Brands and retailers have been tightening inventories and reducing orders in response to a weakening global economy and a marked slowdown in consumer spending, but despite these cost-cutting efforts, the cost of getting goods into the country and onto store shelves is likely to rise as pressures along the supply chain mount.
The most visible threat to transportation costs has been surging energy prices. Gasoline prices reached highs over the summer and spurred more cutbacks in consumer spending. Truckers were particularly hard hit when diesel fuel reached a peak of $4.76 a gallon during the third week of July. According to the American Trucking Association, fuel costs for a 2,000-mile trip were approaching nearly $3,000 this summer compared with $1,680 during the summer of 2007. The ATA said it currently costs about $1,400 to fill a typical tractor trailer’s fuel tanks.
While fuel costs have since come down some, those in the transportation industry understand that competition for energy will only grow in a global economy.
“In developing countries, prosperous exports have brought wealth to a small portion of the population who are then able to pursue Western lifestyles,” wrote Paul Bingham, managing director of Global Insight’s trade and transportation group, in a report released on Sept. 12. “If just 30 percent of the Chinese and India populations reach Western levels of consumption, then world consumer energy consumption will be doubled, not to mention the billions of people still aspiring to this lifestyle. So, long-term energy price increases are not surprising.”
States are also searching for ways to bring in money to fund massive overhauls of roads and bridges that are deteriorating or have exceeded their life spans. The likely option for many states will be to institute toll systems or to raise existing tolls.
The Pennsylvania Department of Transportation and Pennsylvania Turnpike Commission have sought to put tolls on the state’s 311-mile stretch of Interstate 80 since late last year. The groups are calling for a “ground up” reconstruction of I-80 in the state and believe a toll system would quadruple capital spending to $2.5 billion over the next decade. In July, the Turnpike Commission said more than half of I-80 had exceeded its design life. After a six-month engineering analysis, an improvement plan was developed that called for refurbishing 80 percent of the roadway and replacing 60 bridges.
The nation’s ports are also facing increased pressure to improve environmental practices and reduce truck-related traffic and emissions. The ports of Long Beach and Los Angeles, the country’s largest port complex handling 40 percent of imports, are leading the way with the implementation of the first phase of its Clean Truck Program. The ports are seeking to lower air pollution 80 percent by 2012. On Oct. 1, all truck models older than 1988 will be barred from the port. Truck models between 1989 and 1993 and models from 1994 to 2003 that haven’t been retrofitted will be banned as of Jan. 1. A fee of $35 per 20-foot equivalent unit, or TEU, will also be assessed on containers beginning on Oct. 1 to help fund financial assistance for truck replacement.
The ATA filed suit against the ports in July, alleging that the program would result in fewer trucking companies being able to service the ports and would therefore reduce competition. On Sept. 9, a federal judge found in favor of the ports and ruled that the program could move forward. The ATA contends that it supports the ports’ environmental goals, but believes systems have not been implemented to properly manage the program and that congestion is likely to result.
“Unfortunately, it is clear that the ports are now in no position to put in place the systems needed to collect the ports’ clean truck fee and administer the ban on pre-1989 trucks by the Oct. 1 program start-up date,” said the ATA, adding that it would continue to challenge the program.
Congesting ratings for Los Angeles-Long Beach were raised to medium in the National Retail Federation’s September Port Tracker report. The report also expects container traffic at the nation’s major retail ports to fall 6 percent in 2008. In August, NRF had projected a decline of only 4 percent.
Bingham believes the Los Angeles-Long Beach port system will continue to lose discretionary cargo as costs rise.
“[Brands and retailers] will ask themselves ‘Is this still the gateway I want to use,’” said Bingham. “If I’m feeding a store in Orange County or anywhere in California I’m still going to do it, but if I’m feeding by intermodal rail to Chicago, then I start to look at other options.”
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)