Taking a look back at 2015

As the last few days fall off the calendar and we get ready to see 2015 sail off into the sunset, all I can think is “wow, that went fast.”

It is hard to summarize all the key supply chain-, transportation, and logistics-related events of 2015 in a few hundred words, but we will give it a shot. I am sure I will end up missing a few things so please bear with me.

Before we dig into some of the top stories, it bears noting that things in our sectors are as fluid and dynamic as one could imagine, given the rapid pace of change we are witnessing on a near-daily basis to be sure. Some of those things (which may be cited below) include: the expected strong economic growth year we thought we were in store for that never really happened; the ongoing bottoming out of fuel prices, and the rapid pace of change e-commerce purchases have had on supply chain operations.

So without further adieu, here are some of the top stories and themes of 2015.

-West Coast port labor: The months-long dispute over contractual terms between the Pacific Maritime Association and the International Longshore Warehouse Union, stretched back to July 2014, when their existing contract expired. Among the issues that led to a tense negotiating environment between the pair were differences on several issues, including wages, pensions, health-care benefits, arbitration process rules and operations. These differences led to nine months of labor unrest and uncertainty that impacted freight flows and port operations in the form of terminal congestion and related supply chain challenges until PMA and ILWU reached their tentative agreement in February and subsequently formally ratifying a new five-year deal in May. During this time, emotions on each side ran high, and when prospects of a new deal were at its bleakest point, the sides turned to the U.S. Federal Mediation and Conciliation Service in hopes of helping the sides find a way to come to an agreement. And when the parties initially reached a deal in late February, industry estimates suggested it would take about two months to clear out the cargo backlog at West Coast ports. At certain points, the two largest West Coast ports, the Port of Los Angeles and the Port of Long Beach had roughly 30 container ships waiting for a berth between the two ports.

Increased M&A activity: UPS buying Coyote Logistics, XPO Logistics buying Con-way, Echo Global Logistics buying Command, CMA CGM set to buy Neptune Orient Lines (NOL). Those are just a few of the high-level deals that received a ton of attention in logistics circles this year. And that does not include Canadian Pacific badly wanting to acquire Norfolk Southern, and FedEx closing in on acquiring TNT Express. These deals are made for different reasons, whether it be acquiring a company specializing in an area the buyer wants to enter, expanding geographic reach, and increasing service offerings, among others. While the reasons remain somewhat similar regardless of the year, the level of deal making activity in 2015 was largely viewed as unprecedented by industry stakeholders and does not show any real signs of slowing down, at least at the moment.

-A new multi-year surface transportation bill: No, that is not a typo. The House and Senate got down to business and presented President Obama with a 5-year, $305 bill transportation bill, entitled Fixing America’s Surface Transportation (FAST) Act, into law, which was promptly signed into law. DOT Secretary Anthony Foxx put the significance of getting a new bill done into clear perspective: “After hundreds of Congressional meetings, two bus tours, visits to 43 states, and so much uncertainty – and 36 short term extensions – it has been a long and bumpy ride to a long-term transportation bill.  It’s not perfect, and there is still more left to do, but it reflects a bipartisan compromise I always knew was possible.” The bill has myriad facets directly related to shippers and supply chain stakeholders, including: facilitating commerce and the movement of goods by refocusing existing funding for a National Highway Freight Program and a Nationally Significant Freight and Highway Projects Program; promoting private investment in the surface transportation system; and requiring changes to the Compliance, Safety, and Accountability (CSA) program to improve transparency in the FMCSA’s oversight activity, among others.

-How low can fuel go?: On what seemed like a weekly basis, the average price per gallon of diesel gasoline continued to head in one direction—down. With global oil production at strong levels, higher levels of inventory have led to an oversupply, which, in turn continues to drive down prices. This week saw the lowest average weekly price for diesel since May 2009 at $2.223 per gallon.

E-commerce supply chain: It goes without saying that more people are buying goods online, which had led to increased attention to e-commerce supply chain and logistics operations in many ways, shapes, and forms, whether it be: increased regional distribution development; last-mile and same-day delivery operations; making omnichannel a key priority for retailers, especially brick and mortar ones; and online orders being shipped to retail stores for pick up with retailers’ objective being that consumers will purchase additional items once they are in the store, among many other ongoing initiatives.  

Increasing international intermodal activity: In recent years, domestic intermodal has been the growth engine of intermodal volumes, but that might be changing as 2015 saw better than good international, or ISO, volumes gain steam. Much of that was due in part to the carryover effect of the West Coast port labor situation, that left shipments delayed or held up for long periods before reaching their final destination. The West Coast port labor issues during the first quarter created a freight backlog that subsequently led to higher than usual second quarter volumes and in the second and third quarters,  international containers again paced quarterly growth, up 4.0 percent, according to the Intermodal Association of North America. IANA explained that international growth has been “very volatile” in 2015, with the port disruptions being a factor for that earlier this year, as well as variations in the third quarter, too, with July up 3.3 percent, August up 6.6 percent, and September up 1.6 percent. The report added that this was likely due to shippers moving freight earlier in the year than usual as evidenced by the strength of August’s volumes and September’s sequential decrease.

Changes in the truckload market: Compared to a year ago, the truckload market saw significantly looser capacity and lower spot market rates and demand. In recent years especially, harsh winter weather served as a driver for higher rates and tighter capacity, but that is not nearly as prevalent now. But at the same time that is not the sole reason for those declines, with things like sluggish GDP growth, high retail inventories, and lower than expected demand serving as the real culprits.

To be sure, this list could be much longer, but Newsroom Notes endeavored to provide you with some of the big stories and themes of 2015, a year that saw more than its fair share of notable events and themes to say the least.

Have a Merry Christmas and a Happy New Year! Newsroom Notes will see you in 2016.