Logistically Minded ATA forecasts strong freight growth through 2023

Supply chains are constantly changing as new rules, technologies, resources and market trends transform operations. Heres a skim of the weeks indexes, technology announcements, expansions and M&As from around the web.

Thefirst round of NAFTA talkswill take place August 16-20 in Washington, D.C.

Walmart is cracking down on suppliers, demandingon-time, in-full deliveries.

Congress istaking aim at the ELD mandate, in the latest wave of opposition.

TheAmerican Trucking Associationson Wednesday released itsATA Freight Transportation Forecast 2017, concluding freightvolumes will rise steadily over the next decade, creatinga trillion dollar industry by 2024.

ATA found freight volumes will onlygrow 2.8% this yearbut grow at a rate of 3.4% until 2023. After that point, the forecast projectsmore modest growthof 2.3% until 2028. The high initial growth is due to a growing U.S. population and strengthening economy. After that point, the forecast projects more modest growth of 2.3% until 2028.

However, the forecast was not all roses. The next 10 years will also seesome shortfalls,as growth will testfreight handling capacityunless executives anticipate a tightened supply. In addition, the trucking industry will see its share of freight tonnage drop to around 67.2% by 2028 as new pipelines steal market share.

Overall, the forecast highlights thesupply chains ties to a rebounding economyand the need for data-based capacity investments.

However,recent statistics suggestindustry executives across the major modes aregenerally scaling back capacityin efforts to become more profitable and inflate rates, as they recover from a major freight recession. Freights winter may be over, but companies must recover losses and reap the benefits of sustained demand before major investments are made once more.

At theFIA Formula Eelectric street races in Brooklyn, NY last week,DHLdiscussedhow more companies inthe transportation industry can achieve sustainabilitywhile simultaneouslystreamlining their supply chainsand producinggreater cost savings.DHL presented severaltechnological innovations it is testingin warehouses worldwide, including theParcelcopter(a delivery drone), theEffiBOT(an AI cart to assist warehouse picking), and smart glasses.

But DHL isnt the only company testing the use ofsmart glasses for business use:GoogleparentAlphabet announcedearlier this week that it istestingsmart glasses for business usewith Boeing, General Electric, and Volkswagen, tapping into a growing trend among many large companies to implement automation, AI, and AR in supply chains.

In other news,MaerskandFedExs TNT Expressare still strugglingwithfallout from the Petya cyberattackat the end of June. Maersk, whoseIT systems have been hobbling alongsince the attack,petitioned the Federal Maritime Commission (FMC)for a filing exemption,which the FMC grantedunder certain conditions.

Walmartannounced plansTuesdaytobuilda new 2.2 million square foote-commerce fulfillment centerinDavenport, Florida, which the company said willcreate 1,500 jobs. The warehouse is part of anexpansionary project in Floridatotaling more than$450 million,according to a press release.The project is part of Walmarts plan tocompetewithAmazon;the company hopes the new warehouse will providefaster and better shipping optionsfor its online customers and will help its growinge-commerce business continue to thrive.

As brick-and-mortar Walmart enlarges its e-commerce presence,Flexport, a previouslyall-online freight-forwardingcompany, willopenitsfirst warehouse at 100,000 square feetinLos Angeles onAug. 1,according to the Wall Street Journal.

In other news,XPO Logisticsplans tooccupyan empty 1.2 million-square-footwarehouseinLebanon, Indiana,after theLebanon City Council unanimously approvedmore than $2 million intax incentives for the project,according to the Indianapolis Business Journal.The Houston Chroniclealso reported that nearly a dozenbig-box distributors are investigating the Houston areaforwarehouse spacelarger than 500,000 square feet, suggesting that big e-commerce companies, freight-forwarders, or retailersmay be trying to break into the Houston market.

The logistics industry is preparing for sustained growth through arenewed focus on acquisitions.

XPO Logistics, which rose to become a top carrier after a series of acquisitions, has made it clear it is looking for new targets this year. But first, the companyneeds to raise more capital. DC Velocity reports the company will, or 10% of its total shares outstanding. Valued at $60.92 per share at press time, the move would raise a significant amount of money to fund a future acquisition.

But justhow expensive is a good deal?Most logistics acquisitions fall in thehundreds-of-millions of dollar range. As an example,J.B. Huntthis morning announcedit would buySpecial Logistics Dedicatedfor $136 million. The company provides pool distribution services at 14 terminals and fulfillment centers, according to the company.

Yet, full purchases are not the only way to grow, as shown byKuehne Holding. The company, which operates well-known global forwarderKuehne + Nagel, recentlyincreased its share in Hapag-Lloydto 17.15% from a previous 14.1%,American Shipper reports.

In short, as the economy improves and following a season of weak rates,logistics companies are taking the opportunityto increase service offerings and market share through a diversified portfolio. Certainly, news of mergers are far from over.

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