Shoppers Don’t Seem Worried About the Fiscal Cliff

Article by John Wagner Jr from Wagner Logistics.
Hear that clock ticking? The mysterious fiscal cliff we’ve been headed towards since the elections approaches for us all.  Discussions to negotiate a compromise in Washington have not been promising.  Interestingly though, despite the concern and a storm of media coverage, it does not appear that people are too worried. The impending trouble doesn’t seem to be making much difference in consumer behavior, people are spending and consumer confidence remains high.
According to IBM’s Smarter Commerce report, online sales are great as e-commerce sales grew 17 percent on Thanksgiving and 21 percent on Black Friday.  More than $1 Billion was spent on Black Friday, making that a record sales day for e-Commerce. eBay and Amazon have to be extremely pleased, as are department stores, where online sales jumped 17 percent.
On the brick and mortar side, retail store sales were no slouch either.  The National Retail Federation reports 53.5 percent of shoppers walked into a department store over the Thanksgiving period although sales did not meet expectations for stores open at least one year. 
Costco (+6 percent), Limited/Victoria’s Secret (+5 percent), Gap (+3 percent) and Stein Mart (+7 percent) were the big retail winners.  Surprisingly, there were some big chains that didn’t fare so well.  These include Macy’s (-0.7 percent) Nordstrom (-1.1 percent  ), Kohl’s (-5.6 percent), and Target (-1 percent), preforming below expectations.  Walmart, JC Penney’s, and Saks do not report.
Retailers report a 1.6 percent overall increase, only about half of what was expected.  Most blame Hurricane Sandy for keeping shopping lower than expected.
Mobile devices continued to provide value as shopping tools as 25 percent of all online sales originated from a smart phone or tablet.
What Does It All Mean?
These shopping numbers are worth watching since consumer spending makes up 70 percent of our economy.
The Conference Board said leading economic indicators rose 0.2 percent in November, which is good news for transportation providers.  The LEI forecasts business activity for the next three to six months and is a good short-term indicator of the future.
Sign of the Times
As a logistics services provider, I watch the availability of industrial real estate. It is a large fixed cost for our clients and the market has been favorable to deal making through the recession as little, if any, speculative construction has occurred. That’s beginning to change with 47.1 million square feet being built in 86 markets for an increase of 3 percent over 2011 according to CoStar’s Third Quarter Industrial Review and Outlook.
The market only absorbed 17.4 million square feet in the third quarter, so it would seem that there are those betting on a stronger economy. Nationally the vacancy rate stands at 9.2 percent and that available space makes it hard for landlords to raise lease rates.
The strongest absorption is found in Chicago Ill., Columbus Ohio, Dallas/Ft. Worth Tex., Edison NJ, and Nashville Tenn.. Demand has weakened in the Los Angeles/Inland Empire, New York, Lehigh Valley Penn., and Miami Fla. markets. 
Overall, there were 108 markets with rising rents and 102 markets with falling rents. The average asked net rent currently is $4.66 per square foot.
Better Check on the Canary
In transportation news, the American Trucking Associations’ seasonally adjusted For-Hire Truck Tonnage Index fell 3.8 percent in October after falling 0.4 percent in September. If trucking is the “canary in the coal mine,” then one could assume the overall economy is slowing. Much of the blame for October’s drop is being placed on the aftermath of Hurricane Sandy, however, this is the third straight month we’ve seen falling numbers.
UPS announced a 4.9 percent rate hike on its 2013 ground rates while bumping its USA originating international shipment pricing by 4.5 percent. Their second-day air and third-day freight rates between the USA, Canada, and Puerto Rico will go up 4.9 percent.
A Puzzling Strike
The International Longshore and Warehouse Union Local 63 and Office Clerical Unitwalked off the job at the Port of Los Angeles, shutting down all nine container terminals.  The clerks have been working for two years without a contract.
What puzzles me is that the clerical workers have an average pay of about $90K a year and are paid for 12 months while working eight and a half months. That seems like a pretty good deal. And isn’t there less paperwork now with the digital revolution?
The strike has now spread to the Port of Long Beach, closing three of the six terminals.  The unions are, in effect, giving the air cargo companies an early Christmas present as shippers will have to air freight in any needed product with their cargo tied up at the ports.
At Wagner
Our clients’ holiday inventories are out the doors, so we’re experiencing a bit of a slow down in activity. E-commerce remains active and our implementation team is on-site at our new Arkansas location setting up systems and writing procedures.
Our transportation group remains busy despite slowing national trends. We continue to act as a resource for companies who are having a hard time sourcing trucks at an affordable price.
I wish all of you a joyous holiday season.
John Wagner Jr

Ähnliche Beiträge

Schreibe einen Kommentar