Manufacturers send mixed signals
The Institute for Supply Management’s index for manufacturing activity in May rose to 56.1 from 55.4 in April, as did readings of order backlogs and forward-looking new orders, while supplier deliveries, factory employment, and prices paid by manufacturers fell.
Separately, the S&P Global U.S. manufacturing purchasing manager’s index dropped to 57 in May from 59.2 in April, while new orders, inventories, output, and business confidence cooled. Growth in factory activity has slowed as producers reported persistent supply-chain delays and labor shortages, as well as slower demand growth, said Chris Williamson, chief business economist at S&P Global.
Confidence among manufacturers fell to its lowest April since October 2020 amid concerns regarding the impact of inflation on customer spending, the S&P report said.
Cargo theft increased to $19 million in Q1
Estimated cargo theft losses in the United States and Canada jumped to $19 million during the first quarter of this year, a 73% increase over the prior-year period even as the number of reported thefts remained unchanged at 319, according to the latest data from CargoNet.
The average loss value in the first quarter was $232,000, a 68% increase over the same period last year and nearly double the average loss value reported in the first quarter of 2020.
Among the most-stolen items: computer electronics shipments through California. Theft of these shipments increased 443% between September 2020 and May 2021 from the same period a year ago. On average, each shipment of computer electronics was worth $856,993 per full truckload theft and $246,566 per partial truckload theft.
Batten down the hatches: it’s hurricane season
It’s officially Atlantic hurricane season and forecasters are predicting between 14 and 21 named storms, well above average.
Hurricane season runs from June 1-Nov. 30 and last year was among the most active. Hurricane Ida, one of the most destructive storms on record, made landfall in Louisiana on Aug. 29 and touched nine U.S. states, demonstrating that anyone can be in the direct path of a hurricane and in danger from the remnants of a storm system.
In terms of logistics, supply and demand follow a predictable pattern before and after hurricanes. As weather forecasters home in on a storm path, inbound demand spikes as supplies are positioned in advance of landfall. Capacity evaporates as carriers seek safer ground, and then outbound demand surges as shippers look to move freight out of harm’s way. The reverse happens post-landfall.
The effect is especially pronounced around FEMA (Federal Emergency Management Agency) staging sites. According to DAT, inbound flatbed and dry van load-post volumes into the Montgomery, Ala., freight market—which includes Maxwell Air Force Base—were almost five times greater than normal during the week before Ida made landfall.
Carriers feeling the pinch of higher maintenance, parts costs
Add high maintenance bills and parts shortages to the increasing challenge of keeping a truck on the road.
FleetNet America, a national contract maintenance service, reported that the average repair expense increased 9% from 2020 to 2021, and 20.4% from 2020 to May 2022, not including downtime for the trucker. “Whether it’s waiting to get into the shop because of the technician or waiting to get parts, repairs take more time,” said Tim Moore, vice president at FleetNet America. “There is an indirect cost of the loss of that revenue of the tractor.”
Parts pricing has increased an average of almost 15%, FleetNet said, but costs are higher depending on the component.
Brake drums are up around 47%, said Dan Carrano, vice president of fleet maintenance for A. Duie Pyle. “Brake drums are made of pig iron—a low-grade steel—and a big exporter of pig iron is Ukraine,” he said. “Brake drums, brake rotors, and brake kits are getting hard to come by because people are stocking up on them because of the war. Those are parts used regularly.”