Logistics, supply chain and transportation are undergoing a sea change. As highlighted in earlier installments of this series, industry and functional executives recognize they are facing a nearly unprecedented barrage of challenges and opportunities. In response, executives are doing all they can to address their most pressing issues. But resources are scarce.
Today’s opportunities require cooperation across the ecosystem at large. As indicated by Forbes Insights research, transportation-focused executives will not only be looking to hire outside providers for a wider array of services, but they will also be seeking closer collaboration with suppliers, customers and even competitors. In short, for logistics, supply chain and transportation, this is the era of external outreach.
So Hard Keeping Up
Amid so many challenges and opportunities, keeping up with it all is becoming increasingly difficult. In fact, 64% of executives surveyed by Forbes Insights say it is becoming increasingly difficult to keep up with changes in technology, demographics and the competitive environment. Similarly, over half, 53%, say they are concerned their competitors may be moving significantly faster, contributing to disruption in terms of capabilities, costs/margins, service provision and similar attributes.
One proven means to more rapidly reap the benefits of any fast-evolving set of technologies or business practices is to engage experienced third parties. Today, only about one-third of companies (33%) say they outsource the majority or a significant portion of their logistics, supply chain and transport operations/needs. But going forward, 61% say they will be relying significantly more on external sources—outsourcers, service, truck leasing and technology providers—to meet their fast-evolving supply chain, transportation and logistics needs.
Technology: Looking For Outside Help
Amid so many advancements on so many fronts—from telematics/IoT to artificial intelligence and safety/self-driving innovations—technology deserves special attention. Some of the most visible needs include access to leading-edge technology, logistics processes (optimization of routes/loads), or even fleet leasing or maintenance.
A particularly intriguing aspect of the research findings is that in terms of both current and future reliance on outsourcing, the figures are remarkably consistent for all firms large and small. What this means, says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business, “is that even those companies with greater resources, the largest in their industries, recognize that with such complex and fast-moving technologies, it makes sense to look more to outside providers.”
Technology is, in fact, transforming logistics, supply chain and transportation processes on so many fronts that the choices, development and onboarding paths can seem bewildering. So it’s no wonder 58% of executives are saying that when it comes to pursuing related technology, they plan to rely on or at least heavily lean on external partners. Only one-third (32%) plan to go it alone; a mere 11% say they will not be pursuing new technologies.
Greater Collaboration Across The Ecosystem
Transportation-focused executives in general will be pursuing greater outreach and collaboration across the whole of the value chain—all participants will be working more intimately with intermediate customers, shippers and 3PLs (third-party logistics companies), end customers, technology providers and so on. Certainly, if the goals are greater efficiency, speed and accuracy, it pays to forge closer ties with others with shared interests and needs.
Such expanded collaboration can take many forms. For example, 60% will pursue expanded partnerships with vehicle manufacturers themselves. By speaking with vehicle makers, users of such products are able to more clearly communicate their evolving needs as well as understand upcoming options and improvements. Similarly, OEMs will more actively reach out to end-users and prospects of their products.
Almost three in five, 59%, say they will more aggressively pursue the outsourcing of transportation processes. This includes activities such as fleet leasing and maintenance. Similarly, 57% of executives say they will aggressively pursue greater outsourcing of logistics processes, including warehousing-as-a-service, scheduling, carrier management, etc.
As to the former—transportation processes—the thinking here, says Long, “is that as the technology in the vehicles becomes even more sophisticated, it becomes not only harder to keep up with changes but also to service existing fleets.” Firms will also turn to leasing and related services “as a means of gaining greater flexibility as well as access to the latest technologies and lower capital costs,” she continues. As to the latter—logistics processes—here, companies can gain earlier and deeper access to advances in artificial intelligence, machine learning and related technologies as a means of optimizing routes, loads, costs and other variables.
Finally, in a series of interrelated findings, 60% say they will aggressively pursue closer collaboration with their own suppliers; 57% will collaborate more closely with partners/distributors; 55% will pursue closer collaboration with customers. Focuses will be on issues such as the sharing of more data, with an eye toward greater end-to-end visibility and process improvement.
Expect A Surge In M&A
Also likely, the industry should be poised for a significant uptick in M&A. Consolidation builds breadth and scale, which, when coupled with optimizing technologies like AI, can also lead to greater efficiency, flexibility and margins. Firms may also acquire technology providers in a bid to build greater sophistication. Overall, the Forbes Insights report reveals, nearly three out of five executives, 57%, plan to pursue this ultimate form of external outreach.
No One Can Do It All
Change is all around. Structurally, the industry is looking at new global trade patterns as well as shifting customer expectations. In terms of frontline technologies, executives are seeing all manner of new safety equipment—and soon will need to contend with driverless vehicles and drones. Behind the scenes? Logistics, supply chain and transportation teams are moving as fast as they can to understand and obtain the benefits of technologies such as telematics/IoT, AI and machine learning. It’s a remarkably demanding set of challenges. No wonder industry professionals are seeking outside assistance—it’s a necessity.
http://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.png00Point Global Logisticshttp://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.pngPoint Global Logistics2019-08-05 17:21:452019-08-05 17:21:45It Takes An Ecosystem: Transportation-Focused Executives Turn To Outside Providers, Customers, Suppliers And Competitors
“You can’t recommend those stocks,” a Wall Street strategist insisted in 1986. “We’re in the third year of a four-year expansion. They won’t work.” Being naive, I did it anyway. The expansion lasted a total of almost eight years, until July 1990. Strategists don’t know much, but to be fair, it was a B-school accepted truth that expansions last four years. Another expansion began in 1991 and lasted a record 10 years. And this month we broke that record. Since June 2009, the U.S. economy has kept growing. Every day is another record.
Did you ever wonder why we are enjoying a decadelong run? What changed? Everyone wants credit. Was it the Federal Reserve and its relentless stimulus? Nope. The Fed creates the money the economy needs, but not the need itself. Obama or Trump policies? A divided Congress? Demographic shifts? A strong or weak dollar? Actually, none of the above. The answer is just-in-time. You can thank all those freshly minted consultants you see in premium economy crisscrossing the country with their AirPods and Allbirds and airy attitudes.
In the previous era, before pervasive computing, economies would live and die by inventory cycles. Heck, biblical times record seven years of feast and seven of famine. The expansion starts, consumers buy, investment and hiring ramp up, wages and prices rise, inflation emerges, consumers buy ahead of price increases, investment peaks, inventories build, consumers are tapped out, recession starts, inventories are drawn down, and layoffs begin—then start all over every four years. Until recently, price signals didn’t travel very fast, and inventory tracking used clipboards.
In a micro version of this cycle, the videogame industry had a huge bonanza in the early 1980s that ended in ’83 with bust of the highly anticipated “E.T. the Extra-Terrestrial” game. Warner Communications literally buried about 700,000 unsold cartridges of “E.T.” and other titles, and lost more than $500 million. The semiconductor industry got stuck with loads of chips in inventory that had to be written down. It was ugly. After a similar inventory mess related to then-newfangled personal computers, the tech world started implementing just-in-time delivery. Companies like Compaq would ask for chips to be delivered Tuesday for PCs shipped on Wednesday. This gradually smoothed out the cycles of a very volatile industry.
Thirty-six years later, much of the global economy has perfected this just-in-time supply chain. Digital cash registers and bar codes log consumer purchases. Logistics software allows manufacturers to track every production detail everywhere on the globe. Data is fed into giant databases that forecast demand. Manufacturing, transportation and retail are a highly choreographed water ballet of delivering inventory right before it’s needed. Exactly the right amount of toothpaste is magically dropped onto Walmart shelves each night.
Software is now a mind-bending cornucopia of supply-chain management, enterprise-resource planning, business-process re-engineering and decision-support systems—all of which barely existed 30 years ago. But here’s the dirty little secret: Enterprise software from Oracle and SAP and just about everyone else is notoriously hard to use, nasty to implement, and a royal pain to maintain. That means a virtual Full Employment Act for consultants—tens of thousands are hired yearly by PwC, Deloitte, KPMG, Ernst & Young—add BCG and McKinsey too—to customize and implement business processes.
I have to admit my eyes usually glaze over with images of paint drying when I hear these companies’ names. But consulting is booming. Deloitte consulting has grown by double digits in each of the past 10 years. Consulting is now a $130 billion global business. Of that, digital-technology consulting makes up some $50 billion. This software has become the lubricant for economic gears, preventing inventory from gumming up the works. “Consultants” are mislabeled—most are more like implementers, but that doesn’t look as good on a résumé.
Price signals move around the globe in nanoseconds instead of months and squash excesses before they happen. Analytics are also improving—and the field is heating up, as shown by the recent sales of Looker and Tableau. Next, we’ll see machine learning find patterns to squeeze out even more efficiency, putting goods in the right place at the right time. Productivity tools have stretched expansions beyond anyone’s belief and have expanded wealth the world over—see value created at public Salesforce and private Vista Equity Partners.
Have we forever tamed the cycle? Nah, because like white tigers in Las Vegas, outside events can still bite and maul economic growth—oil embargoes, terrorism, tariffs, wars, no-doc home loans, maybe leveraged loans next. The current expansion may have already ended for all we know, stabbed in the back by tariff daggers. But I don’t think so—this could go on for a while. Thank those airline-mile-accumulating consultants. Give ’em your unwanted peanuts. They know how to track them.
http://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.png00Point Global Logisticshttp://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.pngPoint Global Logistics2019-07-08 19:41:062019-07-08 19:41:06The Key to the Long Expansion? Logistics
U.S. businesses spent $1.64 trillion on transportation and warehousing costs last year, with demand slowing in 2019
By Jennifer Smith
June 18, 2019 9:00 am ET
Rising logistics costs consumed a bigger share of U.S. corporate spending over the past year as companies rushed to take advantage of an improving U.S. economy, according to a new report.
Spending on transportation, inventory-carrying costs and other shipping-related expenses as a share of gross domestic product last year reached its highest level since 2014, the Council of Supply Chain Management Professionals said in its annual State of Logistics Report, a surge the report said is cooling this year on more plentiful capacity and moderating shipping demand.
U.S. businesses spent a record $1.64 trillion on logistics in 2018, up 11.4% from the prior year and accounting for 8% of GDP, the report said. Industry experts view the logistics share of GDP as a measure of the efficiency of transportation and distribution networks, and last year’s figure was sharply up from a 7.5% share in 2017.
With economic growth expected to slow in the second half of 2019, companies that built up inventories ahead of expected tariffs could pull back their demand for logistics services this year, “easing the price increases that bedeviled shippers” during last year’s sizzling freight market, the report said. “This is good news for shippers, but carriers will struggle as volumes fall.”
Logistics costs should still rise in 2019, though not as abruptly as last year, when booming demand and tight capacity strained supply-chain budgets and sent shippers scrambling to book transportation, said Michael Zimmerman, a partner at consulting firm A.T. Kearney Inc. and the lead author of the report.
Trucking rates “will come down but not as dramatically as they have in the past,” Mr. Zimmerman said, while costs tied to warehousing and labor continue to rise. A.T. Kearney forecasts contract pricing for over-the-road truck shipments will decline by between 3% and 5% in 2019.
U.S.-China trade tensions are a wild card that could weigh on shipping demand in 2019. Retailers, manufacturers and wholesalers pulled shipments forward in late 2018 in anticipation of rising levies on Chinese imports. That jammed warehouses and strained logistics capacity around major U.S. trans-Pacific gateways.
Storage and other inventory costs jumped 14.8% in 2018 as inventories measured by value increased 4.6% compared with the prior year, the report said.
Commerce Department figures suggest that inventories may be getting ahead of demand, with the inventory-to-sales ratio for all U.S. businesses hovering around 1.39 this spring, after falling to a three-year low of 1.34 in May and June of 2018.
Accelerating tariffs may have contributed to softer-than-usual demand this spring for Omaha, Neb.-based trucking company Werner Enterprises Inc., whose retail customers account for 52% of revenue, Chief Financial Officer John Steele said at a June 5 industrial conference in Chicago.
“It appears that several [retail customers] grew their inventories in that February-to-March time period,” which could have led to destocking in April and May, Mr. Steele said. A number of retailers notched same-store sales improvement from February to April, “so hopefully that will translate into better freight volumes for our retail customer base going forward,” he said.
Lee Clair, a managing partner at Transportation and Logistics Advisors LLC, a supply-chain-strategy consulting firm, said freight demand this year has “moderated into something below where we were last year, but it’s higher than anything that existed before that…There’s no way it could continue to boom the way it was.”
Overall transportation spending increased 10.4% overall in 2018, with spending on intermodal truck-rail transport soaring 28.7%.
Write to Jennifer Smith at jennifer.smith@wsj.com
http://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.png00Point Global Logisticshttp://pointgl.com/wp-content/uploads/2016/03/POINT_GL_LOGO.pngPoint Global Logistics2019-06-19 19:13:452019-06-19 19:13:45Logistics Spending Jumped 11.4% on Strong Economic Growth
It Takes An Ecosystem: Transportation-Focused Executives Turn To Outside Providers, Customers, Suppliers And Competitors
/0 Comments/in Uncategorized /by Point Global LogisticsLogistics, supply chain and transportation are undergoing a sea change. As highlighted in earlier installments of this series, industry and functional executives recognize they are facing a nearly unprecedented barrage of challenges and opportunities. In response, executives are doing all they can to address their most pressing issues. But resources are scarce.
Today’s opportunities require cooperation across the ecosystem at large. As indicated by Forbes Insights research, transportation-focused executives will not only be looking to hire outside providers for a wider array of services, but they will also be seeking closer collaboration with suppliers, customers and even competitors. In short, for logistics, supply chain and transportation, this is the era of external outreach.
So Hard Keeping Up
Amid so many challenges and opportunities, keeping up with it all is becoming increasingly difficult. In fact, 64% of executives surveyed by Forbes Insights say it is becoming increasingly difficult to keep up with changes in technology, demographics and the competitive environment. Similarly, over half, 53%, say they are concerned their competitors may be moving significantly faster, contributing to disruption in terms of capabilities, costs/margins, service provision and similar attributes.
One proven means to more rapidly reap the benefits of any fast-evolving set of technologies or business practices is to engage experienced third parties. Today, only about one-third of companies (33%) say they outsource the majority or a significant portion of their logistics, supply chain and transport operations/needs. But going forward, 61% say they will be relying significantly more on external sources—outsourcers, service, truck leasing and technology providers—to meet their fast-evolving supply chain, transportation and logistics needs.
Technology: Looking For Outside Help
Amid so many advancements on so many fronts—from telematics/IoT to artificial intelligence and safety/self-driving innovations—technology deserves special attention. Some of the most visible needs include access to leading-edge technology, logistics processes (optimization of routes/loads), or even fleet leasing or maintenance.
A particularly intriguing aspect of the research findings is that in terms of both current and future reliance on outsourcing, the figures are remarkably consistent for all firms large and small. What this means, says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business, “is that even those companies with greater resources, the largest in their industries, recognize that with such complex and fast-moving technologies, it makes sense to look more to outside providers.”
Technology is, in fact, transforming logistics, supply chain and transportation processes on so many fronts that the choices, development and onboarding paths can seem bewildering. So it’s no wonder 58% of executives are saying that when it comes to pursuing related technology, they plan to rely on or at least heavily lean on external partners. Only one-third (32%) plan to go it alone; a mere 11% say they will not be pursuing new technologies.
Greater Collaboration Across The Ecosystem
Transportation-focused executives in general will be pursuing greater outreach and collaboration across the whole of the value chain—all participants will be working more intimately with intermediate customers, shippers and 3PLs (third-party logistics companies), end customers, technology providers and so on. Certainly, if the goals are greater efficiency, speed and accuracy, it pays to forge closer ties with others with shared interests and needs.
Such expanded collaboration can take many forms. For example, 60% will pursue expanded partnerships with vehicle manufacturers themselves. By speaking with vehicle makers, users of such products are able to more clearly communicate their evolving needs as well as understand upcoming options and improvements. Similarly, OEMs will more actively reach out to end-users and prospects of their products.
Almost three in five, 59%, say they will more aggressively pursue the outsourcing of transportation processes. This includes activities such as fleet leasing and maintenance. Similarly, 57% of executives say they will aggressively pursue greater outsourcing of logistics processes, including warehousing-as-a-service, scheduling, carrier management, etc.
As to the former—transportation processes—the thinking here, says Long, “is that as the technology in the vehicles becomes even more sophisticated, it becomes not only harder to keep up with changes but also to service existing fleets.” Firms will also turn to leasing and related services “as a means of gaining greater flexibility as well as access to the latest technologies and lower capital costs,” she continues. As to the latter—logistics processes—here, companies can gain earlier and deeper access to advances in artificial intelligence, machine learning and related technologies as a means of optimizing routes, loads, costs and other variables.
Finally, in a series of interrelated findings, 60% say they will aggressively pursue closer collaboration with their own suppliers; 57% will collaborate more closely with partners/distributors; 55% will pursue closer collaboration with customers. Focuses will be on issues such as the sharing of more data, with an eye toward greater end-to-end visibility and process improvement.
Expect A Surge In M&A
Also likely, the industry should be poised for a significant uptick in M&A. Consolidation builds breadth and scale, which, when coupled with optimizing technologies like AI, can also lead to greater efficiency, flexibility and margins. Firms may also acquire technology providers in a bid to build greater sophistication. Overall, the Forbes Insights report reveals, nearly three out of five executives, 57%, plan to pursue this ultimate form of external outreach.
No One Can Do It All
Change is all around. Structurally, the industry is looking at new global trade patterns as well as shifting customer expectations. In terms of frontline technologies, executives are seeing all manner of new safety equipment—and soon will need to contend with driverless vehicles and drones. Behind the scenes? Logistics, supply chain and transportation teams are moving as fast as they can to understand and obtain the benefits of technologies such as telematics/IoT, AI and machine learning. It’s a remarkably demanding set of challenges. No wonder industry professionals are seeking outside assistance—it’s a necessity.
The Key to the Long Expansion? Logistics
/0 Comments/in Uncategorized /by Point Global Logistics“You can’t recommend those stocks,” a Wall Street strategist insisted in 1986. “We’re in the third year of a four-year expansion. They won’t work.” Being naive, I did it anyway. The expansion lasted a total of almost eight years, until July 1990. Strategists don’t know much, but to be fair, it was a B-school accepted truth that expansions last four years. Another expansion began in 1991 and lasted a record 10 years. And this month we broke that record. Since June 2009, the U.S. economy has kept growing. Every day is another record.
Did you ever wonder why we are enjoying a decadelong run? What changed? Everyone wants credit. Was it the Federal Reserve and its relentless stimulus? Nope. The Fed creates the money the economy needs, but not the need itself. Obama or Trump policies? A divided Congress? Demographic shifts? A strong or weak dollar? Actually, none of the above. The answer is just-in-time. You can thank all those freshly minted consultants you see in premium economy crisscrossing the country with their AirPods and Allbirds and airy attitudes.
In the previous era, before pervasive computing, economies would live and die by inventory cycles. Heck, biblical times record seven years of feast and seven of famine. The expansion starts, consumers buy, investment and hiring ramp up, wages and prices rise, inflation emerges, consumers buy ahead of price increases, investment peaks, inventories build, consumers are tapped out, recession starts, inventories are drawn down, and layoffs begin—then start all over every four years. Until recently, price signals didn’t travel very fast, and inventory tracking used clipboards.
In a micro version of this cycle, the videogame industry had a huge bonanza in the early 1980s that ended in ’83 with bust of the highly anticipated “E.T. the Extra-Terrestrial” game. Warner Communications literally buried about 700,000 unsold cartridges of “E.T.” and other titles, and lost more than $500 million. The semiconductor industry got stuck with loads of chips in inventory that had to be written down. It was ugly. After a similar inventory mess related to then-newfangled personal computers, the tech world started implementing just-in-time delivery. Companies like Compaq would ask for chips to be delivered Tuesday for PCs shipped on Wednesday. This gradually smoothed out the cycles of a very volatile industry.
Thirty-six years later, much of the global economy has perfected this just-in-time supply chain. Digital cash registers and bar codes log consumer purchases. Logistics software allows manufacturers to track every production detail everywhere on the globe. Data is fed into giant databases that forecast demand. Manufacturing, transportation and retail are a highly choreographed water ballet of delivering inventory right before it’s needed. Exactly the right amount of toothpaste is magically dropped onto Walmart shelves each night.
Software is now a mind-bending cornucopia of supply-chain management, enterprise-resource planning, business-process re-engineering and decision-support systems—all of which barely existed 30 years ago. But here’s the dirty little secret: Enterprise software from Oracle and SAP and just about everyone else is notoriously hard to use, nasty to implement, and a royal pain to maintain. That means a virtual Full Employment Act for consultants—tens of thousands are hired yearly by PwC, Deloitte, KPMG, Ernst & Young—add BCG and McKinsey too—to customize and implement business processes.
I have to admit my eyes usually glaze over with images of paint drying when I hear these companies’ names. But consulting is booming. Deloitte consulting has grown by double digits in each of the past 10 years. Consulting is now a $130 billion global business. Of that, digital-technology consulting makes up some $50 billion. This software has become the lubricant for economic gears, preventing inventory from gumming up the works. “Consultants” are mislabeled—most are more like implementers, but that doesn’t look as good on a résumé.
Price signals move around the globe in nanoseconds instead of months and squash excesses before they happen. Analytics are also improving—and the field is heating up, as shown by the recent sales of Looker and Tableau. Next, we’ll see machine learning find patterns to squeeze out even more efficiency, putting goods in the right place at the right time. Productivity tools have stretched expansions beyond anyone’s belief and have expanded wealth the world over—see value created at public Salesforce and private Vista Equity Partners.
Have we forever tamed the cycle? Nah, because like white tigers in Las Vegas, outside events can still bite and maul economic growth—oil embargoes, terrorism, tariffs, wars, no-doc home loans, maybe leveraged loans next. The current expansion may have already ended for all we know, stabbed in the back by tariff daggers. But I don’t think so—this could go on for a while. Thank those airline-mile-accumulating consultants. Give ’em your unwanted peanuts. They know how to track them.
Logistics Spending Jumped 11.4% on Strong Economic Growth
/0 Comments/in Uncategorized /by Point Global LogisticsU.S. businesses spent $1.64 trillion on transportation and warehousing costs last year, with demand slowing in 2019
By Jennifer Smith
June 18, 2019 9:00 am ET
Rising logistics costs consumed a bigger share of U.S. corporate spending over the past year as companies rushed to take advantage of an improving U.S. economy, according to a new report.
Spending on transportation, inventory-carrying costs and other shipping-related expenses as a share of gross domestic product last year reached its highest level since 2014, the Council of Supply Chain Management Professionals said in its annual State of Logistics Report, a surge the report said is cooling this year on more plentiful capacity and moderating shipping demand.
U.S. businesses spent a record $1.64 trillion on logistics in 2018, up 11.4% from the prior year and accounting for 8% of GDP, the report said. Industry experts view the logistics share of GDP as a measure of the efficiency of transportation and distribution networks, and last year’s figure was sharply up from a 7.5% share in 2017.
With economic growth expected to slow in the second half of 2019, companies that built up inventories ahead of expected tariffs could pull back their demand for logistics services this year, “easing the price increases that bedeviled shippers” during last year’s sizzling freight market, the report said. “This is good news for shippers, but carriers will struggle as volumes fall.”
Logistics costs should still rise in 2019, though not as abruptly as last year, when booming demand and tight capacity strained supply-chain budgets and sent shippers scrambling to book transportation, said Michael Zimmerman, a partner at consulting firm A.T. Kearney Inc. and the lead author of the report.
Trucking rates “will come down but not as dramatically as they have in the past,” Mr. Zimmerman said, while costs tied to warehousing and labor continue to rise. A.T. Kearney forecasts contract pricing for over-the-road truck shipments will decline by between 3% and 5% in 2019.
U.S.-China trade tensions are a wild card that could weigh on shipping demand in 2019. Retailers, manufacturers and wholesalers pulled shipments forward in late 2018 in anticipation of rising levies on Chinese imports. That jammed warehouses and strained logistics capacity around major U.S. trans-Pacific gateways.
Storage and other inventory costs jumped 14.8% in 2018 as inventories measured by value increased 4.6% compared with the prior year, the report said.
Commerce Department figures suggest that inventories may be getting ahead of demand, with the inventory-to-sales ratio for all U.S. businesses hovering around 1.39 this spring, after falling to a three-year low of 1.34 in May and June of 2018.
Accelerating tariffs may have contributed to softer-than-usual demand this spring for Omaha, Neb.-based trucking company Werner Enterprises Inc., whose retail customers account for 52% of revenue, Chief Financial Officer John Steele said at a June 5 industrial conference in Chicago.
“It appears that several [retail customers] grew their inventories in that February-to-March time period,” which could have led to destocking in April and May, Mr. Steele said. A number of retailers notched same-store sales improvement from February to April, “so hopefully that will translate into better freight volumes for our retail customer base going forward,” he said.
Lee Clair, a managing partner at Transportation and Logistics Advisors LLC, a supply-chain-strategy consulting firm, said freight demand this year has “moderated into something below where we were last year, but it’s higher than anything that existed before that…There’s no way it could continue to boom the way it was.”
Overall transportation spending increased 10.4% overall in 2018, with spending on intermodal truck-rail transport soaring 28.7%.
Write to Jennifer Smith at jennifer.smith@wsj.com