Industry Indicators: May 30 – June 5
Industry Indicators May 30 – June 5
iLevel Logistics presents intriguing data that offers a snapshot of notable industry changes and events during the week of May 30th through June 5th.
Lumber prices, Goods and Services, Trailer orders, Forklift upgrade, Ocean container rates, Manufacturing indicators, Remote work, LMI, Ransomware attack, Amazon injury incidents, Vehicle color and purchasing decision, V-shape recovery, Jobs report, Used vehicle prices
Number of the week: #11
This is the number of container ships at anchor off the ports of Long Beach and Los Angeles on June 1. According to the Marine Exchange of Southern California, eleven is the fewest number of ships at anchor since November 22, 2020.
Lumber prices high, but down from historic high
Source: SupplyChainDive
While the demand for lumber remains strong and supply is strained, by early June prices decreased from their historical highs in early May. However, economists expect prices to stay exceptionally high into 2022.
Spending on Goods and Services
Source: HDT Truckinginfo
After 3 rounds of stimulus from Washington DC, consumer spending on services is still below pre-pandemic levels. However, spending on goods is 18.2% higher than February 2020. Observers recognize the surge of goods spending (e-commerce and home renovations) as one of the most important factors producing the strong trucking market.
Yet if the pandemic induced shift from services to goods generated a boom for trucking, will a return to normal patterns threaten freight volume? Economists are uncertain as renewed spending on services will lift employment and thus fuel additional overall spending – on goods and services. It may be another 6 months or longer before we know how post-pandemic spending patterns impact trucking.
Net trailer orders fall in April
Source: ACT
April net trailer orders fell approximately 52% from March – though rose dramatically from April 2020.
When to upgrade the forklift?
Source: DCVelocity
DC Velocity provides a nice table to help decide whether to upgrade forklifts. Click the hyperlink for more details.
Ocean container rates from China to West Coast
Source: SCDigest
The Freightos Baltic Index shows the cost for shipping a 40-foot container is about $5400, an increase of approximately 200% from a year ago. Analysts expect the trend to continue.
Manufacturing Indicators
Source: AIER
The Institute for Supply Management’s Manufacturing Purchasing Manager’s Index (PMI) increased to 61.2 in May (red). This is the 12th consecutive month above the neutral 50 reading – and fourth consecutive month above 60. This suggests the manufacturing sector continues to expand. The New Orders Index, which reflects a change in new orders of industrial companies (blue), rose to 67.0 in May, up 2.7% from April. The index has been above 60 for 11 straight months.
However, input costs and supply chain constraints continue to pose problems for manufacturers. The ISM prices index – the prices manufacturers pay for input materials, declined slightly in May but remain high. Logistical and delivery problems as well as material shortages are to blame. In addition, supplier deliveries continued to slow in May. The delivery index rose to 78.7 from 75.0 – the highest since April 1974! Contributing factors include difficulties hiring new workers, raw material delivery times, product shortages, and logistical challenges.
Some employees want remote work
Source: Flexjobs
A recent Flexjobs survey of more than 2,100 remote workers shows remote work left an impression. 58% would look for a new job if they were not allowed to continue working remotely. And 65% would prefer to work remotely full time post-pandemic.
Why remote? No commute and cost savings were the top perks.
However, few executives believe their company culture will survive with a fully remote working design. Rather many think to keep a strong culture employees should be in the office at least 3 days a week.
Employers and employees differ on what they see is the purpose of an office.
May’s LMI – continued expansion
Source: Logistics Managers’ Index
The LMI is a combination of 8 components that comprise the logistics industry including inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. A reading above 50% shows that logistics industry is expanding, below 50% the logistics industry is shrinking. The May figure (71.3) is down from April (74.5), which was the second highest in the history of the index. This suggests the rate of growth has slightly decreased in May. Seven of the last nine months reached over 70, all well above the all-time average of 63.
The continued rate of growth presses prices upward. The price metrics (see below in green) are surging – and this spills over onto the consumer and produces fears about inflation.
Ransomware attack on JBS
Source: Bloomberg Law
The recent cyberattack on JBS demonstrates the vulnerabilities of our nation’s food supply chain. The attack also underscores the considerable concentration of market power in the beef industry. JBS’s five largest U.S. beef plants, which handle 222,500 cattle a day, stopped processing after the attack. As the graph shows, the attack interrupted nearly a fifth of U.S. production.
Injury incidents at Amazon Warehouses
Sources: SupplyChainDigest
Many have criticized Amazon’s workforce injuries. Amazon consistently denies the charges noting their workers have no more injuries than other distribution operations. The chart here shows serious injury incidents per 100 full-time employees from Amazon and non-Amazon warehouses. In 2020, Amazon incidents have declined but they remain significantly higher than non-Amazon warehouses.
Color and vehicle purchasing decisions
Source: AP News
Seventy nine percent of Americans say color is an important factor when purchasing a vehicle. Almost half say color is an extremely important factor. Most favor the color black and most own a black vehicle.
A V-shaped recovery
Source: Wall street journal
We were told last summer that the economy would experience a V-shaped recovery. Now, 12 months later, this appears to be the case.
Jobs report
Source: NPR
Employers added 559,000 jobs last month, about twice the number from a disappointing April. However, May’s totals are still down from March’s 770,000 jobs figure. Unemployment declined to 5.8%. Nevertheless, the economy is still down 7.7 million jobs from the start of the pandemic.
Used vehicle prices soar
Source: FRED
This graph from the Federal Reserve in St. Louis shows year-over-year growth in used vehicle prices. In April, price changes reached a high of 21%, up from an elevated 9.4% in March. FRED noted used vehicle prices haven’t increased to this extent since December 1981 – when general inflation was at 9%. Increased spending activity, rental companies restocking their fleets after a sell-off during COVID, and lack of new vehicle inventory due to semiconductor shortages leaves fewer options for used vehicle buyers. For similar reasons, rental car prices are also exceptionally high.
That’s it for this week, thanks for reading!
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