Saturday, July 9, 2011

What Does the Economic News Tell Us

Things are slow and everyone is in a "wait and see" mode is what I believe these numbers are telling us.  Unemployment stayed high at above 9% (9.2%) while all orders (durables and non-durables) increased slightly from manufacturers.  The question of course is did that result in sales or did it result in inventory?  We shall see as companies report their 2d qtr earnings.

In my mind the equation is fairly simple:  No jobs and no job growth leads to a lot of uncertainty which leads to consumers not spending which starts the "death spiral".  Tax cuts for the wealthy will not put people back to work as the wealthy can make a lot of money right now "trading paper" and they do not need to open factories and stores.

The real scary thing is the fact that the one economic engine which has driven even the meager recovery (if you can call it that) we have had so far is Government spending.  Now we will see what happens when the Government retrenches spending in a recessionary environment.  I think we know the answer and it is not a good one.

The Government is playing with fire and unfortunately they are going to have to be burned to have them learn the lesson of implementing contraction policies in a time of a no growth economy.

Tuesday, July 5, 2011

A very sad day as Dr. Bowersox, the founder of the supply chain industry has passed away. Look for more on this great man.

Monday, July 4, 2011

Hybrid Cars and Reverse Logistics

Took a ride in my new Hybrid Ford Fusion yesterday and as always, everything causes me to think about logistics.  First, I will have a "call out" to Ford Motor Company as this is an incredible car.  Write me if you would like more information but suffice to say, I am thrilled about the automobile (and the 39.5mpg I had driving to Chicago).

OK, but the one issue (if there is one) with Hybrids is there is a giant battery pack in the back of the car.  As others have asked (rightfully so), "what happens when that dies"?  Ah, this is where the reverse logistics industry comes in.  There will have to be a way to recover the batteries, ship to a central point and a way to disassemble and recycle the components.  A big business just waiting to be started.

A quick google shows Toyota (as you would expect) has started a service like this and I am sure others will follow.  Amazing how new needs are created, then people fill those needs and all of it requires logistics!

Sunday, July 3, 2011

10X Logistics Now in Mobile Form

If you like to read my blog 10xLogistics, you will like it even better now that it is easily accessed from your iPhone or other mobile device.  If you just save the bookmark and go to it from your mobile device you will get a very readable format optimized for the smartphone environment.


Logistics Report Out

I have read the new report on the "state of logistics and I have a few thoughts.  First, we have to figure out how to make the report more relevant.  The logistics' industry is under tremendous change right now and to have a report on 2010 come out in the summer of 2011 is tough.  All the verbiage around what is happening in the transportation industry is almost not worth reading beyond just good history.

Second, it does forecast for 2011 correctly but it probably is a bit late in its prediction.  The report says rates will change dramatically in late 2011.  Well, we have gone through a cycle already in 2011 where rates changed a lot in Q1 and now the economy has put the brakes on thereby changing the capacity / demand equation just in the last few months.  I think however capacity has finally come out faster than demand has slowed resulting in a still favorable environment for carriers.  Intermodal is still on fire.

Real estate is still very weak.  It is not hard to find great warehousing deals but, of course, who the hell wants a warehouse!

Overall, if there were a measurement of whether the "shipper" or the "carrier" are in control, I would say it definitely is favoring the carrier at this point.  Shippers will need to ensure they have a good strategy in place to manage carriers and also work with good regional carriers.  I have found a lot of value in the regional carriers and the value they can provide.  Do not always just default to the "big 5".  There are other great players out there and as the "big 5" regionalize their operations they lose the competitive advantage against the local players.

More to follow but it is very interesting times to say the least.