16 DC VELOCITY JULY 2017
www.dcvelocity.com
newsworthy
in those modes, which could push up prices, she said.
Warehouse space availability fell 10 percent from the
first quarter of 2016 to the same period in 2017, the report
said. However, spending on warehouse services rose just 1. 8
percent over 2015 levels, about half the pace of its five-year
compounded annual growth rate. A sizable decline in the
weighted average cost of capital drove down the financial
costs of carrying inventory by 7. 7 percent. A third subcategory of inventory-carrying costs that includes obsolescence,
shrinkage, insurance, and handling fell 3. 2 percent.
These muted levels may not last, however. Decisions by
21 states to raise their minimum wage and the need for
e-commerce warehouse operators to invest in expensive
automated material handling systems will have “a significant effect” on warehouse costs, Sean Monahan, an A.T.
Kearney partner and the report’s lead author, said at the
press conference.
DIFFERENT DIRECTIONS
The decline in transportation spending came amid a rise in
energy prices off of multiyear lows. This marks the second
straight year that the two trends moved in opposite directions, reinforcing the notion that energy is no longer the
primary factor driving logistics spending. Rather, consumers have become the main influence, the report said.
The report’s authors said the logistics industry “appears
destined for a prolonged bout of cognitive dissonance”
as it reconciles subpar GDP growth—first-quarter output
rose a scant 1. 2 percent—with rising stock market values,
growing consumer confidence, and ongoing investments in
information technology.
Yet the inherent uncertainty has not slowed the pace
of change, as newcomers challenge established players for
market share and incumbents refresh their business mod-
els, the report said. In one of the report’s most provocative
forecasts, the authors said they expect more large shippers
to follow the lead of Amazon.com Inc. and either establish
or expand their in-house logistics operations. Seattle-based
Amazon, the nation’s largest e-tailer, has added aircraft
and truck trailers. It is also constructing an aircargo hub in
Cincinnati to support its two-day delivery service, Amazon
Prime.
For now, caution rules the day, reflected in declines in the
closely watched inventory-to-sales ratio, which measures
on-hand inventories in comparison with sales levels, the
report said. The authors acknowledged that the declines
could be attributed to more accurate forecasting tools that
minimize the risk of over-ordering. However, a more plausible case can be made that companies unsure about future
demand are holding inventory levels close to actual retail
sales figures instead of stocking up in anticipation of future
growth, the authors said.
—Mark Solomon with Toby Gooley
go figure …
72 million
square feet
The amount of warehouse space under construction
that has been pre-committed, the highest level since
2000.
SOURCE: CBRE GROUP
Chris Youngs and Michael Roe, both account
executives at DMW&H, were named finalists
for MHI’s Outstanding Young Professional
award. In other DMW&H news, the company has been honored with a “Best Places to
Work in New Jersey” award by New Jersey
business journal NJBiz for the fourth consecutive year.
… Global logistics and transportation solutions provider
BDP International has received the 2017 Responsible
Care Partner of the Year award from the American
Chemistry Council. … Reusable packaging company
Orbis Corp. has named its Toronto, Ontario, facility 2016
Plant of the Year for its performance in the areas of
safety, operational performance, quality, and service. …
Westfalia Technologies Inc. was named a Top 10 Food
and Beverage Entrepreneur to Watch in 2017 by Insights
Success magazine. … Yusen Logistics (Americas) Inc. has
received a Service Star from Continental Mills for excel-
lence in intermodal operations in 2016. The award rec-
ognizes Yusen for outstanding customer service, on-time
deliveries, and exceeding monthly performance goals.
… The Manufacturing Institute has recognized Amber
Pratt-Lum, project administrator supervisor of total pro-
cess reliability at The Raymond Corp., with a Women in
Manufacturing STEP (Science, Technology, Engineering,
and Production) Ahead award. … Aisha Eccleston, a sales
and marketing specialist at Florida’s Port of Jacksonville
(Jaxport), has been named to the Jacksonville Business
Journal’s “ 40 under 40” list of the city’s most successful
young business leaders.
accolades
DMW&H
