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Wednesday, October 7, 2020
Logistics Intelligence Brief
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Trucking

Transportation capacity hits new lows, ‘no relief in sight’ for pricing

Freight Waves Todd Maiden October 6, 2020

A September supply chain survey shows transportation capacity has reached new lows. The Logistics Managers’ Index (LMI), a survey of leading logistics executives, showed capacity fell to new lows, dipping another 770 basis points during the month to a 23.8% reading. The LMI is a diffusion index, wherein a reading above 50% indicates expansion and a reading below 50% indicates contraction. The survey captures the rate of change in activity for key supply chain trends in areas like transportation, inventory and warehousing. The September transportation capacity reading was the lowest level ever for any of the eight metrics the survey tracks. The capacity situation was even worse for “downstream firms,” or those closest to the consumer, at 16.3%. “Clearly consumer-facing firms are struggling to find the capacity needed to meet the increasing consumer appetite for home delivery,” the report stated. “It is interesting that logistics capacity is already this pressed at the end of Q3. Traditionally Q4 is when we see peak logistics demand, so the fact that it’s already close to maximum utilization calls into question whether or not missed or late deliveries will become an issue through peak retail times in November and December.” Related: DC Velocity September LMI reaches highest level in two years Link: CSCMP September 2020 Logistics Managers' Index

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Carriers Prepare for Increasing Surge to Supply Chain in E-Commerce Push

Transport Topics Mindy Long October 6, 2020

Satish Jindel, founder of SJ Consulting Group, expects the upcoming peak to be like none experienced by the transportation industry and, in particular, unlike anything parcel and less-than-truckload carriers have seen in the last three decades. “The supply chain is already feeling it with average daily parcel volume for 2020 estimated at 78 million, which is a 28% increase over 2019,” Jindel said, adding that the peak season average daily volume will reach 122 million. Jindel said that with only a short amount of time left before the peak, carriers are limited in doing anything more than the traditional methods, such as hiring temporary workers.

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US shippers shell out to secure container, truck capacity

The Journal of Commerce Mark Szakonyi October 5, 2020

With capacity tight across the supply chain — from the stows of container ships moving goods from Asia to the United States to the trailers of truck drivers making so-called final-mile deliveries — carriers in general hold the pricing power. That’s forcing shippers to change how they contract with logistics providers in the short term, and it speaks to the challenge they face in gauging how much money they should allocate to transportation budgets in 2021.

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Shippers/3PLs

Shippers, Retailers Work to Spread Out Holiday Surge Season to Ease Capacity Constraint

Transport Topics Mindy Long October 6, 2020

You’re going to see very heavy promotional periods before Thanksgiving and then very heavy through the first week of December,” said Dan Coll, vice president of e-commerce for Kenco Logistics, based in Chattanooga, Tenn. An earlier start to the season may also save costs on surcharges that could be applied later in the peak season, Kelly said. He added that to mitigate shipping delays, retailers should plan their promotions in light of shipping constraints. “Shipping demand is usually highest on Mondays, so promotions launched over the weekend have the potential to be problematic. I have been surprised by an unrealized opportunity — picking, packing and tendering shipments on the weekends,” Kelly said, adding that FedEx delivers for about 95% of the U.S. population on weekends.

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As Amazon issues warehousing blockade, carriers scramble to make sense of early peak season and retail wave

CCJ Aaron Huff October 6, 2020

And with peak retail season around the corner, online and big-box retailers are scrambling to lock down transport and warehouse capacity, especially in the “middle mile” of their supply chains from truckload and less-than-truckload carriers. Just-in-time inventory no longer works in today’s retail environment with online and big-box retailers needing to add new warehouses and distribution centers near metro areas to fulfill orders in two days or less, said Jason Lewis, national sales manager, transportation and logistics, for Panasonic. During the peak season, retailers will need to bring on new warehouses, and this will require the ability to roll out fleet capacity, technology and services quickly, in as little as one week. Panasonic has a program to help its customers expedite technology deployment for peak season, he said. Eighty percent of Panasonic’s transportation customers are last-mile delivery courier fleets that use its Toughbook line of mobile and handheld computers, such as the FZ-N1, to scan barcodes on freight to provide better delivery visibility.

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Government/Safety

Whopping $411 million nuclear verdict in Florida said to be biggest ever and tough to collect

Freight Waves John Kingston October 6, 2020

A Florida jury has handed down what is believed to be the biggest nuclear verdict ever against a single trucking company defendant: a $411 million verdict handed down in Florida to a motorcycle driver. According to local press reports and a prepared statement issued by the attorney for the plaintiff in the case, a jury in a virtual Zoom trial handed down a $411,726,608 verdict in favor of Duane Washington for injuries he received in a 45-vehicle pileup in 2018. But that’s where the normalcy ends. The case has numerous twists in it that may mean it won’t set firm precedents even if it is likely to set the trucking plaintiffs and defendant’s bar into an uproar.

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Workforce

Best transportation companies for female employees named

Freight Waves Kim Link-Wills October 5, 2020

The Women In Trucking Association (WIT) has released its 2020 list of the top transportation companies for females. The annual Top Companies for Women to Work for in Transportation list was created by WIT magazine Redefining the Road in 2018 as part of its mission to promote the accomplishments of businesses focused on the employment of females in the trucking industry. Companies making the list this year were listed alphabetically, beginning with AGT Global Logistics, founded and led by Angela Eliacostas, WIT’s 2018 Influential Woman in Trucking. AGT also made the 2019 list. Other repeat winners are American Central Transport, Boyle Transportation, Carbon Express, Carter Express, Centerline Drivers, Day & Ross, Dupre Logistics, Fifth Wheel Freight, Kenco, Kenworth, Knichel Logistics, NFI Industries, Odyssey Logistics & Technology, PACCAR Parts, Palmer Trucks, Peterbilt Motor Co., ReedTMS Logistics, Roehl Transport, Ryder System, Schneider, Total Transportation of Mississippi, Transport America, Trimac Transportation and YRC.

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Driver hiring lags despite September surge in US truck orders

The Journal of Commerce William B. Cassidy October 5, 2020

New truck orders may be surging, but trucking employment is not -- especially compared with hiring in other transportation sectors. Unadjusted for-hire trucking employment numbers rose by 3,200 jobs in September, a month when FTR Transportation Intelligence says Class 8 truck orders hit 32,000, the highest level of new heavy truck orders since October 2018. “The Class 8 truck market continues to recover faster and better than expected,” Don Ake, vice president of commercial vehicles for FTR, said in a statement Monday. “This strong order volume suggests fleets believe there will be steady freight growth going forward. Rates have improved, so carriers have the cash, and now they also have the confidence.” Hiring, however, is lagging in for-hire trucking, although the gains have been bigger than seasonally adjusted numbers indicate. Trucking companies are chipping away at the job deficit created by the implosion of the US economy in March and April, but they’re still short of pre-COVID employment numbers and even more critically, year-ago numbers.

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Fleets preparing to face a driver shortage ‘like it’s 2018 all over again’

CCJ Aaron Huff October 5, 2020

In addition to ongoing economic recovery in the third quarter, the industry saw thousands of drivers exit the labor pool after the Drug and Alcohol Clearinghouse went live in January. As of Aug. 1, the number of drivers who tested positive for drug use and placed in a prohibited “do not hire” status was 26,433. Of this group, 21,053 have not yet started the return-to-duty process. “They just left and are gone,” Costello said. Another contributing factor to the present shortage is that fewer drivers have been going through training schools due to limited seating capacity from social distancing. Driver schools are graduating 30% to 40% fewer drivers, and Costello expects this will result in “tens of thousands of drivers” not entering the labor pool this year. “The driver shortage is going to remain for a while,” Costello said. “It’s like 2018 all over again.”

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Economy

September Services PMI remains on growth track, reports ISM

Logistics Management Jeff Berman October 5, 2020

Economic activity in the services sector grew for the fourth straight month in September, according to the Services ISM Report on Business (formerly the Non-Manufacturing Report on Business), which was issued today by the Institute for Supply Management. The report’s key indicator—the Services PMI (formerly the Non-Manufacturing PMI)—inched up 0.9%, to 57.8 (a reading of 50 or higher indicates growth is occurring), in September. This followed a 1.2% August decline and a 1% gain in July. The September Services PMI is 4% above the 12-month average of 53.8, with the highest reading over that span being July’s 58.1 reading and the lowest being April’s 41.8. Services sector growth has seen gains in 126 of the last 128 months, with the exception of May and June of this year.

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