Supply Chain Matters reflects on reports of the potential for softening U.S. surface trucking rates this quarter, and a potential re-igniting of merger and acquisition activities involving global logistics carriers and services providers should capture the attention of industry supply chain management teams.Buy Zithromax Azithral Without Prescription Order Flovent Asthma
The Wall Street Journal today reported that U.S. trucking companies face an uphill climb this year as a freight boom for carriers looks to be softening.
After extracting double-digit rate increases from shippers, Morgan Stanley analysts now indicate in a research note that mounting evidence is pointing to a potential freight recession in 2019, similar to the 2015-2016 period.
The WSJ cites index data from freight invoice processor Cass Information Systems indicating that U.S. domestic freight volumes clipped in December. Similarly, spot market trucking rates also fell in December for the first time in several years. With the current first quarter traditionally being a slower freight period, and with the Lunar New Year occurring in mid-February across China and other Asian nations, the prospects for declining freight volumes appear to start early.
Meanwhile, a second-report indicates that global logistics mergers and acquisitions may be set to kick into higher gear. Denmark’s DSV A/S, the world’s fifth largest logistics company, has extended a $4 billion bid to acquire European freight-forwarder Panalpina Welttransport Holding, the globe’s 16th largest logistics company. The report suggests that stockpiles of cash and pent-up demand from operators and private-equity could come into the market and: “trigger a new wave of consolidation among large logistics companies.”
Prediction Eight of our Ferrari Consulting and Research Group’s 2019 Predictions for Industry and Global Supply Chains indicates that global logistics, transportation and third-party logistics entities will confront converging forces of industry model disrupters. Our view was that increased annualized logistics and transportation cost increases across global regions were unsustainable. A highly fragmented logistics services industry that has technology disruptors knocking at the door provides ample opportunities for investors and dominant services providers to drive for consolidation opportunities. The fact that corresponding forces and activities are evidently already percolating is an important signpost.
For industry supply and demand network teams, there is likely good and not so good news to these early developments. Indications of softening U.S. trucking rates will help to ease current budgetary pressures that have involved the concern of senior management including many CFO’s. Another wave of merger, acquisition or buyout activities involving the many different aspects of logistics and last-mile delivery could lead to far different customer fulfillment options for various buy and sell channels.
We reiterate for readers the essence and takeaway for our prediction:
We predict that 2019 will be a year of significant transition, one where legacy business, information capture and real-time end-to-end visibility are challenged by industry disruptors on an international scale. Instead of constantly challenging regulatory mandates, disruptors will leverage information toward dynamically managing more efficient or optimized routing.
Indeed, early signposts are not coincidence and point to this very direction.
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