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Friday, October 23, 2020
Logistics Intelligence Brief
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Trucking

U.S. Xpress CEO sees significant gains from Variant initiative, as Q3 revenue posts modest increase

Freight Waves John Kingston October 22, 2020

The third-quarter performance of U.S. Xpress was a mixed bag, significantly stronger in many areas but with clear pockets of weakness. But on his company’s quarterly earnings call with analysts, CEO Eric Fuller kept coming back to the same theme: The rollout of the Variant program at U.S. Xpress is going to have some bumps along the way, but the evidence is already clear that it is making improvements in operations. Immediately after the release of the company’s earnings, the price of U.S. Xpress stock was down more than 20%, wiping out most of the strong gains of the past month. The loss narrowed later to about 16%. Investors seemed to be overlooking a significant improvement in the company’s operating ratio — down 490 basis points in its truckload operations–and producing a net profit compared to a net loss in the third quarter of 2019. But miles driven were down, which contributed to a relatively modest increase in revenue during a period of a strong freight market. Revenue net of fuel was $403.6 million, up from $386.6 million in the third quarter of last year. That 4.3% increase matched almost exactly the increase in non-fuel revenue announced a day earlier by Knight Swift.  

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Knight-Swift: Shippers seek early contract commitments

Supply Chain Dive Jim Stinson October 22, 2020

Stewart said the fact that shippers are seeking out Knight-Swift ahead of bid season — the heaviest part of that season usually runs from January to April, with early bidders asking in the autumn before the new year — makes it a very interesting quarter, one indicative of a hunger for TL capacity. "It's been above seasonal activities," said Stewart. "It's been what you would expect in the fourth quarter." And driving the demand and the shippers' concern are "historically low inventories," said Stewart.  

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Industry

AAR reports mixed U.S. rail carload and intermodal volumes, the week ending October 17

Logistics Management Jeff Berman October 23, 2020

Intermodal containers and trailers—at 291,935—headed up 11.3% annually. This outpaced the weeks ending October 10 and October 3, at 289,488 and 286,488, respectively.

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New Savannah distribution centers to drive medical, e-commerce volumes

The Journal of Commerce Ari Ashe October 22, 2020

Three new importers will open up distribution centers totaling 2.7 million square feet near Savannah over the next year, adding to nearly 9 million square feet of warehouse and distribution centers currently under development around the second-busiest East Coast port. Medline Industries, a major medical supplier, and Home Meridian International, a furniture company, will open facilities in Georgia, the Georgia Ports Authority (GPA) announced on Thursday during its State of the Port event.

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Freight rail offering aims to boost GPS and telematics adoption across North American railcar fleet

Logistics Management Jeff Berman October 22, 2020

What’s more, the Rail Pulse partner stakeholders comprise ownership of roughly 20% of the North American railcar fleet and they are focused on boosting the adoption of telematics on two fronts:

  • rail safety, with the platform’s early phases geared towards hand brake and impact data, which they said could provide key safety data points for railroads, car owners and shippers, coupled with a forward-looking approach to telematics capabilities like onboard bearing temperature and wheel impact detection sensors; and
  • increasing rail’s competitive position relative to other modes by improving visibility into the status, location, and condition of individual railcars, with telematics capabilities including data capture to support real-time track-level visibility, whether doors or hatches are open, whether the car is loaded or partially loaded, and other key performance metrics
 
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Technology/Innovation

Parade taps two software startups to access small carrier capacity

The Journal of Commerce Eric Johnson October 22, 2020

Parade, a software provider to US truckload freight brokers, has teamed up with two early stage technology companies catering to small carriers to enable brokers to connect digitally with those sources of capacity. The partnerships are with CloudTrucks and SmartHop, which both provide operational support and dispatch software for small truckload carriers and independent operators. San Francisco-based CloudTrucks dubs itself a “virtual carrier,” while Miami-based SmartHop provides multi-tenant operational software to carriers that generally lack the capital to invest in any administrative or dispatching technology. Both are seeking to arm an overlooked segment of the trucking industry with the ability to use common technology to project themselves to the market as larger than they would be able to independently.  

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ShipHero CEO: E-comm shippers still scrambling for tech, fulfillment solutions

Freight Waves John Paul Hampstead October 23, 2020

“We’re dealing with customers who are either switching from 3PLs or changing out their own internal systems,” Daniel-Richards said. “We’ve never had a busier sign-up period [for the SaaS platform] than the past week. Typically every year it starts to slow down around mid-September because companies are not changing out their logistics setup by that point. In mid-to-late September, everyone thinks, ‘This is what we’ve got.’ But there’s still a lot of people shifting around right now in terms of new accounts created. Last year we were seeing 20 new SaaS accounts per month — last week alone we had 30 sign-ups.”

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Government/Safety

Poor Insurance Underwriter Performance Is Causing Increasing Rates, Expert Says

Transport Topics Eric Miller October 22, 2020

The insurance underwriting industry continues to face financial uncertainty, characterized by historic underwriting losses for the transportation sector and rising insurance rates for motor carriers, insurance executives said during a virtual educational session at American Trucking Associations’ Management Conference & Exhibition. “We are in very challenging times with respect to transportation,” said Ryan Erickson, executive vice president of McGriff Insurance Services, during the Oct. 21 session, noting that in 2019 the U.S. commercial transportation market recorded $4 billion in underwriting losses — the worst performance on record — which resulted in rate increases averaging 10% to 15% for motor carriers with favorable loss experience. “The industry doesn’t do a very good job of segmenting, specifically transportation. As an underperformer, transportation is going to be negatively affected,” he said. “While we are still seeing insurance premiums increase dramatically, we’re still seeing the same results. Losses are outpacing insurance companies’ ability to capture rate. Until the industry can show profitability, we’re going to continue to see much of the same.”

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The reasons behind trucking’s rising insurance rates

FleetOwner Cristina Commendatore October 22, 2020

“The insurance industry has not been able to catch a profit, which is making it very difficult to attract capacity and capital to try and turn the market,” he added, noting that commercial fleets are seeing anywhere from 100 to 300% rate increases. “Until the industry can get out in front of this and share profitability, we are going to see much of the same.”

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Workforce

How 3 fleets recruit, retain and move women up the ranks

Transport Dive Heather Larson October 23, 2020

Women may alleviate the driver shortage WIT this year recognized 87 firms as top companies for women, and transport leaders hope that will translate into more women entering the trucking industry. "This connection could help our capacity shortage," said Anson. "That will only work if we maintain safety as our core value." Orr said CFI looks for the best candidate, but at the same time makes a conscious effort to have diversity in the workforce. He said his staff is approximately 40% female across the total company. To retain them, he ensures there is continual training and development for those who have the desire to grow their careers at CFI.  

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Economy

The Beige Book

The Federal Reserve October 2020

  • Federal Reserve Bank of Atlanta
Transportation activity across the District improved over the reporting period. Trucking firms reported that shipments of consumer staples and building materials remained above pre-COVID-19 levels. Port contacts reported significant growth in container traffic, driven by increases in e-commerce, and ocean carriers were operating at full capacity and reinstating vessels that were suspended as a result of the pandemic. Railroads reported that overall traffic improved, intermodal shipments of consumer goods strengthened, and industrial freight volumes stabilized but were down from year-earlier levels. Inland waterway contacts noted that demand for barge services was below pre-pandemic levels
  • Federal Reserve Bank of Cleveland
However, pricing power varied by sector. In consumer-facing segments, auto dealers, furniture retailers, and apparel stores were among those reporting that customers were paying higher prices. Freight haulers said that strong demand, especially for last-mile delivery, was pushing up both spot and contract rates. Demand for freight services increased over the reporting period, driven by an increase in e-commerce and ongoing (and broadening) resumption in economic activity. Eighty percent of contacts reported demand had increased in the last two months, and 70 percent expected demand to continue to increase during the fourth quarter, particularly because more consumers will be holiday shopping from home. Many firms have been unable to adequately respond to increased demand because hiring drivers is difficult, and freight prices have increased as a result.
  • Federal Reserve Bank of Richmond
Trucking companies reported strong growth in recent weeks. Capacity was tight as some companies had experienced closures. This shifted activity to the spot market, which saw rates reach record highs. Retail shipments for certain goods were high as some retailers looked to replenish inventories. Competition for drivers from companies developing their own delivery services led to some attrition and wage pressure. Contacts reported some capital expenditures but remained cautious, citing high uncertainty in the market    
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