• Holiday shopping-- and trucking-- has changed

    The manufacturing sector grew in December, indicating that the sector has some momentum left going into this year. Retailers were generally reporting lukewarm sales growth during the holiday shopping season
    Jan. 4, 2007
    3 min read
    Image

    The manufacturing sector grew in December, indicating that the sector has some momentum left going into this year. Retailers were generally reporting lukewarm sales growth during the holiday shopping season.

    Although the economy is generally trending to decelerating growth, there is one sector in trucking that has seen a boost over the holidays: package delivery companies.

    “The continual increase of shopping on the Internet has changed seasonal freight patterns,” Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC) told FleetOwner. “When you purchase goods on the Internet that you normally would’ve purchased at retail outlets, that dampens shipments from distribution centers to retail outlets. It’s a stimulus to the UPS’s and FedEx’s who do home delivery.”

    Additionally, the expansion of e-commerce has grown the ranks of last-minute shoppers, observed a FedEx executive during a conference call to investors for its most recent quarter.

    “I think one of the things we are seeing in spending a lot of time with our peak season shippers is actually the peak is a bit delayed relative to what we have been seeing historically,” said Mike Glenn, president of FedEx Services. “As more business moves to the Internet, consumers tend to procrastinate a bit more. So on the Express side of the business, we tend to see a bit weaker peak and then much stronger as we move toward Christmas, not as significant as it relates to the other segments.”

    “The second thing that’s impacting seasonality is gift cards,” said CMVC’s Chris Brady. “That means products are being purchased after Christmas, rather than before. You’re not getting that surge in freight before the holidays. You don’t see that falloff afterward either because goods are still moving from the distribution center to the retail outlets. These changes in consumer purchasing are impacting freight patterns.”

    The extent to which gift cards has impacted freight patterns may be apparent as carriers disclose year-over-year January freight volumes, Brady noted.

    The Institute for Supply Management reported its manufacturing index was 51.4 in December, with any score higher than 50 indicating growth. In November, the manufacturing sector contracted as shown by a score of 49.5.

    “I think manufacturing is going through its rough patch,” Brady said. “General inventories were a bit high in the fourth quarter. The inventory-to-sales ratio has been trending upward a bit and that would affect the manufacturing side and were seeing the slowdown in manufacturing due to that.”

    However, there is little evidence to suggest that consumer spending will decline. This lends credence to the prediction that manufacturing will rebound slightly as retailers work through their excess inventories.

    To comment on this article, write to Terrence Nguyen at [email protected]

    About the Author

    Terrence Nguyen

    Voice your opinion!

    To join the conversation, and become an exclusive member of FleetOwner, create an account today!

    Sign up for our free eNewsletters

    Latest from News

    Yevheniia Ryzhova | Dreamstime.com
    Why Clear Communication is Key to Retaining Happy, Motivated Drivers
    Drivers want to be seen. Supported. Heard. And they can tell when it’s genuine and when it’s just for show.
    J.B. Poindexter & Co.
    DCBM brand ambulances
    Parent company of work truck upfitting giants Reading Truck and Morgan Olson expands into the emergency vehicle market with the addition of one of North America’s largest ambulance...
    Oxy
    Occidental Chemical, known as OxyChem, produces indispensable chemicals internationally. This small private fleet covers about 2.5 million miles annually, delivering products to customers across the U.S.
    Members Only
    Leadership and training turned this chemical bulk hauler into one of the safest fleets in the U.S. Intensive training and experience pay off for Oxy's Occidental Chemical transportation...