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Distribution Industry in a State of Disruption

Aug. 18, 2016
Challenges to the industry include marine terminal closures, driver shortages, new ocean carrier alliances and Panama Canal issues. 

The goods distribution industry is in a state of controlled disruption, according to a new study by Cushman & Wakefield. Challenges and shifts, such as marine terminal closures, driver shortages, new ocean carrier alliances, Panama Canal issues and others have created an increasingly complex environment.

In their mid-year update on North American ports and transportation published by “Ship – Shore – To Your Front Door”  the company explores the sector’s ongoing transition and the resulting opportunities.

The company outlined some trends and predictions:

  • New truck orders are at a four-year low. Class 8 truck orders decreased 34% year over year in June, to lowest monthly total since July 2012.
  • Surface freight shipments in May were the highest all year. But still 5.8% lower than 2015 and 7% lower than levels in May 2014.
  • High inventories also depressed demand, further extending replenishment cycles • Lower fuel surcharges squeeze revenue at top 25 LTLs.
  • Regional LTL carriers are building last mile/cross-dock terminals, expanding into new territories and winning market share (Schneider acquired Watkins & Shepard in June 2016).
  • Many expect a strong rebound in the OTR freight economy, in the second half of 2016.
  • E-commerce last-mile deliveries of furniture and appliances are the fastest-growing segment. These over-dimensional products bypass parcel networks.
  • Walmart and Home Depot experiment with Uber, Lyft and Deliv to serve last mile from store LTL and will still handle the line haul and over time will sync with last-mile startups for on- demand delivery service.

 Times are changing,” explained Cushman & Wakefield’s Kevin Turner, SIOR, "Stakeholders are charting a new way forward with automation, supply chain transparency, new port labor contracts, technological advances, congressional support and stabilizing fuel costs. “Occupiers and landlords are positioning with logistics partners to increase profits and delivery metrics, alleviating supply chain bottlenecks with scalable real estate solutions.”

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