Institute for Supply Management
Economic activity in the manufacturing sector contracted in August following five consecutive months of expansion, while the overall economy grew for the 87th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
Earlier today Hanjin Shipping Co. filed for court receivership. According to reports from Reuters, the largest South Korean container shipping firm and 7th largest in the world, made the decision to seek court receivership from the Seoul Central District Court on Wednesday. Additionally, the request to the District Court was to also freeze the assets of Hanjin. This decision came after Hanjin discovered that they were losing support from their banks. Hanjin’s debt reportedly stood at approximately $5 billion (USD), and their existing funding was no longer adequate.
On August 2nd the World Health Organization listed the U.S as a country that was reporting the mosquito-born Zika virus. Just 24 hours after this announcement China added the U.S. to their list of Zika-infected countries; which currently totals approximately 40. This listing brings about new requirements for all containers that are being shipped from the U.S. to China.
Reports are coming in from both ocean and rail carriers as well as news sources that the Blue Cut fire, which swept through the Cajon, CA area on Tuesday, is currently impacting both rail and highway logistics routes northeast of Los Angeles at this time.
July’s Cass Freight Index confirmed that overall shipment volumes (and pricing) are persistently weak, with increased levels of volatility as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels. That said, there have been a few areas of growth, mostly related to e-commerce, with lower levels of expansion being experienced in transit modes serving the auto and housing/ construction industries. All of this added up to slightly lower shipment volume in July, the seventeenth straight month of year-over-year decline.
U.S. Department of Transportation
The Freight Transportation Services Index (TSI), which is based on the amount of freight carried by the for-hire transportation industry, rose 0.6 percent in June from May, rising for the third consecutive month, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics’ (BTS). The June 2016 index level (122.3) was 29.1 percent above the April 2009 low during the most recent recession.
Energy Information Administration
In reviewing the Short Term Energy Outlook which was released on August 9th, the below product prices for regular gasoline and diesel pricing were forecast for 2016 and 2017:
August should be the busiest month of the year for import cargo volume at the nation’s major retail container ports now that retailers have stocked up for back-to-school and are getting a head start on holiday season merchandise. That’s according to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates, which said cargo volume for 2016 should end the year with a 1.6 percent increase over last year.
“The U.S. LEI picked up in June, reversing its May decline,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Improvements in initial claims for unemployment insurance, building permits, and financial indicators were the primary drivers. While the LEI continues to point to moderating economic growth in the U.S. through the end of 2016, the expansion still appears resilient enough to weather volatility in financial markets and a moderating outlook in labor markets.”
Total nonfarm payroll employment rose by 255,000 in July, and the unemployment rate was unchanged at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Employment in mining continued to trend down.
