Trends that might impact freight in 2014

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Some interesting trends are taking shape as we begin yet another New Year, with an uptick in global manufacturing a decidedly nice one to kick things off with.

Then there’s the noted improvement in the consumer confidence captured by the Conference Board’s consumer confidence index. After decreasing last November to 72, that index rebounded in December to 78.1.

“Consumer confidence rebounded in December and is now close to pre-government shutdown levels, when it [the index] stood at 80.2 back in September,” noted Lynn Franco (seen at right), director of economic indicators for the Conference Board.

“Sentiment regarding current conditions increased to a 5 ½ year high, with consumers attributing the improvement to more favorable economic and labor market conditions,” she added. “Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately more pessimistic about their earnings prospects. Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began."

In particular, consumer outlook for the labor market is considerably more optimistic as those anticipating more jobs in the months ahead increased sharply to 17.1% in December from 13.1% in November, while those anticipating fewer jobs decreased to 19% from 21.4% for the same two months, respectively.

That’s not just random wishing on the part of consumers, either. Though CareerBuilder's annual forecast indicated that 24% of the companies it surveyed report that they will add full-time permanent employees in 2014, down two percentage points from 2013, nearly one in four employers (23%) said they will hire at a slower rate or will not expand headcount at all until the debt ceiling is resolved in the first quarter – meaning that if those issues are resolved, the pace of hiring could pick up sharply, said Matt Ferguson, CareerBuilder’s CEO.

"The general sentiment shared by employers whom CareerBuilder talks to every day is that there will be a better job market in 2014," Ferguson (seen at left) explained. "What we saw in our survey was reluctance from some employers to commit to adding jobs until the outcomes of debt negotiations and other issues affecting economic expansion are clearer. As these stories play out and employers find their footing in the New Year, there is greater potential for the average monthly job creation in 2014 to exceed that of 2013."

Increased hiring, of course, means companies are expanding – thus pushing up freight demand. And rising consumer confidence may translate into more spending, thus again helping boost freight demand.

Circling back to the manufacturing sector, IDC Manufacturing made some interesting predictions for 2014 that could also beef up the need for freight services, with Robert Parker, IDC’s group vice president and general manager noting that the manufacturing industry “is at the cusp of a new wave of gains that will dramatically restructure value chains to be closer to demand regardless of direct labor costs.”

He explained that trend is being driven by an "intelligent economy" where customers are more informed, talent is at a premium, and the time to react to changes is compressed.

“In 2014, companies should put together a set of business initiatives across critical line of business areas such as supply chain, factory operations, product management, and customer experience/aftermarket services,” Parker added – and making the supply chain such a prominent part of IDC’s “critical line” list should highlights the importance of the role freight services might get to play this year.

Here are some of IDC’s other predictions for the manufacturing sector in 2014:

  • Manufacturers will begin to build more “3D” value chains, meaning that they will relay on closer management of external and internal data to create a more finely detailed “three dimensional” picture of their business.
  • Operational, information, and consumer technology converge to reshape approaches to technology management.
  • Operational resiliency will be the focus of supply chain strategies in 2014 and beyond.
  • Supply chain technology investment will involve modernizing existing systems, while also trying new approaches.
  • The modernization of the underlying business-to-business commerce backbone becomes an investment priority for information technology (IT).
  • Product lifecycle management (PLM) strategies become increasingly global, multidisciplinary, innovation-based, and customer-focused.
  • PLM initiatives will focus on value realization.
  • "Servitization optimization" will be core to future profitable revenue growth and leading manufacturers will make the necessary investments to enable these strategies.
  • On their way towards the factory of the future, 2014 will set the stage for a new manufacturing renaissance.
  • Plant floor IT investments will continue to become a higher share of the overall technology investment portfolio.

Note that four of IDC’s top 10 predictions deal directly with the freight industry (two being supply chain initiatives and two PLM strategies) and that could translate into a welcome increase in business activity for truckers. Let’s see if all that indeed comes to pass.

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