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Wednesday, July 29, 2020
Logistics Intelligence Brief
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Trucking

U.S. Xpress has strong second quarter

Freight Waves John Kingston July 28, 2020

U.S. Xpress turned in strong second quarter earnings, with its closely watched operating ratio (OR) improving both year-on-year and sequentially. The truckload carrier’s GAAP operating ratio of 96.1% was 180 basis points better than the 97.9% it recorded in the second quarter of last year. But an even bigger improvement was posted in the company’s GAAP OR over the first quarter, when USX turned in an OR of 100.8%. The non-GAAP adjusted OR for USX in the second quarter was 95.9%, an improvement of 160 basis points from the second quarter of 2019. The improvement from the first quarter was even more substantial, strengthening 500 basis points – from 100.9% in the first three months of the year. The biggest driver of the improvement at USX was operating revenue. It rose to $393.9 million from $371.1 million last year before fuel surcharges, which declined to $28.5 million from $42.6 million. Employee wages and purchased transportation were both higher, up to $139.9 million for salaries, wages and benefits from $130.5 million, and up to $117.3 million from $112.5 million for purchased transportation. But overall, operating expenses at $406.2 million were only slightly higher than the second quarter of 2019.

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ATA reports mixed June tonnage levels

Logistics Management July 28, 2020

The American Trucking Associations (ATA) recently announced that June truck tonnage was mixed, to varying degrees. The ATA’s advanced SA For-Hire Truck Tonnage Index for June—at 115.3 (2015=100)—headed up 8.7%, following a 1% May decline, which followed a 10.3% (downwardly revised from -12.2%) April decrease, at 107.2. On an annual basis, June SA tonnage dipped 1.3%, marking the third straight annual SA decline, which, while down, marked an improvement over May’s 9.6% annual decline, which represented the largest annual decline going back to 2009 during the Great Recession of 2008-2009, with the caveat that SA tonnage is not falling at the same rate as it was during that period. On a year-to-date basis through June, SA tonnage is down 2.4% annually.

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Shippers/3PLs

C.H. Robinson easily beats the Street, outlook ‘uncertain’

Freight Waves John Paul Hampstead July 28, 2020

On Tuesday, July 28, after trading ended, C.H. Robinson (NASDAQ: CHRW) reported its financial results for the second quarter of 2020. Robinson reported earnings per share of $1.06, handily beating Wall Street’s expectations of $0.61/share. That came on gross revenues that were 7.2% lower year-over-year ($3.6 billion, beating the consensus estimate $3.46 billion) and net revenues that were 11.6% lower year-over-year. Net income fell 14.9% to $143.9 million compared to the year-ago period. Lower revenues were the result of lower contract rates and lower volumes; gross margins got pinched by purchased transportation costs that did not fall as much as the rates paid to Robinson by shippers. North American Surface Transportation (NAST), the largest Robinson division, includes truckload and less-than-truckload (LTL) brokerage as well as intermodal. NAST net revenue margins compressed by 160 basis points year-over-year to 15.3%, which was still much stronger than the first quarter’s 13.1% margin. Net revenues in truckload fell 28.5%; in LTL net revenues fell 13.2%; and in intermodal net revenues grew by 26%. Related:  Transport Topics C.H. Robinson Profit, Revenue Fall in Q2 Over COVID-19 Impact

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Convoy rolls out spot rate benchmarking tool for shippers

Freight Waves Brian Straight July 28, 2020

Convoy has launched a new rate quote benchmarking tool that allows shippers to easily see if the spot quote they are being provided is comparable to, higher or lower than the average. Automated quote benchmarking is now available within the Convoy shipper platform. “Shippers currently spend a lot of time logging into multiple online platforms or contacting several brokers for spot auctions to ensure they get a fair price-to-quality balance. This process alone can increase shipping costs substantially as the time-to-pickup gets shorter,” the company said in a release. According to Convoy, COVID-19 has led to large swings in spot volumes and as a result pricing, leaving many shippers paying more than necessary — or spending too much time looking for the best price — to move their goods. “The need for efficient spot freight booking is greater than ever,” Convoy said. “This is a problem that digital freight networks are uniquely suited to address.”

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What online shoppers want right now

Retail Dive July 28, 2020

Most retailers can remember a time when the internet seemed destined to wreck their business, but amid the COVID-19 pandemic, e-commerce has been a saving grace. Many larger publicly traded retailers are reporting triple-digital e-commerce growth, according to Wells Fargo analysts. Some mom-and-pop stores in recent months turned to the channel for the first time. Unsurprisingly, with shoppers still skittish about shopping indoors, digital sales are expected to remain up. "While triple-digit growth won't continue indefinitely, we do think above-normal growth will continue through year-end," Wells Fargo analysts led by Ike Boruchow wrote in a July 23 client note.

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Government/Safety

House members call for suspension of Federal Excise Tax to stimulate truck buying

Transport Dive Jim Stinson July 28, 2020

The letter is a sign the lobbying effort by the American Trucking Associations (ATA) and the American Truck Dealers (ATD) is having effect. In May, the groups said they had joined with 115 other business organizations to push Congress for wider, industry-specific aid in the next coronavirus relief bill. The FET is a hated tax within some trucking industry circles. It adds 12% to new sales, which is about $22,000 per tractor-trailer. The tax was devised in 1917 to help pay for World War I, and it stood at 3% then. The industry says it's time for relief to stimulate buying, as the COVID-19 pandemic idled OEMs and dropped freight volumes, resulting in a steep drop in truck sales.

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