Narrator [00:00:04]:
Welcome to Supply Chain Now. The voice of global supply chain. Supply Chain Now focuses on the best in the business for our worldwide audience. The people, the technologies, the best practices and today’s critical issues, the challenges and opportunities. Stay tuned to hear from those making global business happen right here on Supply Chain Now.
Scott W. Luton [00:00:32]:
Hey, good afternoon, good evening, good morning. All in crazy order here today. Scott Luton, Kim Reuter with you live on Supply Chain Now. Welcome to today’s show. You ever have that morning, Kim, where you don’t know if it’s morning or afternoon or evening or what time it is always. Well, great to have you here today and we have an excellent show teed up, don’t we, Kim?
Kim Reuter [00:00:56]:
We do. Super excited about this one.
Scott W. Luton [00:00:58]:
We are as well. Count me in into not, not just that excited category, that super excited category. Because on this episode we’re going to be sharing key insights from one of the leading transportation industry resources out there, the US Bank freight payment index for Q 120 24. So, folks, many of our listeners and viewers out there, you know our approach here. We got two wonderful business leaders. One is going to bring perspective that’s focused heavily on what the data is showing out there right across the country. And the other perspective is going to focus heavily in terms of what is actually taking place. Boots on ground, finger on the pulse out there, moving mountains across the country from a supply chain and logistics and freight standpoint.
Scott W. Luton [00:01:41]:
So Kim, one last thing. I want to get your thoughts here, because the power of data is very real, but for folks that don’t know all three of you, maybe, I don’t know, maybe four. US Bank is one of the leading financial institutions involved in powering the transportation industry forward. And of course, each quarter, the US Bank freight Payment index offers actionable and compelling insights based on the data processed through US Banks. Get this. You ready, Kim? $42.8 billion worth of transactions it handled just last year.
Kim Reuter [00:02:13]:
That’s amazing.
Scott W. Luton [00:02:14]:
All of that data is one of the biggest reasons why US Bank is in a unique position. Great resource for this type of information that business leaders leverage out there. So Kim, the power of data and all the insights we can glean from it here, huh?
Kim Reuter [00:02:28]:
Yeah. This is amazing. Being able to get like a single shot of what’s going on in the market is sometimes can be really hard to find, you know, especially if you’re working with specific clients or you’re working for one company, you may only know what that company is doing. So this is great information.
Scott W. Luton [00:02:43]:
Completely agree with you. And hey, with all that said, kim, let’s bring in our featured guest today, starting with the one and only Bobby Holland, director freight business analytics at US Bank and long time friend of the show and quite the dynamo out there, Tevon Taylor, senior vice president with Pegasus Logistics Group. Hey. Hey, Bobby, how you doing? Great to see you back with us here today. I really always enjoy your perspective, as do our audience. And you’re joined by Tevon Taylor, the one and only. Tevon, how you doing?
Tevon Taylor [00:03:16]:
Great. Good to be on the show.
Scott W. Luton [00:03:18]:
Great to have you back. It’s been way too long. Kim, we have got a rock and roll conversation teed up here today. Can we book a few extra hours? Kim, are you free?
Kim Reuter [00:03:26]:
I get into data. It’s nonstop. Like, I love getting deep into data. This is gonna be a great show.
Scott W. Luton [00:03:31]:
Oh, it is. It is. So let’s do this. We got a lot to get to here today, but I want to give you all a chance. Bobby, Tevon and Kim, let’s start with a little fun warm up question because it is gorgeous out there here in the metro Atlanta, here in Georgia, I think the mornings are like 60 degrees and brisk. It’s just light and. And just beautiful. Farmers market is back.
Scott W. Luton [00:03:51]:
Anyone knows? Me and my family, we love our Saturday mornings at the farmers market. So with all that as a backdrop, Bobby, what is one of your favorite things to do this time of year?
Bobby Holland [00:04:01]:
One of my favorite things to do is to eat outside. Whether it’s on our patio or going to restaurants, they start pulling up the outdoor seating. I just think that’s the coolest thing. Have a cup of coffee sitting on a patio.
Scott W. Luton [00:04:13]:
Love it. One quick follow up. Do you ever do any of the cooking or do you always bring it in?
Bobby Holland [00:04:18]:
Do I ever do any of the cooking?
Scott W. Luton [00:04:20]:
Yeah. Any grilling or anything?
Bobby Holland [00:04:22]:
My wife’s the heavy lifter there.
Scott W. Luton [00:04:25]:
On.
Tevon Taylor [00:04:25]:
The grill into the kitchen.
Bobby Holland [00:04:26]:
She’s the heavy lifter. She’s a better cook.
Scott W. Luton [00:04:28]:
That’s right. I leave it to the experts, much like you. All right. So, Tevon, that was a beautiful. I love eating outside, much like Bobby, and just soaking up this gorgeous weather this time of year. What’s one of your favorite things, Tevon?
Tevon Taylor [00:04:41]:
Mine’s going to be pretty boring. I like to do yard work, so turn my brain off. Go take care of the yard. You know, this time of year it’s raining a bunch, so you got to mow and clean the pool and kill the snakes and all that good stuff, so. And I’m sorry if that offends somebody, but if there’s a snake in my yard, I got to get it out of my yard. So I like doing yard work. And, you know, to this day, I still mow my own yard. Unfortunately, my yard’s getting a little bigger than I like to mow, but, okay, that’s, that’s my fun in the sun.
Scott W. Luton [00:05:10]:
Okay.
Kim Reuter [00:05:11]:
Bigger mower. You just need a bigger mower. That’s all.
Tevon Taylor [00:05:14]:
It costs money. I’m pretty frugal.
Scott W. Luton [00:05:16]:
Well, Kim, uh, that was not the answer I was expecting from one. Tevon Taylor, yard work. But, you know, I kind of get it. You’re able to kind of turn off the email, turn off the text, shut things down, and just kind of have some space while you get some exercise. Kim, what’s one of your favorite things to do this time of year?
Kim Reuter [00:05:33]:
It is beaching season here for me, which is just going and hanging out on the beach, which is my favorite thing to do. And we do yard work all weekend long, just like Tevon. And then the reward on Sunday is to hop in the boat and run about 20 miles down the potomac and hang out on the beach, which I could do for days without problem. But my husband Billy gets a little antsy after about 4 hours.
Scott W. Luton [00:05:58]:
So 4 hours, that’s the maximum.
Tevon Taylor [00:06:01]:
Okay.
Kim Reuter [00:06:01]:
He’s like, we gotta go.
Scott W. Luton [00:06:02]:
All right. We gotta see pictures of y’all shooting down the potomac. We’ll save that for next time. Good stuff. Good stuff. All right, so we got a lot to get into here today. Back to the topic at hand. Right.
Scott W. Luton [00:06:13]:
The domestic freight market. Global supply chain. Insights and data and expertise for all the movers and shakers out there. So, Bobby, I want to start with this. We love having you here every quarter for those insights and that perspective powered by all this data that you have at your fingertips. I want to start with a simple sneak peek, just a couple of key takeaways of what we’re going to be talking about here today as we dive into the first quarter. 2024 freight payment index. What are those couple of things that you want to tease out there to our audience? Well, we’re going to look at some.
Bobby Holland [00:06:45]:
Of the biggest factors that have been weighing on freight, spend and shipment volumes. And we’re also going to see which of the five regions had the smallest spend declines and why that happened.
Scott W. Luton [00:06:55]:
Wonderful. Wonderful. So stay tuned for the good stuff as we dive into it here today. But for starting, I think, when it comes to how folks use it and how folks can sign up, let’s dive into some of those questions. Kim, where are we going next with Bobby and Tevon?
Kim Reuter [00:07:14]:
Well, before we get into all these great details in this data because I know they’re coming. I had a sneak peek. They’re amazing. I am especially excited about the regional, and I have thoughts. But before we get into that, let’s get to know our guest a little bit. Tevon, great to have you here today. Tell us a little bit about Pegasus logistics group.
Tevon Taylor [00:07:29]:
Great to be on. Thank you, Kim.
Scott W. Luton [00:07:31]:
So I tell you what, I’ve been.
Tevon Taylor [00:07:34]:
On the show multiple times. This is my first time with being at Pegasus Logistics Group, which is an amazing freight forwarder based out of Capella, Texas. I’m the senior vice president of sales. We’re about a 30 year old three Pl founded by a guy named Ken Beam. He founded on a simple principle of taking care of people and taking care of customers. So it’s operated by him, it’s owned by him, and we’re pretty proud to be privately held. Really what that gives us is flexibility, speed, a culture. That’s amazing.
Tevon Taylor [00:08:04]:
And we play in the freight forwarding space with end to end solutions for a lot of high tech automotive, medical equipment, Fortune 100 companies. Our roots were in white glove domestic moves, but we’ve evolved over the last 30 years to do FTL, LTL, international air import export, as well as contract logistics, which is my recent background. But, you know, I’ve got over 28 years of experience in transportation as well.
Kim Reuter [00:08:30]:
Yeah. So you’ve been doing the easy stuff like white glove medical. I mean, that’s. That’s just like shipping toilet paper. I’m glad that we have you here. No, that’s all. That’s very specialty stuff. I’m joking, of course.
Kim Reuter [00:08:41]:
If you’re in a supply chain, you know that that is all the super technical things.
Scott W. Luton [00:08:45]:
Sure. And someone’s also not a fan of snakes behind the scenes, by the way, Tevon, I’m not sure who this is, but I think we’ll find plenty of folks, Kim, where we’re going next.
Kim Reuter [00:08:54]:
So, Bobby, tell us about you. We know you’re with US Bank. We’ve seen you a couple of times on the show. What are you going to bring us today?
Bobby Holland [00:09:01]:
Well, I’m Bobby Holland with the US Bank. I am the director of freight business analytics in the freight space under corporate payment systems. We’re talking about the US Bank freight Payment index, which is chain based index. It compares each quarter to its previous quarter as well as year over year in a same store sales approach. We compare each quarter, make sure they’re the same size, and then we compare the delta of the velocity and changes for the and that results in our index. We compare that for shipment volumes and spend. This is a quarterly publication. Our special perspective, if you will, is the regional perspective.
Bobby Holland [00:09:48]:
It kind of helps to show and make sense of what we’re seeing at the national level. We break it down at the regional level. And this is based on processing almost 43 billion in paid invoices. And it’s another set of data points that our customers can use in their decision making.
Scott W. Luton [00:10:06]:
Love that. And folks, you can go to freight dot US Bank.com. Go ahead and do that. Download your copy so you can spill coffee on it, makeup notes, you know, dog ear, all that stuff as we walk through this. And you’ll get it each quarter. All right, so Kim and Tevon and Bobby Tevon, I want to bring you back in here because I want to, you know, from your perspective that 28 years, how do you have 28 years of experience? You look like you might have, you know, I need some of your jeans.
Tevon Taylor [00:10:33]:
You got see my comb over? Look at this here.
Scott W. Luton [00:10:37]:
I told you all.
Tevon Taylor [00:10:39]:
Well, you know, I started loading trucks. I mean that it was a horrible experience. I loaded trucks in high school. I don’t think I was really that great at it. I miss sorted and probably damaged more packages than I did a good job on. But it’s weird. I graduated from college and thought I’d get out of this industry and I stayed in, I stayed in the parcel world and I’ve done everything from it to sales to engineering. But once you like the smell of diesel fuel, you get used to it and you love it.
Scott W. Luton [00:11:05]:
Well, and we’re all glad you stuck with it for those 28 years. So how do you know when it comes to the index here? Tevon, how do business leaders like yourself use great resources just like this?
Tevon Taylor [00:11:17]:
You know, these indices really give you the market intelligence that helps you optimize your freight management, controlling your cost and really overall making informed decisions. So it’s not the end all, be all, but it’s kind of another metric and something to help you gauge where you are. It is looking in the rearview mirror a bit, but there’s huge benefits, especially the one we’re going to speak about today. 42 point. Was it eight or $9 billion that we’re looking at?
Scott W. Luton [00:11:45]:
Man? 42.842.
Tevon Taylor [00:11:50]:
So that kind of helps you see, you benchmark yourself and see how you’re performing relative to the market. So it’s a crucial key piece of how you analyze and plan the future.
Scott W. Luton [00:12:00]:
That’s right. And Kim, you’ve already referenced the power of data and all that you can glean from it, but you’re not a newcomer to the freight payment index from our friends at US Bank, you’ve seen it, you studied it, and there’s plenty of value to be derived from it, right?
Kim Reuter [00:12:14]:
Yeah. It’s looking at things across, like I’ve mentioned before, being able to look across markets, across industries is huge. That can be really complicated information to get explicitly to have it as accessible as US Banking is making it. And how I use this data and how I see other people use it in the, in the market is really trying to do some predictive analysis, like what is happening. How do we need to plan for the next couple of quarters and doing that year over year benchmarking, especially coming off of, you know, the pandemic where who knows what was going on, like everything was really crazy. Companies are really trying to stabilize and get some consistency. And this helps.
Scott W. Luton [00:12:52]:
Yes, absolutely. And Kim, I can’t just wait. I feel like you’re going to be springing a special guest that’s going to come in and sit at that chair just over your left shoulder. So we’ll stay tuned. Who knows who, our esteemed special surprise.
Kim Reuter [00:13:05]:
Guest that sits there. She’s here.
Scott W. Luton [00:13:08]:
All right. So Bobby, we’re going to get into the good stuff here. We got seven key takeaways. You’re the star of the show. We’re going to be delivering your key insights here. Seven of them from, again, the Q 120 24 freight payment index, where I think one of the big headlines here is for the fifth straight quarter, we had quarter over quarter and year over year declines in shipments and spend. And that’s where I want to start at the national shipments level. So tell us your key takeaway from national shipments perspective.
Bobby Holland [00:13:40]:
There were a lot of impacts in Q one that affected shipments. This quarter saw slow retail freight due to continuous drawdowns on retail inventories. If you’re using the inventory you already have because you overstocked it, spent the last several months overstocking, sure enough to cover for issues, then you use that inventory. It’s the wise thing to burn down that inventory. But the unfortunate side effect is you don’t require as much inbound truck freight. We see that that impacted the shipment index. We also saw that because of those drawdowns, that replenishments that would normally occur, start to occur towards the end of the quarter, they were much lower due to those high inventories. And this resulted in the national shipments index being down 7.8% from last quarter and 21.6% down over last year.
Bobby Holland [00:14:34]:
So again, market’s been tough.
Scott W. Luton [00:14:35]:
Yep. Well said, Bob. A great place to start with the first key takeaway, Tevon, national shipments wise, anything. What stood out to you there and what are you seeing?
Tevon Taylor [00:14:44]:
Well, first I want to give a little kudos to one of my teammates. I’m fortunate enough to have a data scientist on staff here at Pegasus to help me slice and dice the data. So quick shout out to Nick Vasily, who really made the data easier for me to understand because I am a Texas A and M Aggie, so we’re not very smart. But that’s okay.
Scott W. Luton [00:15:04]:
We may just lost that demographic, Tevon, we just lost that demographic. Hey, shout out to Nick. Great work, Nick.
Tevon Taylor [00:15:09]:
Nick does a great job for us. So year over year we noticed a decline in volume not as significant as the index. We have a benefit here that a lot of our volumes, high tech and healthcare. So that’s fairly resilient when you see recessionary type pressure, and I use the r word, I apologize. But we’re seeing in the first couple.
Scott W. Luton [00:15:30]:
Months definitely a dip.
Tevon Taylor [00:15:32]:
March is kind of like a transition point. So it looks like there might be, we might be at the bottom coming back the other way, hopefully.
Scott W. Luton [00:15:41]:
Well said. Kim, what would you add from again, his first takeaway?
Kim Reuter [00:15:45]:
Yeah, retail sales, everything. It’s just inventory. All this residual inventory coming in after the pandemic and people receiving containers that were from four and five years ago. And so there’s just, there’s inventory. There’s inventory access. And Bobby’s right, we’re seeing it burn down.
Scott W. Luton [00:16:03]:
Yep. One quick factoid. Y’all know, anyone listens or watches us, you know, I love my factoids. Wallethub says, you know, we’re talking about retail spending, right, and retail inventory. All that consumers are going to add project to add $120 billion in credit card debt this year, according to Wallethub, which may break an all time record. How about that? We’ll see how that factors into everything in the months ahead. All right, so Bobby, that was national shipments. Key takeaway number one.
Scott W. Luton [00:16:33]:
Key takeaway number two. We’re going to be talking about the national spin. Tell us more.
Kim Reuter [00:16:38]:
Okay.
Bobby Holland [00:16:38]:
Well, in national spin we have seen that rates appear to have had strong downward pressure this quarter. This could be attributed to capacity struggles with smaller carriers leaving the market as well as lower contract rates. However, there was a spike, or appeared to be a spike in the second half of the quarter in the spot market. This to us indicates the difficulties with managing capacity that carriers have as they attempt to rightsize their fleets. Whether that being adding a little bit of capacity or getting rid of excess capacity to remain profitable. But they’re also adapting to various impacts to the market. From recent events. We know that in Q one, we saw issues in the Middle east that are affecting and causing carriers to reroute shipments.
Bobby Holland [00:17:23]:
And then anytime you slow down imports, you’re going to impact truck freight. We also saw the bridge destruction in Baltimore. And that changes, obviously, the dynamics of some of the ports, which, again, is going to affect shipments as well. So the national spend index was down almost 17% from Q 420 23, and it was down 27.9% year over year.
Scott W. Luton [00:17:47]:
Okay. Man. Bobby, that second key takeaway was compelling. Tevon, your thoughts? National spend, we’re seeing the same thing.
Tevon Taylor [00:17:56]:
Spend year over year is down. And Bobby hit it on the head. It’s a capacity issue. So typically you have this dynamic. If you ship less weight, you’re going to pay more. But there’s so much capacity on the market right now, less weight is actually charging less as well. So we’re seeing that. I will say the business from a spend standpoint, it’s kind of stabilized.
Tevon Taylor [00:18:18]:
Once that extra capacity flushes out of the networks, you’ll see it kind of the spin should come up as well as what you’re seeing on the shipment side. So hopefully, towards the second half of this year, we’ll see spin that increases per pound.
Scott W. Luton [00:18:32]:
I love it. Tevon, you are fearless in making your predictions. Looking ahead, we’re going to dive further into that soon because we all know Bobby, there will be no prognostications on Bobby Holland’s side. Right. Kim, tell us with the national spin based on what Bobby and Tevon said and what you’re seeing out in the market. Thoughts?
Kim Reuter [00:18:52]:
Yeah. Supply and demand. We have too much supply and trucking. So it’s driving down the prices and it is leveling out. I am not as hopeful as Tevon is that we’re going to see rates go up in the back half. I think we can hope for them to stabilize, but I think we’re going to continue to see a weak market into the end of the year.
Scott W. Luton [00:19:11]:
Yes. Okay. Good stuff there. A nice blend of optimism and pessimism.
Tevon Taylor [00:19:16]:
That just made me sad.
Scott W. Luton [00:19:20]:
All right, well, now, folks, thank you, Kim, Tevon, and Bobby. Now, folks, one of my favorite parts of this quarterly conversation here at Supply Chain Now is we go region by region, right? Because there’s, of course, national trends. And then we get deeper into some of the unique trends that are impacting each of these five regions. And we’re going to start out west, where I think, Bobby, for the third time since a pandemic in 2020, the region posts declines both in quarterly and yearly shipments. And. Spin your thoughts, Bobby?
Bobby Holland [00:19:51]:
Well, again, this region has suffered from overcapacity due to reduced imports and continued movement of shipment to other ports. Of course, this has also been exacerbated by, again, the ocean issues and having to reroute. And so perhaps freight that would normally go to the west is being shipped elsewhere because of the traffic.
Scott W. Luton [00:20:10]:
Right.
Bobby Holland [00:20:11]:
We also have lower fuel prices in the west, which have also reduced spend. The Department of Energy says that diesel prices were down 10% from last year or 10% from last quarter. Sorry. And 7.2% from last year. So when you tie all this together, we see that the shipments index was down 10.6% from last quarter and 23% from last year. And in spend it was down 19.9% from last quarter and over 30% from last year. So again, West coast is getting hammered by a variety of influences.
Scott W. Luton [00:20:43]:
Man, I’m glad you mentioned the fuel. I went and filled up my car the other day, and goodness gracious, I had to fill out a 40 page financing contract. Tevon. But when you think about the west and some of those dynamics, trends and analysis that Bob had just shared, what are you seeing out west? Tevon well, the last time I traveled.
Tevon Taylor [00:21:00]:
Out west, I got a rental car. Then I saw the price of gas and I decided to turn the rental car back in and use Uber or Chevrolet maybe. Yeah, it’s crazy. So shipment count and spend for the region year to year has been decreasing. Right. So we’re similar to the national side. It’s, again, ours is less than the index is showing, but similar trend. But believe it or not, in the west, shipments actually did increase in q one of 2024 spend is down with the extra capacity.
Tevon Taylor [00:21:31]:
So the pricing’s down, shipments are up. We didn’t take it in the chin so bad in the west coast. So I guess everybody’s turning their ubers in or turning their rental cars in, man.
Scott W. Luton [00:21:40]:
Maybe so. There’s a time where you couldn’t find one, right? Remember those days not too long ago? Kim out west, what are you seeing?
Kim Reuter [00:21:47]:
You know, I’m not surprised. The west is kind of, as we see here, has been declining for a few years now. I think there’s a variety of reasons. La Long beach have become really hard to work with. They have lots of regulations, so some truckers can’t even pull in and out of there. And so we’re seeing a shift, which we will get to. I don’t want to take anybody, sunder, but we are seeing a shift. And then the other thing I think that’s happening in the market is we’re seeing smaller ports are stepping up.
Kim Reuter [00:22:09]:
Savannah is a great example. Baltimore was trying, and they got a little hiccup, but I’ve been in this industry for slightly longer than Tevon, maybe. And, you know, when I started, like, you had four or five big ports and that’s where you worked out of. But we’re seeing an increase in smaller ports that can offer really great services.
Scott W. Luton [00:22:28]:
Yes, yes. Options, options, options. Good stuff there, Kim. All right, so, Bobby, we’ve covered national shipments, national spend, the west, which is always an interesting one. Let’s talk about the southwest key takeaway there, Bobby.
Bobby Holland [00:22:42]:
Well, this region was the only region that posted higher shipment volumes compared to Q 420 23. The Southwest shipment index was up 8.9% over last quarter. Now, we got to keep this measured. While it’s an improvement, it represents a recovery of less than half of the 18% drop in Q 420 23. Now, there are a variety of reasons for this weakness. Some include soft factory output, which contributed to this region, weakness in this region, according to the Federal Reserve. But there’s also softer retail sales. But the thing that shorted up, though, was strong truck freight from Mexico.
Bobby Holland [00:23:21]:
Inbound trucks are up 4.2% in January and February over last year. So again, this is, we can see, as you measure the national impacts, you can see how they impact the regions differently.
Scott W. Luton [00:23:33]:
Yes. Well said, Bobby Tevon, the southwest, what you seeing?
Tevon Taylor [00:23:38]:
I love the southwest. So year over year growth in the region since 2022. So shipments, you know, we’re getting across the border. We do a lot of business through El Paso. So the large portion of our business transits across through El Paso and then northbound. As you know, Mexico surpassed China and Canada as the top us trading partner. So that’s only going to further increase in the future with volume. We’re also fortunate to be based in Texas, so we’re not only seeing an uptick across the border, but outbound from DFW is really strong.
Tevon Taylor [00:24:10]:
So Dallas Fort Worth, that’s where our main headquarters, our hub is. I’m sitting in the office today in Dallas Fort Worth. There’s a rise in manufacturing and distribution out of Texas, so very favorable in the numbers and the growth in this region.
Scott W. Luton [00:24:24]:
Well said. The pride of Capelle, Texas, is where the company was founded. Is that right?
Tevon Taylor [00:24:29]:
Go cowboys. Yes, sir.
Scott W. Luton [00:24:31]:
All right, so, Kim, the southwest, a lot of interesting activity there. Your thoughts?
Kim Reuter [00:24:37]:
Yeah. So some of this movement or this decline we see from the west is actually freight moving down into Mexico. It’s easier to import through Mexico and t and e it back into the United States in some cases, especially when there’s backups in California.
Scott W. Luton [00:24:50]:
Right.
Kim Reuter [00:24:51]:
The other thing I think that’s contributing to the southwest piece is this importing, I don’t want to say evading, but working around the 301 duties. Right. So a lot of companies are importing into Mexico. They’re doing some kidding, some additional manufacturing, something to shift the hts and the classification for that product to avoid paying those extra duties from China. And that’s a big part of it.
Scott W. Luton [00:25:14]:
We’re getting creative. We’re getting creative trying to save and gain efficiencies. Well said, Kim. Now, Bobby, as you were talking about the southwest there, you touched on manufacturing, and I want to add this in. So, you know, we talked a lot about ISM’s manufacturing index, the PMI. Right. Well, manufacturing cordoned. Their data contracted in January and February.
Scott W. Luton [00:25:35]:
It expanded slightly in March, but in numbers just released, I think today it contracted again in April. And you know, there’s a lot of folks we’re waiting for this manufacturing resurgence. Right. Given a lot of other factors we’re watching, but it’s not quite here yet. Bobby, let’s shift over and talk about the midwest.
Bobby Holland [00:25:56]:
This region had its fourth straight quarterly decline. The shipments index was down 9.5% from last quarter, again in line with the themes. This is due in part to software manufacturing but also slowing auto sales. The Federal Reserve said that this region had flat to falling manufacturing activity. Now you look at auto sales, which generates some of that manufacturing activity. They’ve been down due to finance interest rates, but also consumer confidence. People, do they want to take on an 80 month car loan as car prices continue to rise?
Scott W. Luton [00:26:32]:
Do they? Maybe not, right?
Bobby Holland [00:26:34]:
But on the upside, there’s increased inbound truck freight from Canada through Michigan and this was up almost 5% from last year. This resulted in the fact that the Midwest region spend index was down over 15% from last quarter, almost 26% from last year. Lower fuel prices and lower rates helped drive down spin in this quarter. So a lot of things going on.
Scott W. Luton [00:26:57]:
In this region, ton ton. And I’ll just say for the Luton household, going back to Bobby, you’re talking about do folks want to take out a new big old car loan? No new notes. Is my campaign for the Luton house through at least this year? We’ll see how that works. Tevon we were just talking about the midwest. Your thoughts?
Tevon Taylor [00:27:14]:
Yeah. Our findings are consistent with the US Bank data. Manufacturing actually showed an increase Q three of 2023 from Q two, both shipments and volume. But the last two quarters, shipment count and volume has gone down. Automotive is fairly flat over the last four quarters. So we’re seeing the same type of data.
Scott W. Luton [00:27:34]:
Yeah, kim?
Kim Reuter [00:27:35]:
Yeah, seeing the same thing in the market. We continue to kind of play around with steel and aluminum imports and what we’re going to allow and not allow, and that greatly impacts our manufacturing in the US. I don’t think we always want to talk about that, but our days of mining ore have passed. But it’s got to come from somewhere.
Scott W. Luton [00:27:55]:
Yes, yes. Speaking of automotive sales. So the US auto sales overall grew 5.1% in first quarter. However, EV sales have, as maybe you all know, come crashing down. I think they grew 3.3% only in the first quarter, and that was double digit growth at one point last year. But infrastructure challenges and the, what I’ll call the emerging narrative, as folks are, it’s not quite as easy to plug and drive and do what you want and not find a recharge station or whatever. So we’ll see. We’re gonna keep our finger on the pulse of that.
Scott W. Luton [00:28:35]:
All right, so we’re heading to the northeast, Bobby, for our next key takeaway. Your thoughts?
Bobby Holland [00:28:42]:
Well, the northeast region was, continues to be a difficult model market for truck freight. The shipments index was down 17.5% from Q four. This region is an interesting region. It’s a small region, but population wise, it bats up with the bigger regions. This region is affected by bad weather, but also, and if you’ve listened to the cast for a while, northeast, very retail sensitive and soft retail sales have been a big factor in making this a difficult market. Again, one of the other potential impacts might be from falling population that has been occurring since COVID in the northeast region. So again, very difficult region. Like I said, shipments were down 17.5% and spend was down 23.8%.
Bobby Holland [00:29:33]:
So again, very difficult up here.
Scott W. Luton [00:29:36]:
Yes, it is. Yes, it is. Tevon, the northeast, what you seeing?
Tevon Taylor [00:29:40]:
So, yeah, this region experienced decline in both shipments and spin, but the decline’s full outside of what the index had. So we weren’t double digit as heavy. So we agree with the findings, just not as significant. I think it’s important to say here that a lot of people are asking about container traffic coming into the port of Baltimore, if that had any impact on business. And the findings, it’s a horrible accident. With the key bridge. But right now that container traffic’s just rerouting to New Jersey, New York, and Virginia. So that was insignificant in the numbers I had.
Tevon Taylor [00:30:13]:
Somebody asked me in the office that I said, you know, we’re not seeing that same level. You have so many ports not too far from there, so they’re just being rerouted. And I think they’re going to open the port of Baltimore at the end of this month.
Scott W. Luton [00:30:24]:
That’s right. Port diversification certainly been growing and growing and growing. Back to Kim’s earlier point. And by the way, can we just give Kim and Bobby and Tevon, we give Nick another shout out. Nick has got you ready to go. You’re rocking and rolling. Tevon here today, that data scientist knows what he’s going to on the show.
Tevon Taylor [00:30:44]:
Because he’s smarter than I am for sure.
Scott W. Luton [00:30:47]:
All right, so we’re northeast, Ken. Northeast, what you seeing?
Kim Reuter [00:30:50]:
I agree with what everyone else had to say about it. It’s a very fickle market. No, I don’t think Baltimore had a huge impact in this. It only happened three, four weeks ago. So the impact was relatively recent. And Baltimore is not as big of a player as they may have been one time in the industry, predominantly Aurora and auto port. So I wouldn’t attribute that to the decrease. But to Bobby’s point, the northeast has always been very fickle.
Scott W. Luton [00:31:15]:
Yes, yes. Those population shifts that Bobby also pointed to are fascinating to look at. I want to say we may have talked about this last quarter, Bobby. I think it’s, South Carolina and Florida are the fastest growing states down here in the southeast, which is a great segue as we get into the last key takeaway, the southeastern region, US southeast. What’s going on there, Bobby?
Bobby Holland [00:31:42]:
Well, the Southeast shipments index fell only 9% from last quarter, and it was the smallest decline of the regions this quarter. This region’s impacts are lower freight volumes according to the Federal Reserve. But then softer manufacturing was also a theme for this region. And then the spend index was down 13% last quarter as well. So again, not as severe as some of the other regions have been. Again, big tourist industry maybe shaken a little bit by consumer confidence, but all in all, fairly strong considering.
Scott W. Luton [00:32:17]:
Okay. All right, so southeast, Tevon, what you seeing?
Tevon Taylor [00:32:22]:
Yeah, I think this is a glimmer of hope, a small decline on the index. But for us, we’re seeing growth in the region. And you have to understand the index covers all sorts of freight payments, spend. When it comes to Pegasus logistics Group, we’re doing a lot of infrastructure, white glove shipments of consequences, what we call it, it has to be there perfectly on time with the technician or whoever’s doing the install. So think about, it’s not the product on the shelf, it’s the shelfing. Right. It’s not the money in the bank, it’s the ATM. So the things that are in place that build out retail and build out communities and regions, that’s our move.
Tevon Taylor [00:33:04]:
So if we’re seeing growth, hopefully the growth in that region, that small decline will pop up to be a small incline in the future.
Scott W. Luton [00:33:12]:
Yes. Well said. Tevon. Kim, the southeast, what are you seeing and what did you hear there from Bobby and Tevon?
Kim Reuter [00:33:19]:
Agree with everything that you had to say. I think Savannah has really been pushing hard to get to move inventory into our move shipments. They did a lot of work in getting that port ready for bigger vessels. Charleston has also really been trying to push hard to get more bigger container ships than we’ve been working with in the past. So I think that definitely helps. And then of course, we have a fair amount of manufacturing in the southeast, automotive manufacturing in the southeast. And those are different manufacturers than we see. They’re not domestic manufacturers.
Kim Reuter [00:33:47]:
They’re for manufacturers that we have in the southeast. So seeing a slightly different behavior there in the auto manufacturing piece as well.
Scott W. Luton [00:33:53]:
Yes. Speaking of the intersection of EV manufacturing and automotive Rivian, it’ll be interesting to see Rivian had a, they broke ground on a mega plant here in Georgia. I want to say 5000 jobs related to that. And they put a pause on it. They’ve recently reconfirmed their commitment. That’ll be interesting because that, that will have a major, major impact if it comes to fruition, for sure. Okay, so this comes up next. Those are seven key takeaways, folks.
Scott W. Luton [00:34:21]:
So let us know your key takeaways based on your digestion of the first quarter 2024 US Bank freight payment index. Here’s the next question. And again, Bobby Holland. Banks don’t like predictions and prognostication. So we can’t get Bobby’s predictions here, but we can put Tevon and Kim on, on the spot here. So what might we see in the freight market in the months to come, Tevon?
Tevon Taylor [00:34:47]:
Well, you’re going to see my prediction. So if I had my guess here, us manufacturing is going to rebound. So I see they’ve been in a glut for 16 months now. So I see that actually instead of contracting, I see an improvement in us manufacturing. And that’s an excellent sign with the rise of truckload demand. So the capacity that’s lingering. So hopefully that will keep rates lower. But it’s a shipper’s market right now.
Tevon Taylor [00:35:18]:
I think that’ll right size. We’re at the end of the bullwhip, right. So you think about the pandemic, the chaos that bullwhip hopefully will smooth out. But there’ll be another one. We’re having chaos. You know, we’re seeing it in the Middle east slightly in Baltimore. That wasn’t too bad. But we’re seeing a transition in the market.
Tevon Taylor [00:35:36]:
So things are improving in the freight market starting in March. That’s usually when it happens. May things really liven up. And I have high hopes in the second half of the year. And while there’s still economic uncertainty, I really do see improvement. And that just means we get to race towards the end of the year and have this awesome, challenging presidential election. And we can only hope that the children on both sides of the aisle can play nice this year.
Scott W. Luton [00:36:00]:
Tevon, from your lips, the good lord’s ears, all the folks out in the community, because, yeah, we need a lot more. Nice. But really quick kidding aside, the manufacturing renaissance resurgence is going to come. It’s just a win, I believe. And secondly, I was looking at the National association for Manufacturers. I think they published a lot of data here in the last couple of weeks, and they’re clamoring here in the states, manufacturing leaders, for the R and D tax breaks to come back. That would certainly help. But, Kim, your fearless prediction of where we might see the freight markets or anything else.
Kim Reuter [00:36:33]:
Yeah. So I’m not going to be as optimistic as Tevon. I think we’ve got a little bit longer on this resurgence in manufacturing in the country. I think it’s going to take us closer to 18 months to even see any benefit from that. And I think we’re just going to hold where we are. I don’t see a big, I don’t see a big jump. I don’t think we’re going to have our huge increases. We see around Q four that normally start in August, September timeframe and preparation for the big holidays.
Kim Reuter [00:37:01]:
I think it’s going to hold. We may see a slight increase, but I think the market’s oversaturated right now.
Scott W. Luton [00:37:07]:
Yes. And you know what? We got through this whole conversation, we didn’t mention interest rates. I think there’s a federal law that we. What? That makes us mention interest rates. Right. It’s very interesting. You know, a lot of experts saw maybe as many as six this year, and now we’re in an environment where there may not be one. So we’ll see.
Scott W. Luton [00:37:25]:
Of course, that’ll have a big impact on a variety of things when that happens. All right, so also, Bobby, the folks want to connect with you, have a chat, talk, maybe Montreal or getting outside and enjoying, enjoying good food or all things freight. How can folks connect with you, Bobby?
Bobby Holland [00:37:45]:
My LinkedIn information is up to date. Feel free to reach out.
Scott W. Luton [00:37:49]:
It’s just that easy. Wonderful. All right, so, Tevon, really have enjoyed you and Bobby and Kim’s perspective here today. How can folks track you down? I think you’re going to be making a visit to the Atlanta area, I hope, soon so we can catch up. But how can folks connect with you and all the cool things that Pegasus logistics group is up to?
Tevon Taylor [00:38:08]:
Yeah, LinkedIn is a good way to get a hold of me, but also ttaylor@pegasuslogistics.com. So send him an email. Let me know how I can help.
Scott W. Luton [00:38:17]:
Oh, man. He went there, man. You’re gonna get. I can’t wait to see some of the most creative emails that you’re gonna be getting very, very soon, Tevon. And, hey, I was about to share a story that my brother did to me a while back, subscribing me to all kind of stuff as he got my email address, but I’ll save that for later. Kim, you get a different question. Of course we want to know how folks can connect with you, but Bobby and Tevon has shared a lot of great stuff here today. If you had to think of one key takeaway from this conversation here today that folks got to keep front and center, what would that be, Kim?
Kim Reuter [00:38:52]:
One, you need to be downloading this information. Like, if you’re in the supply chain information or a supply chain industry, I don’t care what level you are, this is excellent information for you to have at the tip of your fingers.
Scott W. Luton [00:39:04]:
Go get it.
Kim Reuter [00:39:05]:
The second thing, my takeaway from this is I think the southwest is someplace we need to keep an eye on. There’s a lot of activity on the border, a lot of activity with Mexico, just creative importing to get better pricing for the consumer. And so I think there’s a lot happening down there and people are not paying attention.
Scott W. Luton [00:39:22]:
That’s right. And if all of that isn’t enough and compelling enough, old Tevon Taylor’s down there in the southwest and you better keep an eye.
Kim Reuter [00:39:29]:
Better watch that guy.
Scott W. Luton [00:39:31]:
Yeah, watch that guy.
Tevon Taylor [00:39:32]:
And the Cowboys are winning the Super bowl this year.
Scott W. Luton [00:39:34]:
Oh, that’s a bold prediction.
Kim Reuter [00:39:36]:
Bold prediction.
Scott W. Luton [00:39:38]:
Good stuff. Well, hey, man, great show here today. Really have enjoyed our conversation been very efficient as well. I want to say a big, big thanks to the one only, Bobby Holland, director freight business analytics at US Bank. Bobby, thanks so much for being here.
Bobby Holland [00:39:55]:
Thank you.
Scott W. Luton [00:39:56]:
You bet. And we’ll see you next quarter. And Tevon Taylor, senior vice president with Pegasus Logistics Group, they are on the move. Tevon, great to have you here today.
Tevon Taylor [00:40:06]:
Good to be on.
Scott W. Luton [00:40:08]:
Absolutely. Kim, always a pleasure and enjoyed a couple of recent live stream conversations and all that you bring to the table. Great stuff here today. Kim, enjoy this show.
Bobby Holland [00:40:19]:
Thank you.
Scott W. Luton [00:40:19]:
You bet. All right, folks, but now the onus is on you, right? Take something, take some insights, some expertise that Bobby, Tevon, Kim shared here today. Take the US Bank freight payment index. Sign up to that. Just take action. Do something. Deeds, not words. Your teams are ready to find a better, more successful way of doing business this year and the markets are demanding it.
Scott W. Luton [00:40:41]:
So with all that said, on behalf of the entire team here at Supply Chain Now, Scott Luton, challenging you to do good, to give forward and to be the change. We’ll see you next time. Right back here. Supply Chain Now. Thanks for buying.
Narrator [00:40:54]:
Thanks for being a part of our Supply Chain Now community. Check out all of our programming at supplychainnow.com and make sure you subscribe to Supply Chain Now anywhere you listen to podcasts and follow us on Facebook, LinkedIn, Twitter and Instagram. See you next time on Supply Chain Now.
