Newsroom Notes: A lot to like in the economic outlook

Things remain on solid footing in the freight transportation and logistics market and likely will for the foreseeable future.

By ·

In a recent , the headline read: “For the U.S. economy, this may be as good as it gets.” I chuckled when I first saw it, mainly because of its bluntness.

But after reading the article highlighting many of the positive things taking place in the economy—low unemployment, strong GDP (will it hit 5% in the second quarter?), several months of ongoing economic expansion—it got me thinking less about the current macro-strength of the economy and more about the strength of the freight economy.

In the Moneywatch article, the assertion was that we’re now at the peak of the good economic times due to several looming obstacles that could potentially hinder the growth we’re currently witnessing. These potential obstacles include a recent tail off in consumer spending, a lower level of savings account increases, price hikes brought on by tariffs and a fluctuating stock market.

Even with these warning signs, when we zero in on the current strength of the freight transportation and logistics economy, there are more than a few things to like—and to keep an eye on as well. These things include the solid trucking market, which continues to benefit from the byproducts of strong pricing arena (for carriers), tight capacity and solid demand.

Other notable factors include the somewhat nascent e-commerce-driven growth track of the last-mile logistics market, as well as manufacturing and industrial production strength. To be sure, these things have a negative impact on myriad supply chain stakeholders, too, like shippers paying high rates and brokers scrambling to find capacity.

And we can’t forget motor carriers. While their margins are up, make no mistake that they’re being quite honest when they say that they’re having an extremely hard time finding drivers. Things aren’t perfect, but we can be pleased with the current state of economic affairs, especially as it relates to the freight economy.

There’s a lot to like and be optimistic about, certainly in the short-term and perhaps in the long-term as well, depending on how a few things play out. But, so far, the economic good times are playing out well as they relate to the strong second quarter earnings results from freight transportation and logistics heavyweights.

This is evident in the form of higher operating income and revenues and lower operating ratios. And they’re also visible in quarterly operating metrics, such as weight-pershipments, pricing and service levels. In previewing second quarter earnings, succinctly laid out the current state of affairs as it relates to the strength of freight transportation and logistics markets. 

“Over the past 30 years, cyclical transports have historically outperformed the S&P 500 Index in the three month period following levels consistent with the most recent reading in the U.S. ISM PMI,” he wrote in a research brief. “In addition, still-accelerating industry pricing growth remains a fundamental cyclical catalyst into third quarter of 2018.”

In a nutshell: Things remain on solid footing in the freight transportation and logistics market and likely will for the foreseeable future. What’s not to like about that?

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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