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Thursday, September 3, 2020
Logistics Intelligence Brief
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Transportation capacity near 2-year low; pricing surges

Freight Waves Todd Maiden September 2, 2020

Supply chain data shows transportation capacity has declined to a 22-month low with utilization and prices reaching 19-month highs. Those were a couple of the highlights from a report summarizing July data from the Logistics Managers’ Index (LMI), a survey of leading logistics executives. The overall index increased to a reading of 63% during the month, up 130 basis points from June and well off the all-time April low of 51.3%. The July mark was the highest for the index since January 2019. The LMI is a diffusion index, wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction. “Interestingly, upstream respondents report a higher level of activity than their downstream counterparts [those in the supply chain that are closer to the consumer]. Whether or not this reflects the closings of downstream retailers due to COVID-19 outbreaks remains to be seen,” the report stated. Transportation capacity tightened further during July with the sub-index declining 680 basis points to a reading firmly in contraction territory at 42.8%. Transportation utilization remained elevated, unchanged at 66.7% for the month.

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Q&A: Avery Vise, FTR Transportation Intelligence Vice President of Trucking

Logistics Management Jeff Berman September 2, 2020

LM: How do you view the current state of the truckload and less-than-truckload (LTL) markets? What have been the biggest changes since COVID-19 truly kicked in? Avery Vise: The word volatility does not describe it well enough. Our Trucking Conditions Index showed that trucking conditions in June were the best in a decade, even though two months earlier, trucking conditions were the worst on record. It is just about the most extreme situation you could imagine and even more complicated if you are a dry van or refrigerated carrier, because, for the first few weeks of the COVID-19 pandemic, you had all this extra demand for grocery restocking and then everything collapsed. And starting in mid-to-late May, and especially during June, which is normally a seasonal peak anyway but we were not really sure because of the lockdowns and the quarantines, we saw conditions in June that were the best for the market in a decade, coming out of the Great Recession. It is really a function of how much capacity was lost as truckload and LTL carriers furloughed a lot of drivers and other workers and then how fast the rebound was based on the growth we saw in retail sales in May and June and to a lesser extent in May in the industrial sector. June and July industrial sector activity improved. It has been a dramatic shift in just the last four months, from OK to horrible to really pretty good. That is where we stand now, and the real question is going to be where are we going to go?

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Monthly Economic Review: September 2020

National Retail Federation Jack Kleinhenz September 1, 2020

During the initial nine-week period of the survey, respondents indicated pervasive difficulties with business operations and finances, including temporary closings, employment, revenues and cash on hand. And even though those difficulties have become less prevalent, business owners’ optimism has declined in terms of how long they think it will take their businesses to bounce back. Initially, 30 percent of respondents said it would take at least six months for their businesses to completely return to normal, and nearly 25 percent said it might be possible in two to three months. At the end of June, 44 percent expected a full recovery to take at least six months, while only 10 percent said it might be possible in two to three months.

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Demand for Rental, Lease Trailers at Historic Highs

Transport Topics Roger Gilroy September 2, 2020

E-commerce also boosted the need for more trailers and prompted an operational redistribution of trailers already in service — especially in the less-than-truckload and local delivery segments, he said. A second surprising aspect of the trailer lease-rental business now, Willmott said, is the increase in the percentage of rentals versus long-term leases, and how lenders have accepted that shift.

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Airfreight rates expected to stay elevated through peak due to loss of belly capacity

Supply Chain Dive Matt Leonard September 2, 2020

"Traffic continued to recover in June and July, fueled by the restart of economic activity and easing of lockdown measures in several key economies," Drewry wrote in a note Wednesday. "Nevertheless, pricing continued its retreat from the peak levels in April and early May, as demand for PPE declined and shippers diverted cargo to less expensive modes of transport." Drewry expects the rates to remain at their elevated level due to the loss of belly capacity and said "product launches like PS4 could even produce spikes."

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COVID is creating the supply chain of the future

Fleet Owner Josh Fisher September 2, 2020

“Your supplier may not have a problem but their supplier or their supplier’s supplier might, and that starts interrupting what's coming in your direction,” Clair explained. “The other piece that’s happening is as those sourcing legs — both import and domestic — are being impacted. The truck lines and transportation networks are networks built around flows. Once you start changing flows, you lose productivity out of the carriers as well. Their availability and pricing and service levels start going in the wrong direction.” Those are among the bigger inbound problems in the supply chain, according to Clair. The other big supply chain change in the COVID era is on the outbound side — specifically e-commerce. With fewer office employees working in central locations, smaller shipments of office products are being delivered to more individual homes. This new outbound flow is also changing retail brick-and-mortar stores, which are doing more e-commerce and home delivery since the pandemic began.

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Forward Air announces Ohio-based expansion plans

Logistics Management Jeff Berman September 2, 2020

“The redevelopment project will also allow us to provide our drivers with a state of the art facility with an expanded yard,” he added. “It allows us to centralize operations from other locations in the Columbus area. With the addition of adjacent property, we will be able to create a campus feel and a dedicated national support center for driver recruitment, training and support.” In late July, Forward Air announced it was moving forward with a growth strategy focused on organic infrastructure investments, coupled with acquisitions of complementary businesses. And it also announced an organic investment to expand the capacity of its Columbus, Ohio-based national hub (CMH) by 30%. This is the central hub for the company’s less-than-truckload network.

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Report: Blackstone Group and General Infrastructure partners makes bid for Kansas City Southern

Logistics Management Jeff Berman September 2, 2020

This is not the first time that Blackstone Group and Global Infrastructure Partners have banded together to acquire KCS, with the report observing that KSU turned down a previous overture earlier this year, in late July. The report also noted that should KSU turn down this offer again, “this bid could prompt other railroads that have long coveted the company and its ties to Mexico trade to come out of the woodwork, though deals in this sector are closely examined by regulators.”

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Daimler takes deliberate approach to driverless trucks

Freight Waves Alan Adler September 2, 2020

The parent of Freightliner, the top-selling Class 8 truck brand in the U.S. and Canada, is  collaborating with Torc to put series-produced Level 4 trucks on the roads within the decade. That includes a Level 4 test fleet, a redesigned truck chassis and adoption of a hub-to-hub model the trucks will travel. “This is a marathon, not a sprint,” said Peter Vaughan Schmidt, head of Daimler Trucks Autonomous Technology Group. Daimler likely won’t be first to sell Level 4 trucks. Navistar International Corp. (NYSE: NAV), working with startup TuSimple, said in July it is targeting 2024 for a Level 4 tractor capable of cross-country travel without a dedicated driver.  

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Ike Reaches Autonomous Tech Deal With Ryder, DHL, NFI

Transport Service Dan Ronan September 2, 2020

Automated trucking technology company Ike Robotics Inc. has reached agreements with three major companies to put its technology into at least 1,000 trucks. Ryder System Inc., DHL Supply Chain, NFI Industries and several smaller companies announced Sept. 1 that they are working with San Francisco-based startup Ike to install its automated system in their trucks through an annual software subscription model. The company was founded in 2018 by CEO Alden Woodrow and a group of engineers and product designers from Google, Apple Inc. and Uber Technologies Inc.

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IIHS: Truck safety equipment could cut 40% of rear-end collisions

Freight Waves Alan Adler September 3, 2020

Large trucks with forward collision warning and automatic emergency braking (AEB) systems could eliminate more than 40% of rear-end collisions, according to a new study from the Insurance Institute for Highway Safety (IIHS). “The potential benefits are great enough that these crash avoidance systems should be standard equipment on all new large trucks,” IIHS President David Harkey said. Forward collision warning and AEB reduced rear-end crashes by 44% and 41%, respectively, IIHS Director of Statistical Services Eric Teoh said. Link: Insurance Institute For Highway Safety Study shows front crash prevention works for large trucks too

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CVSA Safety Enforcement Operation Catches More Than 66,000 Drivers

Transport Topics Eric Miller September 2, 2020

Law enforcement officers and inspectors nabbed more than 66,000 drivers engaging in unsafe behavior on U.S. and Canadian roadways, issuing more than 71,000 warnings and citations as part of Operation Safe Driver Week, the Commercial Vehicle Safety Alliance announced Sept. 2. The stepped-up enforcement event, which took place July 12-18, was CVSA’s first special initiative of the year after postponements and cancellations of other enforcement campaigns due to COVID-19. “However, despite the challenges associated with the pandemic, 3,681 enforcement officers from 55 Canadian and U.S. jurisdictions interacted with 29,921 commercial motor vehicle drivers and 36,500 passenger vehicle drivers during this year’s special enforcement event,” CVSA said in a statement.

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Getting blitzed: Lighting violations continue to place trucks out of service

CCJ Tom Quimby August 3, 2020

While keeping the lights on seems like a fairly easy thing to do, 11.5% of last year’s out of service truck violations during the Commercial Vehicle Safety Alliance’s (CVSA) International Roadcheck were caused by light failures. Unfortunately, fixing outages on the road may entail a lot more than simply replacing a broken bulb. “In this era of LED lighting, lamp failure may suggest broader systemic issues,” said Optronics director of engineering Kyle O’Dell. “A lamp that appears to simply be burned out turns out to be caused by corrosion in that lamp’s branch of the electrical system. This means moisture is loose in the entire system – and a bigger problem.”

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ATA: Trucking is in the climate crosshairs

Transport Dive Jim Stinson September 2, 2020

  • Trucking is now in the "climate crosshairs" more often, as the industry experiences regulatory and other political pressures to use renewable fuels, Glen Kedzie, energy and environmental counsel to the American Trucking Associations, said during a U.S. Bank webinar on the transport sector Tuesday.
  • Transportation creates 28% of all greenhouse gases (GHG). Within that subset, light vehicles, such as cars, make up 61% of transportation-related GHG. Heavy-duty trucking makes up 23% of transportation-related GHG, Kedzie said.
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Court weighs whether carriers can continue to work with owner-operators in California

CCJ James Jaillet September 2, 2020

The California Trucking Association, backed by the American Trucking Associations and supported by a coalition of other trucking groups, argued Tuesday in the federal Ninth Circuit Court of Appeals (a court just one level below the U.S. Supreme Court) that motor carriers and owner-operators should remain exempt from California’s restrictive A.B. 5 law.

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