The IOTI, or the Inbound Ocean TEU Volume Index, saw some sort of life after bouncing back from February’s consumer holiday slump and Chinese New Year. However, still down 51% from both 2021 and 2022. The spread between inbound shipments and inbound TEUs moving in opposite directions since converging at the beginning of the month. Possibly due to the smaller size of orders being placed by U.S. importers due to a continued oversaturation of inventories coupled with a slowdown in consumer goods spending when you factor in inflation. Here’s what the most recent release of the LMI, or the Logistics Managers Index, had to say about the current warehousing and inventory landscape: “What has finally materialized is a loosening in Warehousing Capacity. After 2.5 years of contraction, Warehousing Capacity crossed back into expansion (+10.2) in February, reading in at 56.6. A moderate increase in available storage capacity will be a welcomed sign to consumers and firms throughout the supply chain, as it will likely lead to lower costs (which could impact supply-driven inflation) and prevent congestion from taking place at other points throughout the supply chain. That being said, with Warehousing Prices (73.3) and Inventory Costs (70.9) still expanding at accelerated rates, it will take a significant and prolonged expansion of Warehousing Capacity to push the market back towards normal cost levels.” The report also made notion that downstream shippers, or shippers with products at a completion level closer to the end user such as retailers, are seeing “greater rates of positive change” in transportation prices, utilization, and capacity.
Both existing and new homes sales reported growth in February. Existing homes are up 15.3%, and new homes are up a little over 1%. The percentage change of total home sales grew at a rate not seen since summer of 2020. Still down nearly 23% from last year, but the growth nonetheless still a positive as it represents the end of a yearlong trend of negative growth. According to the NAR, or the National Association of Realtors, Chief Economist Lawrence Yun, the positive news is in large due to rate declines as well as falling home prices in areas where job growth is abundant.
Housing is an important sector as it relates to trucking, as large quantities of durable goods such as furniture and appliances are needed towards the completion of new homes and when remodeling existing. As are building materials such as lumber, flooring, and other home finishings.
The cost of diesel at the pump hit a 13-month low recently at $4.28/gallon. That’s 17% below 2022 prices, but still 35% above 2021 and 68% above 2020 at the pump costs. The ULSDR, or the wholesale cost of diesel fuel at the dispersal point for retail outlets, has fallen 40% since May of 2022. Both the wholesale and diesel at the pump costs typically move one after the other but in a similar pattern with wholesale at times being a good leading indicator of which direction at the pump costs will trend.
This has been your Bridge Logistics Market Update for the week of March 29th, 2023.