What will 2015 look like for an industry that has had four consecutive underperforming years? There are many issues to deal with, but let’s focus on the few that mean the most. At the top of the list is the lack of profitability among ocean carriers and West Coast labor and congestion issues that I don’t see clearing up any time soon.
As we approach the TPM Conference in March, it’s hard to recall any year in the 15 years of this event when the industry was more unsettled, more dissatisfied and more uncertain of what the future holds. Such is the result of a monumentally troublesome 2014, when shippers and their providers absorbed more broadsides from more directions and with less notice than any year in memory.
In this column last year, FTR predicted a bumpy ride for 2014 in trucking, using phrases such as “modest growth meets static capacity,” “it’s all about drivers” and “it’s not a wave of regulations, it’s a storm surge.” Now, with 2014 in the rearview mirror, we can say our outlook was fairly on the mark. So where do we see things going for 2015, and will the coming months see a repeat of 2014’s stormy conditions?
Companies that prefer to keep their operations in-house can leverage some of the best practices used by logistics providers to reduce costs and increase their bottom line.
Although the facts appear to present a dismal picture for the U.S. highway system, some silver linings have emerged as a result of it.
2014 was far from the first year to see waterfront labor issues disrupt cargo flows at U.S. ports. Nor was it the first year to see the formation of large vessel-sharing alliances, big ships, equipment dislocations, truck driver shortages, suspect rail service or unexpectedly strong growth in cargo volumes. Each has been prevalent throughout North American supply chains in given years going back a decade or, in some cases, more. But what made 2014 unique is that they converged simultaneously to form a potent mix that sets the stage for one of the more challenging years in memory for supply chains.
Third-party logistics is a key element of a U.S. economy that is the primary bright spot in the long tunnel of the global economic recovery. In particular, the truck-related components of domestic third-party logistics have prospered during the current economic expansion.
Intermodal transportation in North America is poised to break more records. In 2013, intermodal rail operators handled 15.5 million container and trailer units combined. For 2014, intermodal units easily could top 16 million, if the run rate through 2014’s third quarter — up 5.3 percent year-over-year — holds. 2015 should continue this trend, but not without some anxiety for shippers.
If there is one observation that stands out from the experience of 2014, it’s the complete absence of concern for the shipper in U.S. longshore negotiations. It is fundamentally anachronistic that those who ultimately pay the bills and whose business creates not only all the longshore jobs but also millions more in the larger economy, should suffer the neglect and business disruption shippers do in the U.S. when confronted with labor-management issues on the waterfront.
Although U.S. income growth in the first three quarters of 2014 was only marginally better than the same period a year earlier, it was sufficient to provide the U.S. unemployed with much-needed relief. With hiring picking up momentum, consumer confidence in the U.S. has been moderately positive with the expectations component showing clear signs of improvement.
Logistics real estate markets around the world strengthened in 2014, thanks to more customers being in expansion mode, tightening occupancies and rising rents. In 2015, the cycle will advance further into expansion, although several themes will shape the year.
As we start 2015, the question for international traders is how much more can change? Put another way, what will happen next?
The second half of 2014 saw strong air cargo demand driven by a number of technology releases and the overall rising consumer confidence in the European Union and U.S. To sustain prolonged periods of air cargo success in subsequent years, however, the industry must address some key issues.
2014 was unprecedented in the number of potential regulations tumbling around in the U.S. regulatory machine, but there’s more to come. Here’s a look at what to expect in the coming year.