newsworthy

MOST LOGISTICS PROFESSIONALS SEE GOOD TIMES ahead for the U.S. economy in 2016, with 55 percent of the respondents to DC VELOCITY’s latest Outlook Survey expressing optimism about the business climate in the year ahead.

Although not all respondents agreed with that assessment ( 22 percent said they were pessimistic and 23 percent were unsure), the majority seemed ready to put their money where their mouths are, with plans to increase spending on everything from material handling equipment to freight transportation to software.

Every year, DC VELOCITY polls its readers about their views on the U.S. economy, trends in logistics, and their buying plans for the next 12 months. The 2016 survey was based on the responses of 109 subscribers who completed the survey between Oct. 31 and Nov. 5. The group included manufacturers ( 36 percent); distributors ( 27 percent); service providers such as third-party logistics specialists (3PLs), warehousing companies, and carriers ( 21 percent); and retailers ( 6 percent).

Respondents to this year’s survey were bullish on their own companies’ growth prospects as well. About 48 percent of respondents said they expected their company to generate strong revenue growth in 2016, with just 13 percent predicting weak growth and 33 percent expecting flat numbers. The remaining 7 percent said they didn’t know what the future held.

LOOSENING THE PURSE STRINGS

In expectation of strong revenue growth, companies are
loosening their purse strings, with 46 percent of respon-
dents saying they plan to increase spending on logistics-re-
lated products and services in 2016. Another 38 percent
said they expected their spending to hold steady at 2015
levels. Just 9 percent said they planned to cut spending
So where do they plan to spend all that money? We
asked survey takers which mate-
rial handling-related products
and services they plan to buy in
2016. At the top of the list were
racks and shelving ( 37 percent)
and safety products (also at 37
percent). (See Exhibit 1 for the
top 10 items on readers’ shop-
ping lists.)

Transportation budgets will be up in 2016 as well, with 44 percent of respondents saying they expected to increase their spending. (It should be noted that increases in shipping budgets may reflect higher freight rates charged by carriers and may not necessarily be an indicator of greater demand.)

As has been true for the past several years, trucking service headed the respondents’ list of planned transportation purchases, with 77 percent saying they planned to buy less-than-truckload (LTL) service and 67 percent citing plans to purchase truckload transportation. (For the complete list, see Exhibit 2.)

ONGOING PUSH FOR EFFICIENCY

Despite these optimistic spending plans, survey respondents are also careful to keep a close watch on costs. Asked what steps they planned to take in 2016 to reduce distribution costs, respondents said they would renegotiate rates with carriers ( 43 percent), consolidate more shipments into truckloads ( 40 percent), automate more work processes ( 34 percent), take more control over inbound freight p. 16