It may not be reflected in the latest DOE average cost per gallon for diesel, however the local station in Dubuque, IA, just dropped the price of diesel to $3.99 per gallon. The latest DOE posting reflects an average cost per gallon at $4.28 to lead off the month of March. The EIA is reporting U.S. exports of diesel to remain high with 2022 finishing at 44.066 million barrels for the month of December. So what gives? Reports on lower load-to-truck ratios dominate February news as we appear to be reaching a steady state in truck costs.
The overall rate per mile is also following suit with the decrease in the cost of fuel. The Rockfarm market indicators are showing a leveling in the rate per mile after falling 10% from January’s 2023 peak in cost per load. If our long-sought normalization is occurring, it may be a great reprieve to focus on our strategic initiatives and improve our business processes.
Our supply chains continue to evolve and be reshaped due to lessons learned and the changing conditions within the geopolitical and economic spheres in which our businesses operate. Deeper metrics to keep your eye on as we push through Q1 are:
Today, Commercial Edge’s National Industrial Report is reporting national vacancy of industrial space at 4% and the average price per square foot in January reached $7.10, up 6.9% year over year. As shippers take fresh looks at their supply chain network, cost becomes a dominant point of consideration for relocation and network rationalization. The top five areas with the most industrial space under construction are:
Of the top five locations, DFW and PHX make up 58% of the 114 million square feet of space currently under construction from 2022 data.https://www.commercialedge.com/blog/national-industrial-report/Inventory Levels
As mentioned in previous months, global investment in Mexico continues to grow. The latest figures from the 2022 World Investment Report for foreign investment in Mexico reflect an increase of 13% in 2022 according to Santander Trade’s Foreign Investment in Mexico 2022 review. https://santandertrade.com/en/portal/establishoverseas/mexico/foreign-investment
The top five countries currently are the U.S., Canada, Spain, Japan and Germany. These countries make up 75% of the total investment with the U.S. leading the way at close to 40%.
Mexico offers a great deal of opportunity due to being a gateway to the U.S. market. China has been ramping up investment with the latest figures illustrating $606 million in 2020. Since our low mark in April of 2021, the Inventories to Sales Ratio has increased from 1.09 to 1.26 as reported by the St. Louis FED. The inventory-to-sales ratio is a key indicator of economic activity with businesses reporting inventory levels in comparison to their sales. Over the course of the past three decades, the ratio of inventories to sales has decreased in 2019 ranging from 1.42 to 1.49 throughout the year. This is in comparison to 1999 when the ratio held flat between 1.56 and 1.60. Too much inventory increases distribution costs while lowering freight expenses. Conversely, too little inventory illustrates increased demand applying pressure on transportation and equating to higher freight expenses. https://fred.stlouisfed.org/series/RETAILIRSA
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, lower the cost to serve to stand as a cornerstone to our company today.”