MercuryGate Logistics Landscape

Transportation Industry Trends in Q2 2022

Are you leading the race in 2022, stuck in mid-pack, or … facing DNF? Be alert to transportation industry trends and course conditions in Q2. The path ahead won’t be easy.

And whatever your position, put your strategy into top gear with guidance from MercuryGate and our partners.  

The View from the Field

Parcel volumes remain on upward trajectory after growing 6% last year, reaching 21.5 billion parcels shipped, according to Pitney Bowes. FreightWaves.

ATA: ‘There is more work than there are drivers.’ Transport Topics

Rising diesel costs are straining U.S. truckers and shipping operations as fuel prices hit record highs, climbing $1.50 per gallon in roughly two months. WSJ

Expert: ‘No End in Sight’ for diesel price inflation after price hikes in mid-March were among the steepest ever. Costs above $5-$6.50 per gallon could prevail through 2022. CCJ. 

Why every American should care that diesel prices are surging offers opinion on the importance of diesel fuel in the U.S. economy. Of note, 97% of all Class 8 trucks use diesel fuel – and that’s one piece of an energy puzzle that also includes, railroads, agriculture and ocean shipping. FreightWaves.

On-Highway Diesel Fuel Prices

The average U.S. diesel fuel price of $5.571 on May 24, 2022, is up $2.318 year over year. The May 24 average is down $0.042 over prior week. Regionally, the average high is in California ($6.502), while Gulf Coast averages are the lowest ($5.216). Energy Information Administration

National Spot Rates

Truck posts on the DAT Load Board dropped 16% during the 72-hour Roadcheck safety blitz as carriers took vacation time. The capacity tightening increased linehaul rates across all spot rates. Dry van spot rates are up 2.3% over prior week, and 7.9% year-over-year.  Flatbed spot rates increased 1.3% compared to the week ending May 15, up 16.1% year-over-year. Reefer spot rates are up 4.3% over prior week and up 7.7% compared to the same time last year.  DAT Trendlines.

U.S. Load-to-Truck Ratios

Overall, during the week of May 1 to May 6, the load-to-truck ratio increased for all modes. Dry van increased to 4.0 loads per truck. Reefer increased to 6.7 loads per truck, and flatbed increased to 72.8 loads per truck. Transport Dive

Trucks, Trailers, Tonnage: Get load-to-truck ratios, truckload linehaul rates, tonnage, and trailer orders. Transport Div

Total U.S. Business Inventories / Sales Ratios 2013-2022

U.S. total business end-of-month inventories for March 2022 were $2.3 trillion, up 2% from the previous month. U.S. total business sales were $1.83 trillion, up 1.8%, according to the U.S. Census Bureau
 
Retailers wrestle with inventory challenges and bullwhip effect as consumers’ discretionary spending fluctuates in the face of inflation fears.
 

NRF Forecasts Annual Retail Sales to Grow 6-8% to more than $4.86 trillion in 2022. Non-store and online sales are expected to grow 11-13% year-over-year, with GDP forecast to grow 3.5%.  

E-commerce sales in Q1 2022 totaled $250 billion (not adjusted for “seasonal variation.”) Online sales in Q1 accounted for 14.3% of total retail sales in the United States.

2021 U.S. Retail Trade Corporation After-Tax Profit

Seasonally adjusted after-tax profits of U.S. retail corporations (assets of $50 million+) totaled $58.3 billion in Q4 2021, up $25.2 billion from Q4 2020. Seasonally adjusted sales for Q4 2021 totaled $974.4 billion. U.S. Census Bureau Economic Indicators. 

2021 U.S. Manufacturing Corporation After-Tax Profit

U.S. manufacturing corporations’ seasonally adjusted after-tax profits in Q4 2021 totaled $271.2 billion in Q4 2021, up $137.4 billion from Q4 2020. Seasonally adjusted sales for Q4 2021 totaled $1,931.0 billion, up $112.8 billion from Q3 2021. U.S. Census Bureau Economic Indicators

Gaining Positions but Losing Ground

Shanghai lockdown reignites supply chain problems for U.S. companies. Disrupted businesses warn effects could continue into the summer. Wall Street Journal (subscription). 

U.S. Goods and Services Trade Deficit

The United States international trade deficit in goods and services increased to $109.8 billion in March from $89.8 billion in February (revised), as imports increased more than exports. 

Sanctions on Russia, War in Ukraine, and Covid in China Are Transforming Global Supply Chains. “As companies build more factories, in more locations, and buy parts and materials from a greater diversity of suppliers, the world’s supply chains are becoming more like supply webs.” Wall Street Journal (subscription). 

Trucking’s Inflation Worries Go Beyond Fuel for motor carriers, especially when it comes to trailers. The Producer Price Index (essentially a measure of business-to-business inflation) for truck trailers and chassis is surging. Rising prices for materials – aluminum, steel, and lumber – are driving trailer cost increases. TruckingInfo. 

Trailer Producer Price Index 

February saw the second-largest monthly increase (6.3%) in the trailer Producer Price Index, after the third-largest increase (5.5%) in January. The largest one-month PPI gain (10.5%) occurred in October. 

Supply Chain Trends & Analysis: Manage Transportation Challenges in 2022. MercuryGate webinar recording features Co-Founder Steve Blough and supply chain expert Phil Melton. Watch it now for their insights on the past quarter – and the months ahead.

How Pallet Return Delays Ripple Through Supply Chains. Supply chain management trending toward ordering more goods and stockpiling inventory means more pallets trapped in warehouses – not moving goods for retailers and manufacturers. And pallet costs are climbing. DC Velocity. 

Total U.S. Retail Inventories

February 2022 end-of-month retail inventories were $665.6 billion, up 1.1% from January month. U.S. Census Bureau Economic Indicators.

Total U.S. Wholesale Inventories

February end-of-month wholesale inventories were $814.8 billion, up 2.1% from January. U.S. Census Bureau Economic Indicators. 

Act Now or Pay Later: The Costs of Climate Inaction for Ports and Shipping. “Without further action to reduce emissions, climate change impacts could cost the shipping industry an additional $25 billion every year by 2100.” RTI International.  

The Right Course Going Forward

2022 Supply Chain Benchmarking Report highlighst key factors shaping complexity in your transportation and supply network. Get the top 6 takeaways here.

Challenging the Status Quo: Selecting the Right TMS is a challenge. Analyst assessments can help you determine which brands to consider. MercuryGate is recognized as a Challenger in the 2022 Gartner(R) Magic Quadrant(TM) for TMS report. Download it here.

Truckload Fuel Surcharges: An Overlooked Opportunity for Improvement? “Up until this point, fuel surcharges were seen as a cost of doing business, but we may start thinking more strategically about it to ensure we are hedging against increasing rates and costs,” said one Indago supply chain executive. Adrian Gonzalez, Talking Logistics. 

Supply Chain Trends & Analysis: Manage Transportation Challenges in 2022. MercuryGate Co-Founder Steve Blough and supply chain expert Phil Melton share insights on 2022 to date. Watch it to get their advice for Q2. MercuryGate. 

The Supply Chain Crisis Antidote? Digital ‘Demand Chain’ Management. With 72% of supply chains experiencing a negative impact from COVID-19, “Data analytics and digital collaboration platforms can help supply chain leaders improve the accuracy of their forecasts, identify and address problems more rapidly, and provide customers with a more cohesive experience …” Supply Chain Brain.  

Voice Of The Customer In Modern TMS Platforms. “The ‘voice of the customer’ is more than a catchy buzz phrase. … It’s a direct line of communication and feedback from customers that’s useful in shaping the future of products and services provided by a company. Nicholas Wilson, MercuryGate.

‘Supply Chain as a Service’ Turns Empty Shelves into Extra Cash. “Consistent communication, collaboration, and transparency are key. They can be enabled through a third-party technology provider or a real-time data-powered platform. By ensuring a single source of truth for data, companies can experience greater trust, client retention, and transparency in relationship management.” Supply Chain Brain.  

Selecting a 3PL – Are You and Your Potential 3PL Partner Meant for Each Other? “The organizations most in need of a 3PL probably don’t have a dedicated sourcing function in the logistics and distribution space. A properly developed approach to building the business requirements to share with likely 3PL partners can require an outsized amount of resources when it’s not something you do all the time.” Chainalytics. 

Transportation Trends Update for Q1 2022

Inside Logistics Landscape:

Headlines You Need to See

A New Barometer of Global Supply Chain Pressures aggregates 27 different indicators to provide a summary of disruptions affecting the global supply chain. Among the take-aways: “… shipping cost indices have witnessed enormous growth since the beginning of the global recovery from the troughs of the COVID-19 pandemic.” Federal Reserve Bank of New York.

Parcel Delivery’s Phantom Peak-Mageddon reveals the scores for peak season parcel on-time delivery: UPS 96.9%, U.S. Postal Service 96.5% and FedEx 88.2%. Meanwhile, November non-store retail (online) sales rose 11.6% year-over-year, less than the gain reported between 2019 and 2020. FreightWaves.

2021 Put Logistics Technology on the Map “Global logistics is 12% of the GDP, or $9.6T. Yet, logistics tech is a mere $17.4B market worldwide – or a 0.18% investment in technology.” Alcott Global.

Investors are Piling into Supply Chain Technology highlights capital heading toward logistics technology companies – $24.3 billion in venture funding for start-ups through Q3 2021. The most attractive solutions? “Focused tools for operations,” such as “matching freight loads to transportation capacity and mapping out cost-effective routes to move goods.” Wall Street Journal (subscription).

Looking at Transportation Rate Trends

What do Trucking Conditions Look Like in 2022? highlights expectations for continued strengthening of transportation demand through 1H 2022, with contract truckload rates expected to increase year-over-year. Commercial Carrier Journal.

Top LTL Executives see Continuing Upward Rate Pressure on Shippers in ‘22. How much more costs will climb “depends on individual shipper demands, their freight characteristics and how their tonnage fits into a carrier’s overall freight demand scheme.” Logistics Management.

All Eyes on the Transpacific as Container Rates Look Set to Rise Again with outbreaks of COVID-19 variant Omicron jeopardizing operations at Asian factories and ports, as well as ports on the U.S. West Coast. TradeWinds.

Don’t Miss this Chart

On-Highway Diesel Fuel Prices

The average U.S. on-highway diesel fuel price continued climbing to $5.25 in Energy Information Administration’s March 14 report – a $0.401 jump from March 7. A year ago, the average price for U.S. on-highway diesel was $2.059. Nationwide, the average high is in California ($6.264), while Midwest averages are the lowest ($5.044). See EIA’s most current Gasoline and Diesel Fuel update, here.

More Visual Context

National Spot Rates

Truckload spot rate tracking indicates a drop in demand, especially for dry van and refrigerated modes. (Week of March 7-13 trendlines from Trucking Industry Trends – DAT.)

Total Business Inventories/Sales Ratios 2012 to 2021

Total U.S. business end-of-month inventories for November 2021 were $2.158 trillion, up 1.3% from the previous month, according to the U.S. Census Bureau, Manufacturing and Trade Inventories and Sales, Jan. 14, 2022 (adjusted for seasonal, holiday and trading day difference, but not price changes). U.S. total business sales were $1.723 trillion, up 0.7% from the preceding month.

PPI for Final Demand, 12-month percent change, Transportation and Warehousing, Jan. 2011-Jan. 2022

Year-over-year Producer Price Index Final Demand on Transportation and Warehousing climbed 15.7% in January 2022. Total year-over-year PPI Final Demand for all segments climbed 9.7%. U.S. Bureau of Labor Statistics.

What Are We Reading?

“You cannot avoid disruptions in the supply chain, but when your CEO asks you ‘Where is our cargo currently?’ you need to have a good answer available.” The Past 20 Months in Supply Chain: What Have We Learned? Adrian Gonzalez, Talking Logistics.

“To compete in this new world order, businesses with core logistics must multiple their investments in logistics tech. … Logistics tech will become larger than marketing tech in this decade.” Why Logistics Technology Matters, Forbes.

“By embracing the interplay between AI and BI, businesses can receive additional value and automation from their data and gain great strategic impact.” The Dirty Little Secrets of Business Intelligence: Shaping Corporate Strategies, EnVista.

The Logistics Tail That Wags the Supply Chain Dog shares 3 things logistics leaders must do in 2022 to “continue to leverage their newly found influence and lead their supply chain colleagues through this period of transition.” David Gonzalez, Gartner Supply Chain.

“There are more than 500 different claim causes that can affect a shipment. To avoid the lost costs of goods affected by claims, having a clear concise freight damage claim process is essential.” How The Right Freight Claims Process Works: Best Practices To Know, Joe Celestina, MercuryGate International.

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