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Recon Market Update - October 13, 2021

Posted by Hank Newman on Oct 13, 2021 1:03:16 PM
Tis the season for... Gift Cards.  
 
A lot of folks have asked about why we have such a "Supply-Chain Disruption," but for those of us close to this industry, we know that has existed for at least a year now and the media is late to the party.
 
I'm not an expert in the international markets, but if I hover at 30,000 feet, my take is that there is simply way too much volume being shoved into a network that is well beyond capacity.  Anyhow, simple Google searches will yield hundreds of articles if you're interested in more detail.Update hand writing with a blue mark on a transparent board
 
So why not add capacity?  We're in a vicious cycle where supplies aren't available to manufacture new capacity and even if they were, people don't seem to be interested in working at the jobs required.  Not only in manufacturing, but in general logistics jobs.  
 
This is going to change, but perhaps not for quite a while yet.  Free candy to people who don't want to work has to stop at some point and, when it does, we will potentially see an economic slowdown.  There are already some signs of retail spending slowing.  That will allow the supply chain to finally catch up, but it will cost us.  Classic catch 22.
 
The lesson?  My personal take on it, and you can certainly disagree, is that you just cannot shut down a world economy and expect normalcy to return for a very, very, very long time.  And throwing an obscene amount of money at the problem just feeds the problem even more and creates new ones.  There is only one way out - and that "out" is going to cause pain, but "No Pain, No Gain" right?
 
Take a look at the chart below - the US retail inventory to sales ratio. Tells the story well.  This goes back to 1992!
 
Retail Inventories to Sales Ratio
 
LTL WEEKLY PERFORMANCE:
LTL Weekly Performance-1
 
CAPACITY AND RATES - TRUCKLOAD:
DAT Capacity Index-1
 

Tags: Freight Class, Accessorials, LTL, Freight Rates, LTL Carrier Cost, Rules Tariff, Logistics, LTL Service, Limited Access, Freight Technology, TMS, Freight Insurance, Freight Claims, Freight News, Freight Update

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