The Friday Report: May 13th, 2022

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

Freight Transportation Capacity Trends Upward as Prices Fall 

According to Bloomberg, the Logistics Managers Index fell to its lowest point since January 2021, showing that the U.S. economy is returning to an expansionary level as inventory and warehousing metrics remain elevated. For the first time since May 2020, transportation costs fell and shipping capacity returned to a positive level, beginning a transition that stages inversion suggesting an imminent shift in the overall economy.  

Normally freight transportation prices and trucking capacity indicate robust economic fortitude, and despite a strike in transportation the Index shows growth albeit at an unhurried rate. It is yet to be answered if this downward shift in transportation price will cause recessionary compression or if the market will achieve sustainable levels.  

For more information, please continue reading here. 

UPS Earnings Surpass the Anticipations of Wall Street 

UPS has declared that it will be sustaining its goals and objectives for the full-year 2022 for consolidated revenue of $102 billion, above the Wall Street projections of $101.84 billion. 

United Parcel Service also reported an increase in first quarter income in 2022 compared to last year. The company stated that its 2022 Q1 income improved by $0.11 a share, rising from $2.94 to $3.05, or from $2.7 billion to $3.3 billion, resulting in revenue growth to $24.37 billion from $22.9 billion, a 6.4% increase from year to year.  

Zacks Investment Research has gone on record to state that UPS has exceeded expectation over the last four quarters by elevating its consumer shipment rate over 5% in the past six months, even as package volume declined by 3.6%. Company officials say that the drop in package volume is due in part to workers returning to offices, however business-to-business parcel shipments has increased in Q1 by 3.6% and are 43% of UPS package volume.  

For more information, please continue reading here. 

War in Ukraine Causes Maersk to Lose Over $700 Million, Russian Assets Valued at Zero 

As the war in Ukraine continues, Maersk says that is has lost $718 million in first quarter earnings as it exits Russia. The freight giant stated that the departure has lowered its income before interest and tax, with most of the loss coming from its inability to utilize its shipping terminals. Maersk controls roughly 16% of the worlds’ containers trade and due to the war has started to sell off its stakes of ports owned in the country and halted sending new shipments to Russia.  

Reported earnings from April 26th show that the company bettered expectations for its full-year fiscal outlook even as freighting rates rose due to stressed supply chain. Maersk expects container need will either rise 1% or decline 1% in 2022. 

The last freighting procedure was completed on May 2nd. As of May 4th, Maersk had lost $627 million in Russian write-down’s and another $91 million was reported as loss due to an increase in operational costs associated with Russian ports. The company’s Russian assets are now valued at zero as they are in heavy negotiation with numerous companies with power to purchase the stakes. 

For more information, please continue reading here. 

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