This Week in Logistics News (June 20-24, 2016)

A beautiful woman passed away this morning, my wife’s aunt who we all loved, so I will be brief with my comments about this week’s supply chain and logistics news.

Well, the Brits voted to leave the European Union yesterday (51.9% in favor to 48.1% against). As one commentator put it, will this be another Y2K (much ado about nothing) or will it be like the collapse of Lehman Brothers in 2008 that triggered the financial crisis?

Not surprising, stock markets around the world are responding negatively to the news, and the British pound is taking a hit. But what will happen longer term remains to be seen. From a supply chain perspective, Brexit will have a ripple effect on procurement, trade agreements, customs, and other areas. However, just like they do for other types of supply chain disruptions, leading companies have already simulated, analyzed, and quantified the impact of Brexit on their supply chains, and they have identified appropriate actions to take in the weeks and months ahead. Laggards are waking up this morning dazed and confused, not knowing what to do or where to start. Which one are you?

In other news, The Council of Supply Chain Management Professionals (CSCMP) released its 27th Annual State of Logistics Report, which revealed that “total U.S. business logistics costs rose to $1.48 trillion in 2015, a 2.6 percent increase from the previous year, which represents a considerable slowdown from previous years.” I haven’t had a chance to read the report yet, but based on the key observations listed in the press release, there aren’t any big surprises: a slow-growing economy means slower growth for logistics; the trucking, ocean, rail, and air markets are experiencing downward pricing pressures due to depressed demand, while parcel is the only bright spot thanks to continued e-commerce growth; and technology is playing a more critical role in the third-party logistics (3PL) industry.

In short, as the economy goes, so goes logistics. And if the news from Werner Enterprises and Covenant Transportation Group this week is any indication, the industry remains in low gear. As reported in the Wall Street Journal:

Werner Enterprises, Inc., one of the largest long-haul carriers, said weak demand from shippers, rising driver pay and other factors would cut the company’s second-quarter earnings to between $0.21 and $0.25 per share. Wall Street analysts had an average estimate for the quarter of $0.40, according to FactSet.

Late Tuesday, Covenant Transportation Group Inc. announced after the stock market closed that it was lowering its second-quarter profit outlook as well, from a range of $0.28 to $0.33 per share to a range of $0.17 to $0.23 per share. The company cited a weak freight market, lower fuel surcharges and higher costs, among other factors, for the revision.

Finally, on the technology front, MercuryGate announced “an integration partnership with Thoroughbred Direct Intermodal Services, Inc. (TDIS), a wholly owned subsidiary of Norfolk Southern Railroad, whereby TMS clients gain easy access to Modal-X, a web based portal for instantaneous, dynamically priced, door-to-door intermodal rates for transactional freight opportunities.” Here’s what Sam Niness, AVP & General Manager at TDIS, said in the press release:

“Many of our clients who utilize MercuryGate’s TMS can now secure spot capacity available on Norfolk Southern’s Intermodal network without having to log on to our Modal-X website. MercuryGate has made it very easy for Modal-X customers to optimize intermodal options from one easy-to-use screen. That’s a big advantage for our customers.”

I haven’t been briefed on this partnership or seen a demo, but it points to the continued expansion of TMS functionality, either organically or via acquisition, and the importance of providing users with a unified and seamless experience.

And with that, have a happy weekend!

Song of the Week: “Fire” by Barns Courtney