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Despite improving data, a new year brings the same economic outlook
Thursday, 07 January 2010 00:00
While some indicators are turning positive, freight volumes have yet to catch up.

WALTHAM, Mass.—While it is a new year, the economic outlook appears to look very similar to previous points of the current recession, according to various economic indicators.

But even though the recession is clearly still ongoing, due to things like high unemployment, tight credit availability, and a challenging housing market, among other factors, there is no shortage of optimism when examining some key data points across the general economy along with those data points that specifically focus on the freight transportation and logistics markets.

Among some of the recent notable economic indicators are:

  • a 52.9 percent December reading for consumer confidence from the New York-based Conference Board, which was up from 50.6 percent in November;
  • retail sales from November 24-December 24 were up 3.6 percent year-over-year, according to data from Spending Pulse, a subsidiary of MasterCard;
  • five straight months of growth from the Institute of Supply Management's manufacturing index, with December hitting 55.9 (readings at 50 or above indicate growth);
  • the December Cass Freight Index was up 1.9 percent year-over-year in December, representing the first annual increase since December 2007;
  • new orders for manufactured goods in November were up 1.1 percent—or $3.9 billion—to $365.3 billion, according to the Department of Commerce, and shipments of manufactured durable goods in November were up for the third straight month at $0.4 billion or 0.2 percent to $166.9 billion.

But despite these signs, volumes for trucking, rail and other freight transportation modes remain sluggish, with some gradual signs of improvement, due to easier year-over-year comparisons. This was evident in the recent announcement by the American Trucking Associations, which recently noted that its advance seasonally adjusted (SA) For-Hire Truck Tonnage Index was up 2.7 percent in November—its highest level in a year.

The increase in trucking tonnage can be viewed as the exception rather than the norm, according to a recent report from Wolfe Research President Ed Wolfe, whom noted in December that the overall pace of freight demand is inconsistent, with "few signs of consistent demand improvement across modes," adding that freight demand has remained in a relative lull since July.

While the overall economic picture largely remains a "mixed bag," it has not stopped some shippers from planning for future growth, according to Chris Norek, principal of Chain Connectors, an Atlanta-based supply chain consultancy.

"Shippers in the $50-$500 million category are already planning for the future, when things are more likely to be back on track with the economy," said Norek. "They are viewing present conditions as a time to make improvements to their supply chains, as well as making needed investments into things like human resources, IT and other efficiencies."

Logistics Management, 1/7/2010