The goal of this three-part series has been to assess trends and determine how major supply chain participants, including downstream, upstream and transportation , are currently experiencing and viewing 2010 business levels, and how the general post recessionary recovery is manifesting itself among industry supply chains. In Supply Chain Matters Global Supply Chain Snapshot-Part One, we observed Q1 results of some lower-tier downstream companies that supply various other upstream supply chains. Supply Chain Matters Global Supply Chain Snapshot- Part Two reviewed some selective sampling of global based manufacturers who tend to be the engines of global supply chain activities.

In this posting, we will focus on a sampling of major transportation carriers to ascertain Q1 trends. As noted in our initial posting, we certainly do not pretend to be trained economists, and please do not view these postings as a basis to plan for the remainder of the year. It is, however, interesting to put information points into a context, and begin a commentary on what lies in store for supply chain for the remainder of 2010.

As in our previous two commentaries, a selective snapshot across transportation segments that support all levels of supply chain activities reflects a positive upswing in Q1, but cautionary notes also prevail.  Issues of excess capacity, or reduced capacity in certain segments, uncertainty on fuel costs, and uneasiness brought on by increased disruption events such as the recent volcanic ash incident across Europe, are all evident.  An unusually severe winter weather pattern did not seem to impact carriers, which is good news.

While severe cutbacks in overhead in labor costs are now bearing fruit in significant profitability increases, capacity  issues are evident in certain transportation sectors. Railroads, airfreight and ocean carriers have excess capacity while truck transportation in the U.S. has the opposite problem of significantly reduced capacity as many independents have been forced into bankruptcy by the recession.  As you will note, most carriers are cautiously optimistic that the first signs of recovery are manifesting itself in supply chain activity.

 A snapshot of key segments indicates the following:

 International Air and Surface Freight


  • Total revenues up 4.4 % year-over-year
  • Consolidated net profit up 81.4%
  • Volume growth continues to accelerate: Asia strongest (up 30.3%) but Europe weakest
  • Air freight volumes up 34%, Ocean Freight up 15.1%
  • Clear signs of economic recovery


  • Total revenues up 7%
  • Operating income up 129%
  • Operating margin increased to 4.8% , up from 2.2% in year earlier
  • FedEx Express Segment: International priority shipping volumes up 18%, led by exports from Asia;  U.S. domestic average daily package volume grew 1%
  • FedEx Ground Segment: Average daily package volume grew 5% year-over-year, due primarily to growth in B2B markets;  yield improved 2% due to higher weight per package.
  • FedEx Freight Segment: LTL average daily shipments increased 26%, but operating income declined due to discounted pricing


  • Total revenue up 7%
  • Operating profit up 39% year-over-year
  • Operating margin increased to 8.9% from 6.6% a year earlier
  • Average daily shipment volumes of 14.93 million packages, up 2.6% from a year ago
  • Us> domestic package daily volume up slightly, the first year-over-year growth in two years
  • International domestic package volume up 18%
  • Export volume increased more than 9%
  • Supply chain and freight businesses up 14%, with strength in high tech and healthcare sectors
  • We expect first quarter trends to continue through the year, producing revenue growth and additional operating leverage.”

 J.B Hunt Transport Services

  • Total revenues up 17%
  • Operating income up 18%
  • Higher volumes in international segments, Dedicated Contract Services and truck segments
  • Operating income and net earnings growth despite significantly lower base freight rates
  • “The freight recession we have experienced for over three years showed signs of yielding to moderate volumes improvements throughout the current quarter.  We believe that this is partly attributable to increases in our customers supply chain activities and partly due to a continued shrinkage of available capacity,”


U.S. Railroads

Association of American Railroads noted overall freight traffic up 2.2% in Q1; traffic remains well below 2008 levels.

 Burlington Northern Sante Fe LLC (Berskshire Hathaway)

  • Total revenues up 12.8%
  • Operating profit up 48%


  • Total revenues up 11%
  • Operating profit up 24%
  • Overall freight volumes up 5%
  • Increased shipping activity in metals.; coal shipments remained weak

RailAmerica, Inc.

  • March carloads rose 8.7% from a year ago
  • Higher shipments of agricultural products, chemicals, metallic ores and metals


Union Pacific Corporation

  • Total revenues up 16%
  • Operating income up 47%
  • Business volumes up 13% compared to a year ago
  • Double-digit increased shipping activity in automotive, intermodal, chemicals and industrial products.
  • “Feeling better about 2010 growth opportunities.”


Ocean Shipping

A posting on CommodityOnline notes that the Baltic Dry Index, a major recognized indicator of ocean shipping activity is showing weakness because of excess new capacity and higher rates, but is expected to increase 7% this year. The global market is highly dependent on China, the world’s top producer and consumer of iron ore.  In 2009, the total dry bulk fleet expanded by 10%, the strongest growth rate in fleet history, and is expected to grow an additional 12% in 2010.

This concludes our Q1 snapshot series.  Overall, cautious optimism prevails across major levels of global supply chains indicates that some positive momentum has begun, led by the emerging regions and export markets.  But, as we often know, this momentum could change if any economic setback, such as the effects of European sovereign debt crisis derails this momentum.

What about your perspective? Is your organization experiencing this same uptick in momentum?  Does you supply chain organization view the current environment as cautious or optimistic?

 Bob Ferrari