According to Douglas Nix, Chairman of CFA’s Transportation and Logistics Industry Group, there is a very strong demand for good quality logistics & transport companies of all sizes. Significant bid premiums are being submitted by all categories of strategic buyers in every auction run by CFA.
On a global scale, the shipping of dry bulk containers – across all modes – continues to climb and is projected to continue on an upward trajectory. The growth is expected to be driven by freight rates, ship availability, ship utilization, oil market fundamentals, exchange rates and commodity prices and production.
A recent industry survey reported that the top priorities of North American logistics leaders for their 2017 transportation operations were:
- Reduce overall transportation costs
- Improve route planning accuracy
- Improve the quality and timeliness of management information/reporting
While there are several reasons driving these priorities, we believe the key ones are:
- The continued shortage of qualified drivers. Many trucking companies are still reporting 100% annual turnover rates in their driver pool. The impact of the Federal Motor Carrier Safety Administration’s electronic logging devices requirement is expected to worsen this shortage as it comes on stream in December 2017.
- Continued weakness in freight rates resulting from overcapacity in intermodal, water and road markets.
- The tightening of supply chains combined with the growing demand from shippers for transparency and real time, accurate freight status information.
- Total US manufacturers’ shipments, an indicator of the volume of goods shipped by truck, fell 1.5% year-to-date in December 2016 compared to the same period in 2015.
- Total US revenue for general freight trucking fell 1.4% in the second quarter of 2016 compared to the previous year.
Posted by Doug Nix.