US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Supply Chain Alternatives: Will Rerouting to Florida Make the Difference?

The term “supply chain” was, before the COVID-19 pandemic, known to but a few Americans. However, the phrase is now on everybody’s lips as consumers confront empty shelves, rising prices, and few answers as to when the crisis will abate. One key bottleneck in the supply chain is that the California ports – such as those in Long Beach (near Los Angeles) – do not have the capacity to unload all of the ships sailing outside their harbors as quickly as they would like.

A potential solution to the problem has been floated: recommending shippers to reroute to use ports in Florida instead. While the journey would add about two weeks and cost more money for ships currently in the Pacific to reach Florida (even longer if the vessel is too large for the Panama Canal), once there, 8 of the 15 Floridian ports are able to accommodate container ships. However, only two have channel depths as deep as those on the west coast so as to accommodate the biggest container ships. Still, there are others further up eastern coast that have similar channel depths to the Ports of Long Beach, Oakland, Sea Tac Alliance, and Vancouver. 

Furthermore, some suggest that rail and truck capacity in the region is under less stress compared to the facilities in California, making it easier to find the railcars, locomotives, and tractor-trailers needed to move off-loaded cargoes to their final destination. Thus, it may be time- and cost-effective for some shippers to make the lengthy voyage from the Pacific to the Atlantic coast.

However, shipping experts suggest this is more of a long-term potential solution rather than something that is going to solve the crisis in the next few weeks or months. Shippers are already paying historically high rates for shipping containers and may balk at adding even more cost to traverse the Panama Canal. Even among those that decide the cost is worth it, few will be making that change immediately due to the need to realign other shipping plans as most containers that dock are already booked for outgoing goods at the originally intended port.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Freedonia Focus reports such as Freight by Waterways: United States, Freight Services: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Freedonia Focus      Industry Studies    

Ford’s Push Into Electric Vehicles Market: A Potential Gamechanger?

For many, the shift from gasoline-powered to electric-powered motor vehicles cannot happen soon enough, given their concerns about the carbon emissions generated by traditional combustion engines. However, one potential obstacle to this shift is the popularity of pickup trucks in the US. These larger vehicles – which are heavier and therefore require more energy to operate than passenger cars – are a challenge to electric vehicle designers, as batteries must have sufficient “juice” to power them.

Thus, the recent announcement by Ford that it would erect a new production facility devoted to the manufacture of electric-powered pickup trucks – as well as three battery plants (in conjunction with South Korea-based SK Innovation) – represents a tremendous commitment in bringing these vehicles to the market.

The new Tennessee-based plant – expected to begin operation by 2025 – will make electric-powered F-Series pickup trucks. As these trucks are among the most popular selling vehicles in the US, widespread sales of these vehicles would represent a significant reduction in carbon emissions – to say nothing of the shift in truck buyers’ preferences.

Indeed, with early sales reports indicating some promise there (with 150,000 nonbinding sales reservations since May), Ford may feel that truck buyers are more than ready to adopt electric technologies to power their vehicles.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.



Continuing Demand for RVs Spurs Manufacturers to Expand Production

We have frequently mentioned on this site how the pandemic has increasingly sent Americans outdoors for their entertainment. Homeowners looking to get out of their homes – while meeting guidelines for minimizing the spread of COVID – have increased the amount of time spent outside. Consumers’ spending habits have reflected this, as demand for a wide range of outdoor products – such as pools, decks, playground equipment, and other items – have surged.

Among the products that have seen the largest increase in sales during the pandemic are recreational vehicles (RVs). This is not surprising, as these craft allow families and other groups of people to enjoy the outdoors while also providing a higher level of comfort than simple camping. Indeed, manufacturers of these vehicles – recognizing that many of these buyers are more affluent – have added amenities to their RVs, such as additional cabinetry, more extensive bathroom facilities, and more attractive interior components.

Demand for RVs has been so strong that Thor Industries – a leading RV producer – announced plans to build two new RV manufacturing sites in Michigan. These facilities, which will employ more than 400 people, will complement Thor’s existing network of production sites, and increasing the company’s RV manufacturing capacity.

Freedonia Group experts will continue to monitor the US RV market and see how manufacturers cope with the increasing demand for the craft as the US gradually emerges from the depths of the COVID-19 pandemic.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially in the Consumer segment and the Recreational Vehicles in the US study. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Continuing Shortage of Shipping Containers Another Blow to Global Supply Chain

US consumers have been confronted with sharply rising prices for a wide range of products – most notably, groceries and gasoline – and in a number of cases, the cause is the “supply chain”. While something of a mystery to many, the supply chain is simply the processes needed to get goods to the stores where people shop. The supply chain includes:

  • trucks (and truckers) to carry items to and from manufacturing plants, warehouses, and retail stores
  • pallets to serve as stable platforms for boxes and other items during shipment
  • rail lines and train cars to carry cargo once it is unloaded from ships to distribution centers
  • ships to carry items made overseas to US harbors
  • shipping containers that transport bulk cargoes on ships to railheads

While there is currently a shortage of most of these items across the US, it is the lack of shipping containers that is currently most acute, causing delays in product shipments, shortages on the shelves, and prices of available goods to climb. This shortage of shipping containers has been caused by a number of factors, key among them:

  • a surplus of empty containers in many parts of the US, as there are not enough trucks and railcars to send them back to port facilities for overseas shipment
  • backups at US ports – many ships (loaded with containers) are unable to be unloaded and re-filled with shipping containers
  • shortages of workers at warehouses and lading docks to remove goods from containers at distribution facilities, which has reduced the turnaround of containers for shipment back to ports

Though shipping experts believe there is enough global capacity of shipping containers, there will continue to be a shortage of containers in the US until the many bottlenecks in domestic supply chains can be resolved. This, too, cannot be solved quickly enough, even as the US economy improves and workers return to their jobs – including those in the crucial logistics sector.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas, as well as Freedonia Focus titles such as Freight by Waterway: United States, Freight Services: United States, Freight by Rail: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Own All Four Railroads? “Monopoly” Might Be a Bit More Difficult Soon

An executive order signed in early July laid out the Biden administration’s plan to reduce the strength of monopolies across the US economy. In the freight industry – namely, freight by rail and freight by waterway – the administration believes consumers and small companies are at a disadvantage due to the power of the limited number of major players.

In the rail industry, competition is largely limited by high concentration – the four largest firms control the vast majority of the market – and each rail company’s captive control of its rail system. The executive order encourages the Surface Transportation Board to adopt a system, known as “reciprocal” or “competitive switching”, which has been proposed many times in the past. If put in place, rail shipping customers that are served by one railroad are able to accept bids from competing railroads in the area. The bidding company would pay a fee to utilize the dominant railroad’s infrastructure, increasing the number of potential choices rail shipping customers have among railroad firms and placing downward pressure on shipping rates. Furthermore, it may open the door for smaller rail shipping firms to increase their market share.

For ocean shippers, the executive order encourages the Federal Maritime Commission to take further action to reduce export fees and allows the Justice Department to enforce their decisions.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, as well as Freedonia Focus titles such as Freight by Waterway: United States, Freight Services: United States, Freight by Rail: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19