Five Recent Graphs that Illustrate Challenges in Transportation

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NO. 1 - We have work to do.

Our country’s largest ports (Los Angeles and Long Beach) are two of the least efficient in the world for handling containers due to a myriad of logistics issues. A majority of the busiest U.S. ports – including Savannah, New York, New Jersey, and Oakland – are ranked in the bottom half of a worldwide list of top-performing ports. The Middle East and Chinese ports dominate the top 10. 

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NO. 2 - Consumer sentiment continues to fall

In late May, a key measure of consumer sentiment (University of Michigan Index) dropped to a level not seen in over a decade.  According to Joanne Hsu, director of the Michigan survey, the recent drop was “largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concern over inflation.”  Experts anticipate consumer sentiment to remain low as inflation outpaces wage gains. 

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NO. 3 - Transportation under pressure

Readers of transportation news are certainly familiar with the green energy agenda – EVs, AVs, carbon-neutral energy sources, and the like).  There is no other business sector that impacts the environment like transportation.  In fact, according to the Environmental Protection Agency, the transportation sector generated over a quarter (27%) of US greenhouse gas emissions in 2020.  This represents the largest single source of greenhouse gases – just ahead of electricity generation.    

Within transportation, cars, and light-duty trucks together produce nearly 60%, substantially ahead of medium and heavy-duty trucks at 24%. This is perhaps a surprise considering the aggressive push from DOT and many within the sector to convert large and small fleets to environmentally friendly technologies.  While we all want clean air and a safe environment, it appears efforts should first focus on cars.     

And for cars and light trucks, we should expect change to be slow and fragmented.  The US infrastructure is not ready for EVs, regardless of the positive messaging from political and economic interests.   

For an informative perspective on electrification versus decarbonization, see Battery-electric trucks are a ‘fantasy’.

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NO. 4 - The post-pandemic pains

During the pandemic, many new small for-hire trucking firms were created.  In July 2020, the FCSA reported about 186,000 new trucking operations – a testament to strong entrepreneurship regardless of circumstances. 

However, now, many of those new carriers are failing due to compounding challenges in transportation.  Spot rates have declined from all-time highs and the surge in diesel prices disproportionally impacts small new carriers.  Experts expect the numbers to get worse as the full effects of the spring spike in fuel costs are absorbed. 

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NO. 5 - Back to old habits?

There are some early signs of consumers returning to typical spending patterns between goods and services.  Goldman Sachs shows goods consumption nearly 5% higher than before the pandemic (so still elevated) but down from a peak of 15%.  The services industry appears optimistic as airfares, hotel occupancy, and travel has increased.  Retail spending is also up, as is spending at restaurants and bars.  In March, spending on services hit $8.6 trillion, topping a previous high in February 2020.    

This trend may relieve pressure on supply chains, strained by the unprecedented growth in consumer expenditures on goods.

One measure of the strength of goods purchases, however, is the price of wood pallets.  As the demand for goods surged in the last two years, the prices of new wooden pallets jumped about 60%.  And, the prices of pallets are still rising, which implies demand for goods is robust – as reported by Goldman Sachs. 

In short, the data suggest burgeoning services spending with sustained expenditures on goods.  Generally, this is a positive, though inflation and the recent tightening by the Federal Reserve do portend a decline in overall spending – both goods and services.       

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