In the August edition of DSC Insights, the strong economy continues to impact transportation, labor and real estate with tight capacity.
In Real Estate, only 4.9% of US industrial space is vacant, one of the lowest rates on record despite the 125 million square feet of new construction completed. According to Colliers Industrial Market report, rents are at a record $6.01 per square foot per year for warehouse / distribution space because of tightening markets and new, higher quality Class A space.
In Transportation, diesel is poised to become a negative bias in late 2019, adding to the softness in realized pricing power for truckers and intermodal shippers. As an example, the proprietary Cass Truckload Linehaul Index (which measures linehaul rates and does not include fuel) has fallen flat (0.0%) on a YoY basis and is predicted to go negative in coming months, according to The Cass Freight Index report.
The News Section includes stories reporting that the trade war uncertainty could drain $585B from the global GDP, with China’s economy expected to be hit hardest and the US economy expected to face a slowdown of roughly 0.6%; XPO is still working to make up for the loss of its largest customer, widely believed to be Amazon; and, Target’s same-day fulfillment is growing at twice the rate of last year with same-day fulfillment accounting for 1.5% of Target’s sales growth and the average productivity for store-fulfilled sales at $300 per square foot.
If that’s too long, here’s a shorter paragraph using only the headlines from the three stories in the News Section:
The News Section includes stories reporting that the trade war uncertainty could drain $585B from the global GDP, XPO is still working to make up for the loss of its largest customer, widely believed to be Amazon, and Target’s same-day fulfillment is growing at twice the rate of last year.
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*No guarantee is presented or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein.”
