Logistically Minded: February indices spark business optimism

Supply chains are constantly changing as new rules, technologies, resources and market trends transform operations. Here's a skim of the week's indexes, technology announcements, expansions and M&As from around the web.

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Market Snapshot

Economic growth is prompting a wave of optimism among business leaders and consumers alike, according to various February indices.

In just one measure of business confidence, the Business Roundtable CEO Economic Outlook — which surveys 141 chief executives of top U.S. businesses — jumped a sequential 19.1% this quarter, marking the largest surge in seven years, according to The Wall Street Journal. The index revealed that 41% of respondents were looking to hire in the next six months, and that growth still has the potential to accelerate further.

The growth is not limited to 141 companies, however, as it seems to be spreading throughout the economy. The trucking industry appears to be addressing its driver shortage by hiring 10,600 more employees in February, the "strongest monthly gain since February 2012," per the Journal.

Meanwhile, container shipping imports are set to grow at double-digits for the next two months, according to a recent report by the National Retail Federation and Hackett Associates. Retail sales over the past two months follow that trend, too, according to the Census Bureau's February estimates. Sales in January and February combined grew 3.7% compared to same last period last year, although February marked slower growth than the previous month.

Meanwhile, consumer prices continue to rise, albeit more slowly. The February Consumer Price Index recorded a 0.1% increase in prices from the previous month and a 2.7% annual increase. The increase marks the seventh-straight month of price increases, although the slower monthly growth could signal that price growth is approacing the Federal Reserve's target inflation rates of 2%.

In fact, the Federal Reserve announced that it would raise interest rates again, given the strong economy. The Wall Street Journal reports the central bank would raise the benchmark federal-funds rate by 0.25% this year and is planning two additional increases. The central bank's determination to continue increasing rates signals confidence the economy will continue to expand at a healthy rate and should bolster business confidence.  

Technically Speaking

Next-generation technology is beginning to gain ground in the supply chain.

Last week, Maersk Line and IBM partnered to bring blockchain technology — a digital, unalterable transaction tracking network — to the container shipping industry in order to enable end-to-end visibility, reduce delays and avoid corruption.

This week, blockchain made headlines again within the electronics supply chain. Foxconn Technology Group announced its subsidiary, FnConn, would begin offering loans to Foxconn suppliers using blockchain technology. The idea is that with blockchain's transparency benefits, suppliers do not need a middleman to secure loans, and can therefore bypass the interest costs of bank loans for small cash needs due to upstream disruptions.

Meanwhile, a recent Forbes report suggests 3-D printing could have more disruptive effects than previously imagined by displacing the small parts manufacturing industry. Although prototyping remains the main use case, Forbes notes manufacturers could skip sourcing obscure parts altogether by printing them independently. 

Full adoption of either technology remains years away, as supply chains' multiple stakeholders yield many laggards. However, early adopters are beginning to appear.

In other news, Maersk Group subsidiary Damco recently launched a new supply chain intelligence suite; SAP and Google partnered to offer SAP HANA on Google's Cloud Platform in order to ease scalability and increase flexibility; Rolls Royce is opening a new R&D center to investigate automated shipping; and the Panama Canal is transitioning to a Quintiq vessel scheduling system as it prepares for increased traffic.

Breaking Ground

Big box warehouses may be the biggest winners from the logistics boom, as core indicators for the market hit record highs in 2016, according to a new Colliers International report. 

Annual net absorption, leasing activity, product in development and construction completions all surged last year due to high interest for the large warehouses from retailers, wholesalers and 3PLs looking to adapt to speedier e-commerce fulfillment. Materials Handling & Logistics reports only 171 of 2,064 big-box buildings are currently 100% vacant, and new construction promises to bolster strong growth throughout 2017 as well.

In fact, strong demand and increased volumes highlight the need for greater logistics infrastructure, and when it comes to roads, bridges and other transportation projects states are anxious to begin building.

Bloomberg reports that, absent of certainty on the Trump administration's infrastructure bill, 15 states are considering raising their gas taxes to fund new transportation projects, while many others did so back in 2013.

New Jersey, which already has among the highest gas taxes in the nation, recently approved spending an additional $400 million on transportation projects as well. Further south, Charleston recently broke ground on its newest inland port in Dillon, SC, which is set to open next year and service intermodal freight between the Port of Charleston and the various surrounding markets up to the Midwest.

In other news, Amazon is expanding its brick-and-mortar presence with a new retail pickup store in Columbus, OH; DHL is opening a new e-commerce fulfillment center in Hong Kong to service Asian markets; UPS' Coyote Logistics opened a new office in Guadalajara, MX, to improve its services for North American customers; and Samsung Heavy Industries built the world's largest containership, with a 20,000 TEU capacity.  

Mergers & Analysis

The automotive supply chain is becoming increasingly linked with the technology world, as connected cars pick up steam across the industry.

The latest example: Intel purchased self-driving car software company Mobileye, the company that supplied Tesla with its auto-pilot technology. Samsung, Siemens and Qualcomm have all inked deals with automotive suppliers in the past, all while automotive companies continue to invest in technology companies themselves.

In other words, self-driving tech providers appear to be caught in a profitable power play between two giant industries, signaling the relationships in manufacturing self-driving cars may be based on partnerships rather than buyers and suppliers. 

Speaking of buyer-supplier relationships, Dell EMC made news this week when it announced Ingram Micro would once again distribute for the company after a previous dispute. Ingram Micro joins Arrow, Avnet and Tech Data, alongside various regional distributors for the company, Channel Insider reports.

Meanwhile, on-demand solutions continue to grow in uptake and investment. On-demand delivery startup Bringg raised $10 million in a second round of funding, just a week after Coca Cola announced the company would use the app to help match small store supply needs with restocking procedures. Similarly, French online marketplace PriceMinister partnered with on-demand logistics provider Cubyn to help expand its delivery capacity.

In other news, DC Velocity reports HighJump acquired voice-directed picking technology vendor Vitech Business Group; Volkswagen is reportedly in talks to ally with Fiat Chrysler Automobiles; and Ocean freight marketplace INTTRA acquired cloud-based container management solution provider Avantida.

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Filed Under: Logistics Operations Technology
Top image credit: BP63Vincent