Housing in 2013 has seen solid growth, still one of the bright spots in today’s economy.   Prices have been steadily [...]]]> The housing market is one of the biggest drivers in timber prices, and Packnet uses a lot of wood in its custom packaging and crating solutions, so we are always interested in housing market picture.

Housing in 2013 has seen solid growth, still one of the bright spots in today’s economy.   Prices have been steadily increasing; demand is growing at an 8% rate.   March had the highest number of housing starts in the last 4 years.   There has been some drop off in April, but most of it can be attributed to colder, wetter weather that has hampered new construction starts.

While many are encouraged and optimistic that housing can continue its rebound through 2013, in fact even hopeful that we return to the levels experienced back in 2005.  There are some conditions that may give reason to “pull back” on expectations.   Here are 5 reasons that the housing market recovery may lose steam in 2013, or at least never reach the levels of a decade ago:

1. The current housing boom is investor led, houses are being purchased by investors that are finding good deals, generating some monthly rent income and are looking to sell down the road and large profits.   This group tends to be pretty fickle; as soon as there is a sniff that things may go south, they will be jumping out.
2. New home construction prices are increasing as fast as or faster than the growth rate.   Wood products have skyrocketed in price resulting in higher construction costs.   At some point this could price a lot of would-be buyers out of the market.
3. Mortgage money is tighter, banks are putting more restrictions on loans; it will be a long time before we see the easy money that we saw seven years ago.    The truth is a significant portion of the market that was buying houses a decade ago, is restricted from getting mortgages.
4. Demographic changes will impact the housing market.  The baby boomers are moving into retirement age, a little over a decade ago many in this group were looking at buying their dream home.  Today, boomers are downsizing to townhomes, condominiums, and retirement villas.  If they do buy a home it will be smaller with more features.  The baby boomers constitute the largest age group so the “grey wave” will cause some major economic impact.
5. Buying interests are changing.  Many in the demographics known as the millennia are not as excited about owning a home.  While years ago, most baby boomers dreamed of a 2-3 car garage and a ½ acre lot, many of the younger generations are viewing apartment or condo living as giving them more flexibility.  Buying a house was at one time viewed as a “rock solid” investment.   Today many are unsure that a house is a great investment.

Of course everything one of these points could be easily muted by other stronger forces that immerge in the market place.   Many home owners are still underwater with their mortgage, but if prices continue to increase, more buyers and sellers could be entering the market.

Lumber prices are still at historical high levels, we don’t expect to change for a while, even with a downturn in the housing market.

It appears that retailers can breathe a little [...]]]> Over the last 5 months, many of the US retailers have been concerned about the labor situation for US ports.   Contentious labor negotiations, temporary contract extensions and even mediation by the Federal government have put a lot of uncertainty on strike disruptions at the major US ports.

It appears that retailers can breathe a little easier as labor and management have come to agreement:

In February, The U.S. Maritime Alliance (USMX) and the AFL-CIO-affiliated International Longshoremen’s Association (ILA) reached an agreement after contentious negotiations that had to be extended several times.   And three weeks ago the 15,000 union memberships finally ratified the agreement which covers 14 ports from Maine to Texas that handle 40 percent of the nation’s ocean cargo.

Normally one would not see this much labour strife when an industry is down; unions typically wait until a company is on an economic upturn before threatening to strike.  The shipping industry is suffering as a whole.   It would seem to be bad timing on the union’s part to try to push back now; however this situation may have been different.

• All shipping companies are losing money, cost pressures are evident throughout the industry and ports are under pressure to reduce costs.  These cost reduction pressures are causing management to push for higher productivity while pushing for concessions.   Some of this issue can be attributed to management being more aggressive for cost reductions.
• Labor Unions may feel that they have more leverage because there are relatively few options for shippers.   Shutting down a string of ports can affect the entire economy, so the impact of a strike has a much larger impact on the region and even the country.   In a typical business, when labor strikes, the business could face market share loss.  In that scenario both labor and management lose.   In the case of ports, there are fewer options, and it is less likely that a port would lose market share if all adjacent ports were also on strike.

The economic situation for the shipping industry over the next few years should be extremely dynamic.  There is more capacity than needed, and the reaction of the shipping industry is to bring in much larger cargo ships to reduce cost, but ironically also add to the over-capacity situation.   This situation should continue to put downward pressure on prices.  With the pending re-vamping of the Panama Canal, larger ships will have more options for ports thereby increasing the competition.

From an economic standpoint there are two common scenarios when over capacity exists.   An increase in shipping demand fills the excess capacity, or several shipping lines go bankrupt, thereby reducing the available capacity.   We expect to see more volatility in the shipping industry, but it appears that disruption from labor strikes is not likely in the next few years.

Wood is the base [...]]]> What makes Packnet excel in custom wood containers and custom wood crates?   Packet has been providing wood packaging solutions to a variety of industries for over 2 decades.   Our experience and knowledge of wood products enables us to design, engineer and fabricate solutions to meet your exact needs.

Wood is the base material for many of our applications including shipping crates,  pallets and skids,  reusable containers such as trade show crates and most notable our Slot Lock™  container system.

Our competitive advantage starts with our supply base.  Because we are major consumer of wood products, Packnet can leverage its volume use to get competitive prices and deliveries from a few key wood suppliers.

The advantage continues with our technology, Packnet has saws, panel cutters; routers and optimizers that provide give us great material utilization and labor efficiencies.    Packnet also utilizes a variety of pneumatic tools for stapling and nailing wood.

Our workforce is skilled, dedicated and hardworking and we believe is the key to providing a quality wood crating product.   We have thousands of hours of experience in fabricating crates, boxes and pallets.

We are proud of our design and engineering team, they have consistently created innovative solutions that are both highly functional and cost effective.   We bring a lot of expertise into play when it comes to ocean crating and knowledge of international regulations including ISPM 15.

In conclusion, if you are an industrial company that has needs in packaging, wood crating or material handling solutions, you need to contact Packnet to explore the possibilities.

One reason for a relatively low occurrence in the US is the [...]]]> The recent and tragic bomb explosions at the Boston Marathon should be a solemn reminder to all that terrorism is still a real danger. After 9/11 many people feared that the amount of incidents would be significantly higher that what they have been.

One reason for a relatively low occurrence in the US is the good work being done by port security. Trying to sneak explosives in cargo whether by ocean or air is difficult because of the high level of security detection at ports.

A variety of technology and methods are being used at ports to inspect for harmful products or devices. Potential threatening substances include chemical and biological substances, drugs, weapons and explosives. Of all these contraband, explosives may the most difficult to smuggle into the US. There is an abundance of explosive detection technology available and it is getting better. These methods include:
Dogs: Trained dogs can detect certain odors attributed to explosive devices. Certain breeds of dogs have very sensitive noses and have been successfully used in detection of drugs as well as explosive material
 Scent detection equipment: Highly sensitive detection devices can “sniff out” certain emissions common to materials used in explosives.
Radiation detection: Radioactive emissions can be detected by a variety of devices that are far more sensitive and accurate than the old fashion Geiger counter.
X-Ray Machines: Explosives can be detected by examining material densities and using computer analysis to compare density patterns with known explosive material composition.
A variety of other methods are currently being tested and marketed that are designed to make explosive device detection more foolproof and efficient.
One of the most common materials used for packing and crating is wood. From detection standpoint wood is a good choice of materials as it does not mask or hide some of the tell-tale emissions or radiations associated with most contraband. Cargo that is shipped in other types of material will get extra manual inspection including unpacking and visual inspection.