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Logistics Intelligence Brief
Thursday, May 25, 2023


Dry Van Market: Manufacturing Set for Steady 2023 Expansion

DAT Freight And Analytics Dean Croke May 23, 2023

Survey respondents expect manufacturing revenue for 2023 to increase, on average, by 1.7%, which is 3.8% lower than the December 2022 forecast of 5.5%. Fiore said, ”Manufacturing continues its comeback from the turmoil that began in 2020 and is expected to continue through this year. With ten manufacturing sector industries expecting revenue growth in 2023 and 11 industries expecting employment growth in 2023, panelists forecast that recovery will continue the rest of the year, albeit somewhat softer than originally expected”.

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A Pivotal Month for Truckload Freight

DAT Freight And Analytics Dean Croke May 23, 2023

Truckload freight volumes declined, and national average spot rates for dry van and refrigerated (“reefer”) loads fell for the fourth consecutive month in April. The DAT Truckload Volume Index (TVI), a measure of loads moved during a given month, was lower for all three equipment types:
• Van TVI was 206, down 15.5% from March and 12.3% lower year over year.
• Reefer TVI fell to 154, a 16.3% decline from March and 12.5% lower year over year.
• Flatbed TVI was 239, 13.7% lower compared to March but 3.5% higher year over year.
It’s not unusual for truckload freight volumes to decline from March to April. However, the van and reefer TVI numbers were the lowest since February 2021, when a polar vortex and unprecedented winter storms disrupted logistics activity across large areas of the United States and Canada.
“May will be pivotal for shippers, brokers, and carriers,” said Ken Adamo, DAT’s Chief of Analytics. “After a challenging first four months of the year, we expect to see the effects of seasonality on freight volumes and rates. The question is how sustainable those effects will be.”

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Bloomberg analyst Klaskow provides detailed analysis of key freight themes on Tucker Company Worldwide webcast

Logistics Management Jeff Berman May 24, 2023

Peak Season outlook: When asked about the prospects for the 2023 Peak Season, Klaskow said he expects it to be “more normal” than it was in 2022, despite not expecting a major increase in demand but more of a gradual increase in demand levels. In our view, that is going to be driven by the ability of retailers to take down their inventories, and they have been doing that for about a year now. I think inventory levels are in a much better position, and I don't think they are where they need to be, they are heading in that direction.”
As for when inventories may return to more typical levels, Klaskow said that it could be over the second half of the year, explaining that people have to remember inventory levels are high, not necessarily because consumers were spending a lot, but also because companies and retailers bought too much because supply chains were so clogged up.
“They were having stock outs where they couldn't manufacture things,” he said. “So, as soon as something was [sellable], consumers were just gobbling things up, and then all of a sudden, demand stopped, or slowed down, considerably and so people are just stuck with that inventory and they're just working through it.”

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Citing progress in Q1, Kohl’s will open new stores, avoid closures

Retail Dive Daphne Howland May 24, 2023

• Kohl’s on Wednesday said Q1 net sales fell 3.3% year over year to $3.4 billion, with comps down 4.3%. Inventory declined 6% from a year ago.
• The department store opened two stores in the period — one of which was a relocation — and plans another five this year. CEO Tom Kingsbury told analysts Wednesday that all stores are profitable and the company has no closure plans.

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Walmart Is Now Fighting Inflation In a Big Way

Bloomberg Conor Sen May 25, 2023


Consumer goods companies have been willing to hike prices on core products even if it meant selling fewer units, as long as the end result is more profit. But those price increases have been costing Walmart, too. That’s because Walmart earns higher margins on discretionary spending — categories like apparel and home goods — so for the company, household budgets being gobbled up by the basics is bad for business.
Walmart is determined to push back against this trend. The chief of Walmart’s US operations explained the strategy on the company’s recent earnings call, saying that "working with those suppliers that are on the prepared foods and consumable categories to get costs down more as fast as we possibly can would help them drive unit volume” and would “free up cash for customers to use for discretionary goods.”

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US Postal Service outlines next steps to becoming ‘the preferred delivery provider’

Supply Chain Dive Max Garland May 24, 2023

The Postal Service expects to see $24 billion in net package revenue growth under its Delivering for America strategy, and its best opportunity to take share from FedEx and UPS could come from a plan to consolidate existing services into one offering.
The agency aims to streamline three package shipping options — USPS Retail Ground, Parcel Select Ground and First-Class Package Service — into a new product, USPS Ground Advantage. It’s set to launch the service on July 9, pending review from the Postal Regulatory Commission.

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Hair Drug-Testing Rule Could Be Finalized by Midsummer

Transport Topics Eric Miller May 24, 2023

Now the draft of the final rule — discussed in a closed meeting last month by members of the Substance Abuse and Mental Health Services Administration’s Drug Testing Advisory Board — is again being reviewed by HHS but still faces review and approval by the White House Office of Management and Budget before it can be posted in the Federal Register, said Ron Flegel, chairman of the advisory board.
“I cannot speculate, but it was an agreed-upon timeline,” Flegel said.
SAMHSA is a subagency of HHS, the ultimate decision-making agency in charge of drug testing. The Drug Testing Advisory Board comprises mostly drug-testing lab executives.

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ATA’s Spear: Trucking must resist ‘mad dash to zero’

Fleet Owner Kevin Jones May 24, 2023

Uncommon sense
Yet, a simple solution is already at hand. If policymakers would use their common sense, the transition to clean transportation will continue in a way that has delivered tangible results for decades, as Spear explained.
He pointed to trucking’s 40-year relationship with EPA, working “hand in glove” to develop solutions such as the SmartWay program to encourage voluntary adoption of more “environmentally friendly” equipment. Additionally, ATA has taken a “proactive” stance in the development of the first two phases of the greenhouse gas emissions regulations.
“We're now facing Phase 3 on NOx, which we all know is like squeezing blood out of a rock—this is the tough one,” Spear added. “But we’ve been there throughout the process, to ensure that the equipment that is ultimately put on the market is stringent and that those tractors can withstand the pressures that you put them through yet deliver those reductions that we seek for our environment.”
Indeed, thanks to trucking’s relationship with EPA, 98.5% of tailpipe pollutants have been removed over the decades, Spear touted—and trucking is committed to tackling that remaining 1.5%. But policymakers need to understand what the tremendous improvement really means and frame regulations accordingly.

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China’s Risky Strategy to Control One-Third of the World’s Lithium Supply

The Wall Street Journal Sha Hua And Alexandra Wexler May 24, 2023


In the past two years, Chinese companies have spent $4.5 billion acquiring stakes in nearly 20 lithium mines, most of them in Latin America and Africa, according to data compiled by Rystad and Benchmark.
Those include investments in countries such as Mali and Nigeria, where they face security threats from terrorism, and places such as Zimbabwe, Mexico and Chile, which have tried to gain greater control over their mineral resources.
In December, Zimbabwe imposed an export ban on unprocessed lithium, effectively forcing foreign companies to process it there. In February, Mexico’s government signed a decree to fast-track nationalization of the country’s lithium reserves. And in April, Chile’s president proposed that private companies would be required to partner with a state-owned company if they want to mine for lithium there.

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