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Friday, September 11, 2020
Logistics Intelligence Brief
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Trucking

Shippers swallow higher contract rates to secure capacity

The Journal of Commerce Ari Ashe September 10, 2020

“There are numerous examples of customers who have struggled to get their loads picked up, their tenders accepted, proactively come back to the carrier asking, ‘What is [it] going to take because we need to have our freight moved.’” Schneider National CFO Stephen Bruffett said during the event. Fuller said shippers have also come to US Xpress offering to increase their contract rate in exchange for guaranteed capacity in the peak season. Shippers volunteering to pay rate increases is “not something that happens a lot in our industry,” he said, adding that some of those shippers may already be looking ahead to next year. “You’re also having customers trying to lock in next year’s rate increase now, in the hopes that they can get a lower rate increase, rather than being fully exposed to the bid cycle in early 2021,” Fuller said.

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COVID-19 Disruption Continues to Affect Freight, Rates

Truckinginfo.com Deborah Lockridge September 10, 2020

One of the reasons spot rates are currently high is that capacity is currently tight – and that’s because we haven’t brought all the drivers back into the industry, not because of a lack of trucks, many of which Starks said are still parked against the fence. Vise offered a number of reasons for that:

  • Carriers are slow to add back drivers because of uncertainty about whether the current surge in demand will continue
  • With federal assistance such as extra unemployment payments, PPP loans, and stimulus checks, some drivers may feel less pressure to get back to work
  • The new drug and alcohol clearinghouse that went into effect in January shows that through July, about 29,000 drivers have tested positive or refused tests
  • inflow issues – the Commercial Vehicle Training Alliance estimates that social distancing and COVID-19 issues in some states could see 40% fewer commercial drivers’ licenses issued this year. So we may have fewer drivers coming into the market.
  • We’ve probably seen some temporary or permanent retirements due to COVID-19 as older drivers who face a higher chance of death from the virus decide it’s not worth the risk.
  • The industry is likely seeing some competition for those drivers from the dramatic growth of local delivery, which has grown 9% since February.
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Industry

West Coast Freight Networks ‘Bursting at the Seams’ With Surging Imports

The Wall Street Journal Jennifer Smith September 10, 2020

A crush of goods coming into West Coast seaports is straining capacity at the gateways and on key inland distribution lanes, raising shipping prices for retailers and complicating efforts to replenish inventories following the supply chain upheaval from the coronavirus pandemic. “It is bursting at the seams here in Southern California,” said Weston LaBar, chief executive of the Harbor Trucking Association, which represents trucking companies at the neighboring ports of Los Angeles and Long Beach. Mr. LaBar said trucking companies are calling the group “asking if anyone has additional drivers that can sub-haul for them,” while the movement of containers between the ports and nearby distribution centers has slowed.

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Investor conference highlights bullish truckload market; intermodal demand returns

Freight Waves Todd Maiden September 10, 2020

Schneider National’s (NYSE: SNDR) Chief Financial Officer Steve Bruffett said if the company’s current load tenders fell by 10% to 15%, it would still have more freight than it could handle on a daily basis. The carrier’s truckload (TL) segment normally operates at a 90% contract-to-10% spot freight mix, which can decline to as little as 6% in softer freight markets. It’s at 12% currently as the carrier is choosing to take advantage of higher spot rates. Eric McGee, executive vice president of highway services at J.B. Hunt Transport Services (NASDAQ: JBHT), said it has seen demand increase incrementally each week over the last six weeks. He said the supply side of trucking continues to suffer from the impacts of the Drug & Alcohol Clearinghouse as well as employment headwinds from COVID-19, which resulted in drivers sitting on the sidelines from either a lack of employment opportunities or as stimulus payments provided sufficient replacement income. He believes these catalysts have diminished the driver pool by more than 100,000 drivers.

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Reports say Amazon has acquired a Boeing 767 aircraft

Logistics management Jeff Berman September 10, 2020

This marks a shift from Amazon’s longstanding tradition of leasing aircraft from Air Transport Services Group (ATSG), to operate its air cargo network to serve United States-based customers, and Atlas Air Worldwide Holdings, whom provides air cargo services to support Amazon’s package deliveries to its customers.

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Government/Safety

Squelch high CSA scores to broaden your insurance option

Freight Waves September 10, 2020

Insurance rates are on the rise thanks to factors such as distracted driving and substance abuse, which can ultimately lead to truck accident fatalities and costly “nuclear verdicts.” While it’s true that these events have contributed to increased rates for truckers across the board, drivers with a poor record on a number of benchmarks have themselves to blame for high premiums. Joe Schreiner, Reliance Partners’ senior vice president of sales, urges truckers looking for lower premiums to focus internally, beginning with cleaning up their CSA scores. “The reason why insurance companies charge such high premiums, especially for the ones that have two or three CSA score alerts, is because an attorney would have a field day with that trucker in court,” Schreiner said.

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FMCSA issues emergency declaration in response to wildfires

Fleet Owner Catherine Conway September 10, 2020

FMCSA's extension covers commercial vehicles that are "providing direct assistance supporting emergency relief efforts [by] transporting supplies, goods, equipment and fuel, and transporting persons into and from the affected states, or providing other assistance in the form of emergency services during the emergency in the affected states from the wildfires."

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