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Friday, September 4, 2020
Logistics Intelligence Brief
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Trucking

Less-than-truckload turning positive in August

Freight Waves Todd Maiden September 3, 2020

Several expansion and growth initiatives have been announced by LTL carriers recently. YRC Worldwide (NASDAQ: YRCW) announced last month that it was expanding its regional next-day service with the addition of more lanes in the Midsouth and Waco, Texas. The plan is part of the company’s overhaul and aimed at improving transit times and lowering damage claims as there will be fewer touchpoints on the new routes.

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Truckers Are Seeing Growing Freight Volumes

The Wall Street Journal Jennifer Smith September 3, 2020

Trucking companies are reporting stronger freight demand as retailers and manufacturers move to restock depleted inventories, in a sign of strengthening corporate confidence in the U.S. economy. “Between strong consumer demand … and a manufacturing pause, it appears the U.S. is really light on inventory and retailers/manufacturers are rushing to get products on shelves,” Citi analyst Christian Wetherbee wrote in an Aug. 21 research note. “With the industrial economy continuing to rebound month over month and robust activity in the TL [truckload] market, our sense was that LTL demand continued to accelerate as the quarter has progressed,” Stephens Inc. analyst Jack Atkins wrote in a Sept. 3 research note. “Looking ahead, we expect the strength in the broader freight market to persist through the end of the year.”

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LA-Chicago truck rates double as imports consume capacity

The Journal of Commerce William B. Cassidy September 3, 2020

The increase was even higher in rates to Chicago from Ontario, California, the heart of the Inland Empire warehousing and distribution hub. That average spot truckload rate rose from 93 cents per mile in April to $2.64 per mile, sans fuel surcharges, Sept. 2. Those figures provide factual basis for anecdotal claims of soaring truckload and LTL rates as shippers struggle to get freight off ships, through West Coast ports, and onto intermodal trains or trucks. Intermodal freight is rolling over to truckload, and truckload capacity is tight as a drum, Finney said. “There are so many carriers that don’t have drivers based here anymore and there are carriers that won’t come to California any longer,” because of state regulations and higher costs, he said. “That pulls truckload capacity down and pushes that freight onto LTL.” At the moment, they don’t have many alternatives if they want to avoid stock-outs during peak fall sales periods. Finney said LTL rates in LA are heading up by high single- to double-digits. “We’ve had some pretty good increases, some in the 20 percent range. We’re not overcharging,” he said. “We need to service the freight, and it’s very expensive to do anything now in California.”

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Fall trucking levels surprisingly high as industry rebounds from COVID-19 shutdown

Logistics Management John D. Schulz September 4, 2020

Leading trucking executives and analysts say they are pleasantly surprised by the strength in freight demand coming out of the COVID-19-induced economic shutdown in early summer. It’s slightly better if your company is hauling retail as the industrial economy remains so-so. But overall, top trucking executives are reporting their trucks are mostly filled heading into the fall peak season. “Business is back to last year’s numbers, finally,” reports Pitt Ohio President Chuck Hammel, who runs the nation’s 15th-largest LTL company. “We were down 20% in April, 15% in May and 6% in June. July is back to last year’s level.” Like many other trucking executives, Hammel is hoping this trend continues into the fall. “But with the recent spike in the virus and subsequent closures we’ll see,” Hammel said recently.

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Trucking Surges as Capacity Tightens Amid Continued Pandemic

Transport Topics Dan Ronan September 3, 2020

“States are reopening at different rates and are being hit by the virus at different times. This is leading to unseasonal peaks and valleys in manufacturing output and consumer demand,” said Ken Adamo, chief of analytics at DAT. “Carrier networks are out of balance due to inconsistent freight demand at a commodity and lane level, and this is leading to a spike in demand for spot freight in order to meet the capacity need.” “The entire supply chain is being forced to adapt to changes in consumer buying patterns, which affects everything from the equipment types needed for delivery to warehousing capacity,” Adamo said. “Increased online shopping is here to stay, and shippers and carriers alike are being forced to adjust.” Leathers said there’s another factor tightening capacity. Older drivers are accelerating their retirement plans and, because of the pandemic, it’s harder to get new drivers into the industry. Leathers also said 21,000 drivers have temporarily lost their commercial driver licenses after testing positive in the Department of Transportation’s new Drug and Alcohol Clearinghouse. “That’s not an insignificant amount of drivers,” Costello said. “And when you add up all these factors, capacity is getting tighter.”

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Freight Market Could Be Shifting in Favor of Carriers

Transport Topics Connor D. Wolf September 3, 2020

Shippers have faced increasingly tighter capacity throughout this year while consumer spending has increased after a precipitous drop in the second quarter. The coronavirus pandemic likely played a role in both trends. Nevertheless, those factors are providing carriers with leverage by putting pressure on shippers. “I would expect to see continued pressure from carriers to shippers to increase price and increase volume commitments,” Glenn Koepke, vice president of network enablement at FourKites, told Transport Topics. “It’s very hot and heavy in the spot market right now. But there are some companies that are facing that in the contract market.” “Capacity has gotten tighter, I think, for a host of reasons,” American Trucking Associations Chief Economist Bob Costello told TT. “You add all of that up, and I think it’s the reason you’ve seen the spot market go crazy in terms of pricing, and capacity is tighter.”

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COVID-19 Freight Recovery Index

FTR September 2, 2020

  • Dry Van • The Dry Van segment has been especially volatile over the past 10 days, but the latest data fell just short of the August 19 peak. The segment’s recovery from the pandemic remains far greater than the others. • Current Level: 207.6 // Bottomed at 42.6 on 4/24/2020, peak on 8/19/2020 at 210.0
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Shippers/3PLs

Transplace acquires LeanCor, for its third acquisition of 2020

Logistics Management Jeff Berman September 3, 2020

This marks the third acquisition made by Transplace in 2020. In January, it acquired Green Bay, Wis.-based Lanehub, a cloud-based platform and community focused on shipper-carrier collaboration by automatically identifying and connecting companies with complementary freight lanes to save on shipping expenses. And in June, it acquired Austin, Texas-based ScanData Systems Inc., a provider of parcel transportation management solutions (PTMS). Transplace officials described LeanCor as a strategic supply chain partner that provides managed transport services, supply chain consulting, and corporate training programs for “manufacturing-centric shippers.” And the company added that LeanCor’s proprietary consulting and logistics management processes aid shippers in providing better service for their customers through the elimination of waste, decreasing costs, and building cultures of continuous improvement.

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Stores are ‘critical’ for Dick’s Sporting Goods’ booming ecommerce sales

Digital Commerce 360 April Berthune September 2, 2020

Ecommerce sales increased nearly 200% year over year in Dick’s Sporting Goods’ fiscal second quarter ended Aug. 1. Plus, the sporting goods retail chain said online sales accounted for about 30% of total net sales in its Q2 compared with about 12% in its fiscal Q2 2019. Overall, Dick’s reported its highest-ever quarterly sales at $2.71 billion, a 20.1% year-over-year increase. Same-store sales increased 20.7% year over year, even with roughly 15% of its stores closed during the quarter, the retailer reported. This is compared with its Q2 2019, when same-store sales increased 3.2%. As of June, all of its stores are now open.

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Whole Foods moves beyond stores for online fulfillment

Retail Dive Jeff Wells September 3, 2020

Whole Foods has opened its first dark store dedicated to permanently fulfilling online orders, according to a blog post by parent company Amazon. The fulfillment hub is located in the Industry City complex in Brooklyn’s Sunset Park neighborhood and will serve customers throughout the borough. Link:  Amazon Take a look at Whole Foods Market's first permanent online-only store

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Industry

eBay, UPS enter into enhanced tie-up

Freight Waves Mark Solomon September 3, 2020

Last October, Atlanta-based UPS announced an initiative to integrate its services into e-commerce platforms leveraged by small to midsize (SMB) merchants to broaden their access to the consumer market. The program is part of UPS’ strategy to capture a larger share of the SMB market, which UPS executives consider a priority.

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Technology/Innovation

Inside the Cab of an Autonomous Truck

Truckinginfo.com Jim Park September 3, 2020

The first time most of us became aware of the term “safety driver” was probably March 18, 2018. That was the day a self-driving Uber car plowed into and killed a pedestrian in Tempe, Arizona, while its safety driver was watching a video on her cell phone. The term safety driver had a hollow ring to it after that. While the shortcomings of that particular technology and Uber’s approach to development are well documented, it seems that the developers of self-driving heavy trucks take their responsibilities a little more seriously. However, there are few rules and regulations governing the testing of self-driving vehicles on public roads against which their performance can be judged. The truck and its human occupants remain subject to all the usual regulatory requirements (FMCSRs, etc.) governing heavy trucks, but there are few rules relating to the standards and qualifications of either the person in the left seat (usually called the driver), or the functionality and capability of the sensors, computers and artificial intelligence that control the truck.

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Government/Safety

Safe Driver Week results: Fewer checks but speed-related violations rise

Freight Waves John Kingston September 3, 2020

Of the citations this year, 42,857 were traffic enforcement violations — which are moving violations — and 28,486 were nonmoving violations. Chris Turner, director of crash and safety programs at CVSA, noted that not only is the primary focus of Safe Driver Week the commercial vehicle sector, but it is also aimed at moving violations. One of the key numbers showed regression from 2019. This year, CVSA says enforcement officials handed out 2,330 citations and 3,423 warnings to commercial vehicles for speed-related violations. Last year, that number was 1,454 citations and 2,126 warnings.

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DOT rolls out National Freight Strategic Plan

Freight Waves John Gallagher September 3, 2020

The plan highlighted eight “key trends” in U.S. freight transportation — among them diversifying global supply chains, rising domestic energy production, changing urban-rural dynamics and increasing e-commerce. “E-commerce is clearly a major trend that is leading to rapid changes in supply chains, increasing demand for air cargo, residential deliveries and reverse logistics,” said Acting Undersecretary of Transportation for Policy Joel Szabat. “Advancing technologies and innovations also are transforming how freight is delivered.” Link:  Department of Transportation National Freight Strategic Plan

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Workforce

FedEx to Increase Peak Hiring 27% for ‘Unprecedented’ Season

Bloomberg/Transport Topics Thomas Black September 3, 2020

FedEx Corp. plans to hire about 70,000 seasonal workers to handle the holiday surge of packages, a 27% increase from last year’s peak, in what is expected to be an unprecedented level of delivery demand. The courier already has added thousands of workers to keep up with a jump in deliveries as people order more online because of coronavirus concerns. In the quarter through May, FedEx’s U.S. ground deliveries rose 20% from a year earlier. The company likely will match or surpass that for its fiscal first quarter, which ended in August. To keep up with demand, FedEx also will expand Sunday delivery service to 95% of the U.S. population by mid-September and has built more automated sorting centers, including more capacity to handle oversize packages.

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Economy

ISM Services PMI sees sequential decline but remains on strong growth path

Logistics Management Jeff Berman September 3, 2020

The report’s equally weighted sub indexes that directly factor into the NMI were mixed in August, including:

  • business activity/production down 4.8%, to 62.4 growing, at a slower rate, for the third straight month, with 13 sectors reporting growth for the month;
  • new orders were down 10.9%, to 56.8, growing at a slower rates, for the third straight month;
  • employment headed up 5.8%, to 47.9, contracting, at a slower rate, for the sixth month in a row; and
  • supplier deliveries, at 60.5 (a reading of 50 or higher indicates contraction), slowed at a faster rate for the 15th consecutive month
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ISM: Pricing power is in suppliers’ hands

Supply Chain Dive Shefali Kapadia September 3, 2020

Yet as demand rebounds, supply has not necessarily been able to keep pace — an economic dynamic contributing to rising raw material prices. "Business is very good. Production cannot keep up with demand," said one respondent in the chemical industry. "Some upstream supply chains are starting to have issues with raw material and/or transportation availability.

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