JUNE 2011 LOGISTICS MARKET SNAPSHOT

Prepared: June 15, 2011

Fueling Logistics Competiveness

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MULTIMODAL:

Dow Jones Transportation Index Dow Jones Transportation index was down 8.2% during May. (Stock performance of twenty large, well-known U.S. companies within the transportation industry, average of May 10th thru June 10th)

NASDAQ Transportation Index NASDAQ Transportation Index was down 8.9% in May. (Averaged share weights of NASDAQ-listed companies classified as transportation companies, average of May 10th thru June 10th)

DOT Freight Transportation Index The USDOT's freight transportation services index decreased 1.0% in April 2011 from the previous month but is up 3.7% from a year earlier.

Cass Freight Index The shipments index remained fairly steady in May, dipping 0.2%, but was up 9.6% year over year. The May expenditures index was up 1.7% for the month and up 29.9% year over year. (Based upon transportation dollars and shipments of Cass clients comprised of over 400 shipping companies)

Multimodal Business News: • The U.S. Department of Agriculture is forecasting $135.5 billion in agriculture exports this year due to

increased demand in the global marketplace. This year’s forecast is 17% higher than in 2010, and nearly doubles the value of agriculture exports in the past five years.

• U.S. steel mill imports grew 2.9% in April over March, and were up 21.9% in the first four months of the

year over the same period a year ago. Steel imports for the year to date through April totaled nearly 9 million tons, potentially a signal of greater demand in the U.S. manufacturing sector.

• Japan recorded a trade deficit of $5.54 billion in April, the first April deficit in 31 years. Japanese exports

of automobiles and parts plunged 67% from the same month a year ago as suppliers struggled to repair damaged supply chains.

TRUCKING:

Over-the-Road Trucked Shipments Over-the-Road Trucked Shipments fell 0.9% in May. Overall trucked shipments remained flat on a year-over-year basis. (From the Ceridian-UCLA Pulse of Commerce Index which is based on real-time fuel consumption data for over the road trucking)

Trucking Volume The ATA’s seasonally adjusted cargo index fell 0.7% in April after increasing 1.9% in March.

Truckload Freight The spot market for truckload freight in May fell 10% from the previous month, but was 10% higher year-over-year. (Source: TransCore Freight Index)

Freight Rate Index The freight rate index cost-per-mile decreased to $2.48 in June 2011, down from $2.50 in May 2011. (This Cost Per Mile (CPM) indicator is comprised of 8 main and 65 total cost and cost influencing components, it considers completely, every cost related to freight transport by land)

Diesel Prices

U.S. average diesel prices fell for the fifth consecutive week last week, to $3.94 per gallon. Last week’s average diesel price was about 1¢ lower than the previous week, and was 99¢ higher than the same week last year. Average diesel price in lower Atlantic states was $3.891 per gallon. (Source: U.S. DOE) (Reflects the costs and profits of the entire production and distribution chain.)

Truck Orders Orders for heavy-duty Class 8 trucks in North America totaled 24,063 units in May 2011, a 37% decrease from the record high of 37,922 units reported in April. However, May truck orders were still 85% higher year-over-year. (Source: FTR Associates)

NAFTA Trade

Surface transport-related trade between the U.S. and its NAFTA partners, Canada and Mexico, was up 15.6% in March compared to the same month in 2010, reaching $80.8 billion. NAFTA freight value in March was the highest on record since data collection began in 1994, beating the previous record set in April 2008 by 8.8%. March was also the 16th consecutive month of year-over-year increases. (Source: US DOT)

Trucking Employment The trucking industry added 100 jobs in May following an increase of 4,500 jobs in April. The trucking workforce increased for the eighth consecutive month in May. (Source: U.S. DOL)

Trucking Business News: • The Federal Motor Carrier Safety Administration will delay the release of its controversial new truck driver

hours-of-service rules until October. The hours-of-service rules will be released on or before October 28th while the FMCSA reviews comments on four driver fatigue studies.

• U.S. freight tonnage is expected to grow 24% by 2022, with trucking hauling 70% of all freight by that year. Intermodal rail transportation is predicted to be the fastest growing mode, increasing 6.6% per year through 2016, and increasing 5.5% per year through 2022. Intermodal revenue will nearly triple, rising to $30.7 billion in 2022. (Source: American Trucking Association)

JUNE 2011 LOGISTICS MARKET SNAPSHOT

Prepared: June 15, 2011 Fueling Logistics Competiveness

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AIR FREIGHT:

Air Cargo Traffic

Global air freight in April up 5.4% from one year ago and was up 1.4% over the previous month. North American air freight increased 7.9% in April year-over-year. (Source: IATA) (Global air freight covers international scheduled air traffic; domestic traffic is not included. North American traffic includes only domestic freight traffic.)

Atlanta Air Cargo Traffic In March, Hartsfield-Jackson Atlanta International Airport transported 56,222 metric tons of cargo, an 8.7% increase over February and a 0.3% increase year-over-year. (Source: HJIA)

Air Freight Price Index

In April, average international air cargo prices rose 5.7% from March, the highest point in six months. Average air freight rates were down 16% year-over-year, the sixth straight year-over-year decline. (Source: JOC) (The Drewry Air Freight Price Index is based on the average of rates ($US per kg) for cargoes of 100+kg to 1,000+kg cargoes from Shanghai to London, Moscow, Prague, New York, and Los Angeles.)

Jet Fuel Prices

As of June 3, 2011, the global average jet fuel price was $131.3 per barrel; down 5.2% from the previous month, and 49.9% higher year-over-year. (Source: IATA) (The weekly index and price data shows the global average price paid at the refinery for aviation jet fuel)

Air Freight Business News:

• The International Air Transport Association downgraded its 2011 airline profit forecast to $4 billion. The revised estimate is 54% less compared with the $8.6 billion profit forecast in March and a 78% drop compared with the $18 billion net profit recorded in 2010. The 2011 industry fuel bill is expected to rise by $10 billion to $176 billion. Fuel alone is now estimated to comprise 30% of airline costs, more than double the 13% of 2001.

• UPS boosted its cargo capacity 50% on flights to Central and South America last week, saying it is

responding to solid growth in Latin American demand. (Source: JOC)

Archives of these monthly snapshots are posted to: snapshot.georgialogistics.org

For more information about the Logistics Market Snapshot or the many other resources and activities of the Georgia Center of Innovation for Logistics please contact:

Page Siplon, Executive Director – psiplon@georgia.org – 912.966.7867

RAIL:

U.S. Freight Rail Traffic Railroad bulk carload freight in May 2011 remained steady since April 2011. May’s freight traffic increased 0.5% over May 2010, and was up 16.4% over May 2009. (Source: AAR) (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units)

U.S. Intermodal Rail Traffic Intermodal rail traffic in May 2011 was 7.5% higher than May 2010 and 0.8% higher than April 2011 totals. Intermodal loadings have experienced year-over-year gains for 18 straight months. (Source: AAR) (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units)

Railroad Fuel Price Index The index of average railroad fuel prices in April was 658.9, up 5.6% over the previous month, and up 42% over the previous year. (Source: AAR) (Average monthly price for gallons purchased by freight railroads; Includes federal excise taxes, transportation, and handling expenses)

Freight Cars in Storage The number of freight cars in storage has increased to 279,083 (18.4% of the fleet) on June 1, up 2,855 cars from a month earlier. (Source: AAR) (A freight car is "in storage" if it has had a loaded revenue move since 2005, but not in the past 60 days. Decrease here = more demand

Class 1 Railroad Employment

) Railroad employment was up 935 employees to 156,777 employees in April 2011 from the previous month. (Source: U.S. STB, AAR)

Railroad Business News:

• Eastern U.S. railroads CSX Transportation and Norfolk Southern each began working on separate intermodal construction projects earlier this month. CSX is reinvesting more than $100 million to expand the existing intermodal terminal in Worcester, Massachusetts. Meanwhile, Norfolk Southern is spending nearly $200 million to construct intermodal hubs near Birmingham, Alabama and Memphis, Tennessee.

• The CSXT HDF/mileage based fuel surcharge of $0.52 per mile, which became effective June 1, 2011,

will remain unchanged at $0.52 per mile for shipments having a bill of lading dated on or after July 1, 2011.

JUNE 2011 LOGISTICS MARKET SNAPSHOT

Prepared: June 15, 2011 Fueling Logistics Competiveness

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OCEAN FREIGHT:

Import Volumes In April, U.S. ports imported more than $219 billion of cargo. April U.S. imports have decreased 0.4% in terms of value over the previous month and grew 15.9% year-over-year. (Source: US Census)

Export Volumes In April, U.S. ports exported more than $175.5 billion of cargo, the highest on record. April U.S. exports have increased 1.3% in terms of value over the previous month and grew 18.8% year-over-year. (Source: US Census)

Import & Export Price Index U.S. import prices rose 0.2% in May, following increases of 2.1% in April and 3% in March. The price index for U.S. exports rose 0.2% in May after rising 0.9% the previous month.

Retail Freight Volumes The National Retail Federation is projecting an increase of 4% for containerized shipments in April. March, the latest month for which data is available, saw a 0.3% increase in retail traffic and was the 16th consecutive month of improvement.

Container Rates

The June 6, 2011 average spot market rate was $1,775 per FEU. The latest container spot market rate is $157 lower than the previous week, and $418 (19.1%) lower than the rate for the same week last year. (Source: JOC & Drewry Inc.) (Based on Drewry Shipping Consultants' research and derived from shipping rates from Hong Kong to Los Angeles. The rate is based on a full 40-foot container load or FEU, excluding terminal-handling charges in Hong Kong.)

Shanghai Containerized Freight Index

The June 3rd SCFI rate was $1,054.60 per FEU; down 1.5% from the week before, and 29.8% lower year-over-year. The spot rate for shipments to the U.S. East Coast was $3122 per FEU, down 1.4% from the previous week. (Source: JOC) (The Shanghai Containerized Freight Index is a weekly reported average export spot rate from Shanghai for 15 different trade lanes.)

Ocean Bulk Freight Rates The Baltic Dry Index increased 14.71% in May, ending with a cost of $1,480. The BDI has decreased 4.8% for the first half of June. (Source: The Baltic Exchange) (The Baltic Dry Index is an index that tracks and averages worldwide international shipping prices of various dry bulk cargoes.)

Bunker Fuel Prices Average bunker fuel price was down 4.9% or $42/MT to $817.18/MT in May 2011. By mid-June, bunker fuel prices were up 2.9% to $840.89/MT. (Source: Bunker Index) (The Bunker Index is the average global bunker fuel price from individual ports; measure in $US per MT or megaton)

Port of Savannah In April 2011, container traffic was up 10% over the previous month and up 9.2% year-over-year, totaling 261,734 TEUs. (Source: GPA)

Port of Brunswick In March 2011, the Port of Brunswick posted its best month ever for automobile and machinery units, moving 42,740 units. Brunswick’s Ro/Ro volume in March was 36% higher year-over-year. (Source: GPA)

Ocean Freight Business News: • Wal-Mart remained the top importer of containerized ocean cargo, increasing its imports 1.8% in 2010.

The world’s largest retailer imported 696,000 TEUs last year. The company ranked 39th on the list of top exporters in 2010, shipping out 28,000 TEUs. (Source: Journal of Commerce)

• Trans-Pacific rates for containerized ocean shipping exports are plunging due to an increase in vessel capacity and a steady demand for U.S. goods. Vessel capacity (up 19.3% for the year) is growing faster than the demand for U.S. westbound exports (up a forecasted 11.3% this year), causing carriers to lower rates drastically to stay competitive.

• The Mediterranean Shipping Company is ranked as the top U.S. container line with an 11.5% market

share, ahead of Maersk (9.4% market share) by a 143,971-TEU margin. MSC grew at more than double the pace of the overall market in the first quarter, with a 24.7% year-over-year increase in container traffic.

• The Volkswagen Group of America has selected the Port of Savannah’s Garden City Terminal to handle containerized shipments of auto parts for its new plant in Chattanooga, Tennessee. The Port of Savannah was chosen for its close proximity to two major interstates and direct rail access. The GPA’s Port of Brunswick already handles import Volkswagens that are distributed throughout the Southeast.

• Container lessors spent $4 billion during 2010 to renew the box fleet and are expected to further increase spending for the next two years according to a new report from the Institute of International Container Lessors. Container purchases last year totaled 1.6 million TEU’s, and an estimated 3.5 million TUE’s will be built in 2011 and available for sale. The global leasing fleet currently totals an estimated 11 million TEU’s.

• Containerboard supplier America Chung Nam was named the top U.S. exporter in 2010 for the 10th year in a row. The company shipped 300,800 TEUs from the U.S. in 2010, 16% more than it exported the previous year. Experts see the wastepaper exports as a measure of confidence in the U.S. retail economy since much of the material is turned into packaging for consumer goods.

JUNE 2011 LOGISTICS MARKET SNAPSHOT

Prepared: June 15, 2011 Fueling Logistics Competiveness

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WAREHOUSING & DISTRIBUTION:

Industrial Vacancy The U.S. average industrial vacancy rate was 10.47% during Q1 2011. Overall vacancy was 13.9% in Atlanta and 16.44% in Savannah during the first quarter. (Source: Colliers International)

Warehouse Rent Rates In Q1 2011, warehouse and distribution rental rates in the US averaged $4.76 per square foot. Rental rates for warehouse space averaged $3.26/square foot in Atlanta and $3.95/square foot in Savannah. (Source: Colliers International)

Industrial Absorption

Net absorption in the US during Q1 2011 totaled +26 million square feet. Absorption in Atlanta totaled more than 2.6 million square feet, while Savannah absorbed about 926,000 square feet. Atlanta experienced its strongest quarter of absorption in four years and led the region in absorption rates. (Source: Colliers International) (Absorption is the net change in occupied space between two points in time. Positive absorption means that previously unoccupied space is being occupied.)

Purchasing Managers Index

The National PMI decreased 6.9 points to 53.5 in May 2011, but indicates expansion in the manufacturing sector for the 22nd consecutive month. New orders decreased 10.7 points to 51.0 and production decreased 9.8 points to 54.0. (Source: ISM) (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment. A reading above 50 indicates that the manufacturing economy is generally expanding.)

Purchasing Managers Index in Georgia

Georgia’s PMI decreased 2.8 points to 64.6 in May, but was still 9.1 points higher than the national PMI. New orders in Georgia were down 6.2 points to 67.9 and production was also down 6.2 points to 67.9. (Source: Kennesaw State University) (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment. A reading above 50 indicates that the manufacturing economy is generally expanding.)

W&D Business News: • The industrial space utilization index climbed to 55.4, the highest reading of the index since April 2008.

The index has been above 50 for 10 out of the last 11 months.

• The U.S. third-party logistics market is set to grow 10.9% this year over 2010 to a record $141.2 billion.

The 3PL industry is expected to slow down slightly following last year’s 18.9% growth following 2009, the first annual decline recorded since tracking began in 1995. (Source: Armstrong & Associates)

U.S. MARKET:

Gross Domestic Product The U.S. GDP increased 1.8% in the first quarter 2011 according to the second estimate released by the BEA. (Source: US BEA)

U.S. Trade Deficit The U.S. trade deficit decreased by 6.7% in April to $43.7 billion, as exports increased 1.3% to $175.5 billion and imports decreased 0.4% to $219.2 billion. (Source: US DOC & Census Bureau)

Consumer Confidence Decreased to 60.8% in May 2011 from 66.0% in April 2011. (Source: The Conference Board) (The consumer confidence index is based on a monthly survey of 5,000 U.S. households. It is designed to gauge the financial health, spending power, and confidence of the average U.S. consumer.)

Unemployment Rate The unemployment rate in America rose to 9.1% in May 2011, the second monthly increase in a row. Approximately 54,000 jobs were created in May after averaging 222,000 new jobs in each of the previous three months. (Source: US DOL)

Leading Economic Index

The Leading Economic Index for the U.S. decreased 0.3% in April to 114.0 (2004=100), following a 0.7% increase in March and a 0.9% increase in February. (Source: Conference Board) (The LEI is a composite of 10 economic indicators that together create an analytic system designed to signal peaks and troughs in the business cycle. The LEI reveals patterns in economic data in a clearer and more convincing manner than any individual component alone.)

Retail Sales Retail and food service sales fell for the first time in 10 months in May to $387.1 Billion, down 0.2% from the previous month, but up 7.7% from May 2010. Non-store retailer sales were up 15.9% from May 2010. (Source: US Census)

Manufacturing & Trade Sales Total combined sales and manufacturing shipments totaled $1.185 Trillion in April 2011, up 0.1% from March and up 11% from the previous year. (Source: US Census)

Manufacturing & Trade Inventory Total value of inventory on hand is estimated at $1.497 Trillion in March 2011, up 0.8% from March and up 10.6% from April 2010. (Source: US Census)

Housing Starts In April, housing starts decreased 10.6% to an annual rate of 523,000 units. Building permits (an indicator of future housing starts) decreased 4% to an annual rate of 551,000.