Supply chains are in a time of exceptional uncertainty, says Craig Fuller.
“You never know with Trump whether he’ll go through with it. But they could agree to do something. You just never know. That’s the problem,” said the founder and CEO of FreightWaves, speaking on the unpredictable nature of tariff announcements that are reshaping global supply chains.
Fuller recently appeared on “Street Signals,” a weekly podcast produced by State Street Markets that explores markets and macroeconomic trends. The show is hosted by Tim Graff, head of macro strategy for Europe, who brings together insights from strategists, traders and business leaders on current financial market developments.
During the episode, Graff highlighted the challenge of forecasting economic effects from widespread tariffs on U.S. imports, especially given constantly changing headlines. Just hours before recording the episode, President Donald Trump had announced 50% tariffs on goods from the EU starting June 1, only to delay them until July 9 the following Monday. “Good luck trying to gauge the timing, direction and magnitude of any economic impact, good or bad, that all this might actually have,” Graff noted.
Fuller, who grew up immersed in the trucking sector, offered an insider’s perspective on the freight market’s intricate dynamics amid ongoing global trade shifts. He emphasized that the freight logistics industry is “one of the most fragmented markets on the planet” with approximately 400,000 trucking companies and countless participants. This fragmentation presents significant challenges but also opportunities for data-driven insights.
The conversation shed light on how current tariffs have disrupted supply chains worldwide. These dynamics have highlighted the critical role of high-frequency data in anticipating economic cycles and supply chain disruptions.
Fuller said the freight market is currently experiencing volatility due to issues such as tariffs and trade policy changes. Despite these challenges, he remained bullish about the second half of the year for freight. Fuller highlighted the impact of high-frequency data and the ability for FreightWaves to predict market trends, including potential recessions and recovery periods. His outlook suggested that companies might overprepare inventories due to uncertainty in international trade, which he viewed as a net positive for the freight industry in the short term. Additionally, Fuller anticipated that geopolitical tensions, especially between the U.S. and China, will lead to an increase in sourcing from the Americas.
The freight market’s state reflects broader economic activities, with sectors such as trucking and international containers acting as bellwethers for consumer demand and industrial cycles. Trucking data, in particular, proves hypersensitive to consumer activity, providing real-time insights into the U.S. goods economy. Meanwhile, international container markets respond vigorously to global trade policy changes, becoming a focal point of trade tensions.
Comparing current challenges to the pandemic, Fuller observed the strain on the supply chain systems then and now, emphasizing that the fragmented supply chains require a nuanced understanding to navigate effectively. As trade policies continue to evolve, the reliance on comprehensive data from the freight market is more crucial than ever in crafting economic forecasts and responses.
This approach gives FreightWaves visibility that even major industry players often lack. Fuller cited a notable example from February 2022, when their data indicated an imminent “freight recession” despite the seemingly strong economy. Six weeks later, major retailers including Walmart, Target, and Amazon confirmed they had too much inventory – exactly what FreightWaves’ data had signaled. Bloomberg later dubbed this the “FreightWaves recession.”
A similar situation occurred when China reopened after COVID shutdowns. While many predicted a tsunami of containers from China, FreightWaves’ booking data showed a sharp drop in container volumes. This contradicted forecasts from FedEx’s CEO, the National Retail Federation and the head of the Port of LA, all of whom predicted a strong second half of the year. By November, there was a 40% drop in international container freight, proving FreightWaves’ analysis correct.
“The advantage that we get with this high-frequency data is that we see so much – a very large sample of the entire goods economy,” Fuller explained. “Because of the fragmented nature of the freight market, the bigger companies tend to be far more insulated from the boom-and-bust cycles that tend to happen. They often don’t actually know what’s happening till late in the cycle when things are collapsing.”
This ability to detect economic shifts early works in both directions. In February of the pandemic year, FreightWaves became notably bullish about the recovery in the goods economy. “Bloomberg called me the most bullish guy in America because we were seeing it, and we were talking about an aggressive V-shape recovery,” Fuller said. “It was obvious in the freight data that things were going to come back fast and furious.”
When asked which aspects of freight data are most powerful for understanding economic cycles, Fuller emphasized that different indicators serve different purposes. “If I want to understand real-time activity on the ground in the U.S. goods economy, particularly consumer activity, the most reliable way is trucking data because it’s hypersensitive to what’s happening in consumer demand,” he explained. For upstream activity like industrial cycles or inventory replenishment, long-haul trucking provides insights. Meanwhile, the international container market reflects global demand and activity.
https://podcasts.apple.com/us/podcast/craig-fuller-tariffs-and-twists-in-global-supply-chains/id1692292577?i=1000710385055
Currently, Fuller notes, the international container market is where the action is, as it responds to trade policy changes. “Trump is an agent of chaos and is creating so much instability in international container markets,” he observed, though he cautioned that this doesn’t necessarily provide clear insights into consumer activity.
Comparing current supply chain challenges to the COVID-19 pandemic, Fuller recalled how the global economy was shut down and then restarted with massive stimulus money injected worldwide. “You had this massive surge in demand at the same time you didn’t have supply,” creating unprecedented disruptions that couldn’t be resolved by simply “turning a switch” to restart the global supply chain system.
Fuller concluded with a forward-looking perspective on the future of global supply chains. He predicted that as uncertainty persists in international trade relations, particularly with major players like China, businesses will increasingly seek to decentralize their sourcing strategies. This fragmentation may benefit regions like the Americas, which could become key beneficiaries of supply chain realignment.
Fuller underscored the potential for regions such as Texas’ I-35 corridor to emerge as pivotal logistics hubs as companies adjust to shifting trade conditions. He emphasized that while the high-frequency disruption of tariffs continues to challenge traditional supply chain models, the agility and foresight offered by comprehensive data analysis will be indispensable in navigating these turbulent times.
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