Subscription boxes — wow them or they’ll bounce

Offering subscription box services come with many challenges, including processing payments for a customer base that changes greatly each month and tracking a large volume of often low-value inventory that has expiration dates. In addition, customers’ expectations are high when they open a box — wow them or they’ll bounce. Keep in mind that those subscription dollars compete with the likes of Netflix and even with print magazines. Changes to advertising policies on Apple and Facebook have required shifts in marketing strategies.

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Unilever bolsters revenue growth prospects with announced ice cream divestiture

Unilever shares rose this week after the company announced a planned ice cream divestiture and 7,500 job cuts. Chart: Barchart.com Inc.

This week’s news on the planned ice cream divestiture was something that most analysts expected at some point. An eventual divestiture of the ice cream business seemed to be the most likely rationale last year for the reorganization of the company’s financials in 2022, which included making ice cream its own segment.

For all the drama regarding Ben & Jerry’s politics and its position on the Middle East, it appears to me that the rationale had far more to do with the ice cream segment’s underperformance. Last year, Unilever’s ice cream segment grew only 2.3% on a volume decline of 6% and a price increase of 8.8%. That was both slower volume growth and higher elasticity than the company’s other segments. Other CPG giants have taken similar action, including Nestle with its “cut the tail to move the head” strategy. Other disadvantages associated with Unilever’s ice cream business include a more complicated frozen supply chain, which lacks synergies with its other segments, and the ice cream segment’s relatively high capital intensity. 

Weak truckload rates pressure intermodal volume in Chicago-to-Atlanta lane

I recommend that domestic intermodal shippers use SONAR to track intermodal volume, intermodal spot rates, and dry van contract and spot rates in their lanes — even if all those do not appear directly relevant.

For instance, the modally competitive Chicago-to-Atlanta lane has shown rate decline in recent weeks for both intermodal and truckload. The door-to-door intermodal spot rate to move 53-foot containers from Chicago to Atlanta declined from $2.92 a mile to $2.39, including fuel, in the past week.

That appears to be a response to falling truckload rates. Those falling rates, in turn, appear to be driven by Atlanta flipping to become a headhaul market (HAUL.ATL is currently 11.1), which makes carriers more willing to head there. Market Dashboard (one of the SONAR applications) shows a current dry van truckload spot rate of $2.42 a mile, down from $2.90 in early February and $2.55 in early March. Meanwhile, the average dry van contract rate is $2.83 per mile.

Turning to intermodal volume shown via the SONAR ORAIL ticker, daily 53-foot containerized intermodal volume averaged 287 containers a day in the past week, which is at the low end of the recent range of 280-320 containers a day. That could be for a number of reasons, including poor rail service, but in the context of weak truckload rates, I suspect that some shippers that might otherwise have used intermodal are opting for the convenience of the highway.

Left chart: Loaded containerized domestic intermodal volume in the Chicago-to-Atlanta lane.

Right chart: Intermodal spot rate to move 53-foot containers door to door, including fuel.