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Logistics Intelligence Brief
Tuesday, September 21, 2021

Trucking

FedEx to boost most tariff rates nearly 6% next year

Freight Waves Mark Solomon September 20, 2021

FedEx Corp. said late Monday that it will raise its noncontract, or tariff, rates by 5.9% for U.S. shipments moving under its Express, FedEx Ground, FedEx Home Delivery and FedEx Freight LTL services. The increases go into effect Jan. 3, the company said.
Rates on shipments moving under the FedEx Ground Economy service, which was rebranded from FedEx SmartPost after FedEx (NYSE:FDX) took in-house all of its last-mile deliveries once handled by the U.S. Postal Service, will also increase. FedEx didn’t specify the percentage, however.
In addition, FedEx will unveil on Jan. 3 an international service option to provide time-definite deliveries of one to three days.
Starting Jan. 17, the company will add several changes to its delivery surcharge table. Perhaps the most notable will be a new surcharge on all forward and returns deliveries using the FedEx Ground Economy service. In addition, FedEx will assess surcharges whenever a FedEx Freight driver makes a scheduled pickup but no shipment is waiting.
In a statement late Monday, FedEx said the surcharges will allow it to recoup additional costs associated with the “challenging” operating environment, and re-invest into its pickup and delivery capabilities.

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Carriers say tractor and trailer shortages will linger for another year

DC Velocity September 20, 2021

Both truckload and less than truckload (LTL) carriers are trying to add new capacity to meet soaring demand, but with equipment backlogs predicted to last at least through 2022 they’re looking to more creative solutions to wring more efficiency out of the market, according to a panel of trucking executives who spoke at the Council of Supply Chain Management Professionals (CSCMP) Edge conference today.
Fleets would prefer to focus on long-term, five-year plans, but a series of business hurdles keeps pulling their attention to more immediate challenges, said Derek Leathers, chairman, president and CEO of Werner Enterprises. “If it’s not Covid, it’s the driver shortage, equipment shortages, or parts shortages. You find yourself having to look a lot closer at your toes than at the horizon,” Leathers said in a session titled “ A Look Down the Road: Carrier CEOs Speak.”
Not only are automakers backed up on meeting orders to build new Class 8 trucks, but suppliers also can’t fulfill orders for the trailers towed behind them, agreed Darren Hawkins, president and CEO of Yellow Corp. “We can’t get enough trailers compared to what we need, so trailer detention is becoming an ongoing issue,” ” Hawkins said, in reference to the amount of time that truck drivers spend at distribution centers waiting to exchange inbound and outbound freight. “We charge detention fees and it’s good we’re getting paid, but as long as they’re not moving, those are revenue producing assets that are not being used.”

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Freight activity recovers much of its Labor Day week loss.

FTR Transportation Intelligence September 20, 2021

Dry Van
• The Dry Van segment increased more than 14% after falling nearly 19% from the previous week. The index is about 39% below
February’s weather-induced peak but about 142% above the pre-pandemic baseline.
• Current Level: 241.5 // Bottomed at 45.3 week ending 4/24/2020. Current high is 392.4 for week ending 2/26/2021.

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Shippers/3PLs

As retailers stock up, real estate near ports sees record demand

Supply Chain Dive Alejandra Salgado September 20, 2021

Dive Insight:
Companies are holding more than the usual inventory to prepare for the peak season, which causes less warehouse space to become available.
"People really want their stuff, so we're seeing an extreme demand for warehouse product," said Carolyn Salzer, Americas head of logistics & industrial research at Cushman & Wakefield.
Big Lots, Lowe's and Best Buy are all taking action to expedite inventory for the holidays as demand for space to store inventory dedicated to e-commerce only increases.
With consumer demand increasing, record volumes at the ports causing delays and record-high ocean freight rates, shippers still need to find where to place their shipments.

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How A Single Missing Part Can Hold Up $5 Million Machines And Unleash Industrial Hell

NPR Scott Horsley September 21, 2021

Nicole Wolter runs a factory in Wauconda, Ill., that makes gears and pulleys used in a variety of industrial equipment. She's got plenty of orders, but she's straining to get all the parts she needs – and that's creating trouble across the supply chain.
"I'm getting phone calls of, 'Hey, you're holding up a $5 million machine,'" says Wolter, adding customers sometimes offer to pay for overtime in her factory or next-day air delivery. "I think there's just that air of desperation."
Unfortunately, there's little Wolter, who runs HM Manufacturing, can do. Her own suppliers are short-staffed and struggling to keep up with demand.
"I had an order for a plater that was sitting on their dock for six weeks and they hadn't touched it because they couldn't get the workforce," Wolter says. "So that hurt."
Anyone who's ever tried to cook an elaborate dish, only to be foiled by a missing ingredient can appreciate what manufacturers are wrestling with, a year and a half into the pandemic. Many are stuck waiting for crucial parts that are out of stock or stuck in transit.

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GM Plans ‘Substantial Shifts’ in Supply Chain as Chip Woes Last

Bloomberg Yueqi Yang September 17, 2021

General Motors Co. is planning to revamp its supply chain as the pandemic-triggered chip shortage aFrom Subject Received Size Categories
Jeffrey Sparshott, WSJ Real Time Economics: Chinese Capitalism, Fed Forecasts and Inflation Worries 5:16 AM 329 KB nd rising demand for chip-intensive vehicles have demonstrated the need for an overhaul.
The Detroit-based carmaker will make “substantial shifts” in its supply chain, chief executive officer Mary Barra said Friday in a live-streamed discussion with Delta Air Lines Inc. CEO Ed Bastian. While GM generally doesn’t buy chips directly, the company is now “building direct relationships” with manufacturers.
“It’s a solvable problem, but it’s going to be here a little longer,” Barra said.

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Industry

From controlling cost to ensuring supply: inbound supply chain’s focus shifts, says research report

DC Velocity September 20, 2021

Tightening supply and capacity constraints are rearranging companies’ priorities for their inbound supply chain operations, according to a research report released today at the Council of Supply Chain Management Professionals (CSCMP) EDGE conference.
Inbound logistics under stress
Even after securing key components and supply, companies face numerous obstacles before they get those materials in hand. All aspects of the logistics network are currently besieged by capacity constraints, congestion, declining service, skyrocketing rates, and labor shortages. And “Logistics 2030” survey respondents don’t anticipate that these problems will dissipate any time soon. Instead, they expect that their top three concerns leading up to 2030 will remain workforce availability (81%), inbound capacity constraints (70%), and volatile freight rates (65%).
It’s perhaps not surprising then that 89% of survey respondents report that their company now consider inbound logistics to be an organizational priority. As a result, 77% of respondents expect to see an increase in corporate funding and resources to manage and monitor their transportation and logistics partners.
Respondents indicate that they are pursing a variety of strategies to deal with these logistics stressors, including consolidating shipments (83% of survey respondents), building long-term partnerships with transportation carriers (82%), and investing in warehouse automation (73%).

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Expanding LA-LB port hours easier said than done

The Journal Of Commerce Bill Mongelluzzo September 20, 2021

Subscription-Based

Landlord ports can suggest, not dictate solutions
Unlike some US ports, such as those in the Southeast that are operating ports that can set policy, Los Angeles and Long Beach are landlords that lease facilities to private-sector terminal operators. Landlord ports can act as facilitators by calling stakeholders together to discuss best practices and participate in pilot projects designed to enhance cargo throughput. But the ports do not have the authority to dictate policies to the disparate stakeholders, especially because policies designed to optimize the supply chain as a whole might be costly or inconvenient for some sectors individually.
Long Beach announced Friday it will take the first steps toward a 24/7 supply chain by maximizing nighttime gates. Los Angeles announced it will maximize weekend operations through a pilot program called “Accelerate Cargo LA” that will use data sharing to provide shipment visibility and link port users with terminal operators. In both programs, terminal operators are urged to “incentivize the use of all available gate hours, especially night gates, to reduce congestion and maximize cargo throughput capacity,” according to Friday’s joint statement from the ports.
But drayage operators and their customers are concerned that “incentives” will translate to “corrective action” against trucking companies, including fines for missing appointments, Matt Schrap, CEO of the Harbor Trucking Association, told JOC.com Monday.

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Diesel Rises 1.3¢ to $3.385 a Gallon

Transport Topics September 20, 2021

The price of diesel rose for the third time in the past four weeks for a total of 6.1 cents a gallon. The cost dipped just one-tenth of a cent the week of Sept. 13.
Trucking’s main fuel now costs 98.1 cents a gallon more than it did at this time a year ago.
Diesel increased in nine of the 10 regions in EIA’s weekly survey, with the largest being 2 cents in the Lower Atlantic and Gulf Coast. The Rocky Mountain region, at seven-tenths of a cent, registered the only decrease.

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Government/Safety/Sustainability

FedEx to Spend $100 Million on Improving Delivery Vehicle Safety

Bloomberg/Transport Topics Thomas Black September 20, 2021

FedEx Corp. plans to spend more than $100 million to improve delivery van safety and reduce costs from accidents, potentially dragging on short-term earnings as the courier faces pressure from rising wages and other expenses.
The company’s ground unit is offering $1,500 per vehicle to reimburse its contractors for installing cameras and sensors that warn drivers of obstacles or other vehicles, according to documents viewed by Bloomberg News. The unit’s contractors operate about 72,000 vehicles, FedEx said.
“As e-commerce continues to drive substantial growth in our industry, the number of resources needed to meet this demand is increasing, which requires even greater focus on motor vehicle safety,” the Memphis, Tenn.-based company said by email.

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FMCSA Nominee Testifies Before US Senate Panel Sept. 22

Transport Topics Eugen Mulero September 20, 2021

When she testifies before the Senate committee on freight affairs this week, Joshi will have the opportunity to explain her qualifications to fill the role of administrator at FMCSA. Responding to a questionnaire from the committee, she affirmed a commitment to promoting safety across freight corridors, and noted the prominent role technology is having throughout transportation sectors.
“The agency’s top challenge and primary mission is safety. The agency must reduce the number of fatalities involving commercial motor vehicles to make our roads safer for drivers of [commercial motor vehicles] and all road users,” she said. “The agency has a critical role in forging safety partnerships with state and local government and organizations to amplify our safety enforcement, messaging and training, modernizing inspection capabilities and ensuring the current and electronic exchange of vital safety information. Adequate financial and oversight support for these programs is integral to FMCSA’s success.”

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Transportation Projects Often Rely on Optimistic Forecasts

The Wall Street Journal David Harrison September 21, 2021

Subscription-Based

Transportation planners are looking for ways to improve their travel forecasts as Congress debates spending billions of dollars on new projects.
If lawmakers enact the $550 billion bipartisan infrastructure bill now before the House, state and local officials will have to decide which projects to spend money on. But researchers have found that transportation planners frequently expect more people to use their road and transit projects than ultimately do so. Yet those optimistic forecasts become part of the justification for spending millions or billions of dollars on such projects.
“What we need to demonstrate to the decision makers is that we’re helping them make good decisions and giving them good answers and good numbers,” said Dave Schmitt, a travel forecaster with Connetics Transportation Group, a consulting firm. “The big wrinkle is Covid.”

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