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Tuesday, May 4, 2021

Logistics Intelligence Brief

Trucking

LTL carriers, 3PLs see more price hikes ahead (Subscription Based)

The Journal Of Commerce William B. Cassidy May 3, 2021

US less-than-truckload (LTL) shippers are having a hard time catching their breath, with LTL carriers “pushing the pricing meter,” as Saia president and CEO Frederick Holzgrefe put it during an earnings conference call with Wall Street analysts last week. Carriers are raising their base rates and contract prices and intensifying their focus on assessorial charges. Trucking operators and third-party brokers say they expect LTL rates to continue their climb through at least the end of the year, thanks to increasingly tight capacity. Operating costs are rising across the board for LTL carriers, as well, adding further fuel to the rate increase fire. Like manufacturing, LTL has underlying inflationary costs, Holzgrefe said. Saia and other carriers are paying more for real estate, for equipment, and especially for truck drivers, both local and long-haul. “That’s the piece now that is kind of a drag on adding capacity,” CFO Douglas Col said.

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Spot market volume, rates set another record

FTR Transportation Intelligence May 3, 2021

After easing very slightly the week before, spot volume in the Truckstop.com system increased 2.2% during the week ended April 30 (week 17) to surpass the record set two weeks earlier. Spot rates excluding fuel also rose to set a record for the fourth straight week. For the first time in weeks, both load postings and rates were stronger in all segments. Meanwhile, truck postings saw their second-largest decline in 11 weeks, sending the ratio of loads to trucks to its highest level in six weeks. Although extraordinary, the spot market’s strength is not surprising given robust economic indicators and the huge stimulus that hit consumers in March. The Bureau of Economic Analysis on Friday released data showing that March’s surge in consumer spending was the largest since June. Meanwhile, a fading pandemic and increased vaccinations have led to sharply stronger sales and employment at restaurants and other businesses involved in leisure and hospitality. Flatbed especially is benefiting from strong housing starts, which are running at their strongest level since the middle of 2006. A combination of strong sales and supply chain disruptions have left retail inventories the leanest on record. These upward pressures on freight demand come as payroll employment in trucking still lags pre-employment levels significantly, further fueling the need for spot capacity.

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Werner prioritizes driver retention, equipment as shippers restock

Transport Dive S.L. Fuller May 3, 2021

Transport leaders project freight demand to remain elevated, but constraints on equipment and staffing, so far, prevent an oversupply of trucks and drivers in the market. Werner is investing in equipment and focusing on driver recruitment to keep up with expected restocking demand. Werner acknowledged the current state of the driver shortage, which other executives have noted is worse than it has been in decades. Leathers said drivers prefer dedicated lanes, which is where the majority (64% by the end of Q1) of Werner's TL trucks are located. "Our retention efforts are paying off, and we are holding the line on turnover," Leathers said. "In addition to attractive driver compensation, Werner strives to be the truckload employer of choice, by providing a modern truck and trailer fleet with the latest safety equipment and technology, a wide variety of driving positions including daily and weekly home-time opportunities, and an industry-leading driver training program."

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Industry

Seller’s market for transport services may last through 2023, mega-bull Mehrotra says

Freight Waves Mark Solomon May 3, 2021

The powerful surge in demand and pricing now coursing through transport modes will last through the rest of 2021, continue through all of 2022 and could extend well into 2023, Deutsche Bank analyst Amit Mehrotra said in a note published Monday. Just as important, shipper psychology is shifting to support what Mehotra has called the “stronger for longer” pricing cycle. This is especially relevant to the $700 billion-a-year U.S. truckload sector, where stakeholder psychology is critical in assessing price volatility, Mehrotra said. An increasing number of truckload shippers, namely very large retailers, have already discounted higher transport spending levels in 2022, he said.

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Diesel Price Resumes Rise, Increases 1.8¢ to $3.142 a Gallon

Transport Topics May 3, 2021

The increase came after the price of trucking’s main fuel was unchanged at $3.124 on April 26. A gallon of diesel costs 74.3 cents more than it did at this time last year.

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Economy

Manufacturing output remains strong in April, reports ISM

Logistics Management Jeff Berman May 3, 2021

April manufacturing output remained elevated, coming off of its best monthly performance in years in March, according to data issued today by the Institute for Supply Management (ISM). In its monthly Manufacturing Report on Business, ISM said that the report’s key metric, the PMI, at 60.7 (a reading of 50 or higher indicates growth) was down 4% compared to March’s 64.7 reading, which marked the highest reading since November 1983’s 66. This marked the eleventh consecutive of PMI growth, coupled with April representing the eleventh consecutive month of growth for the overall economy.

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Technology/Innovation

The Race to Build Self-Driving Trucks Has Four Horses and Three Jockeys

Bloomberg Ira Boudway May 1, 2021

It’s likely that safety drivers will remain in cabs for years to come as companies hone their sensor technology and train their software for every highway scenario. It’s expensive and painstaking work that can overwhelm even the best-run start-ups. The consensus within the industry is that three contestants stand the best chance to make it to the finish line: “It's TuSimple, Aurora and Waymo,” says Grayson Brulte, co-founder of Brulte & Co., a consulting firm focused on transportation. TuSimple, a San Diego based-company that raised $1.35 billion in an initial public offering in April, is in the pole position, as Brulte sees it, because of its singular focus on trucking and its partnership, begun three years ago, with Navistar International to build autonomous trucks. “They've got the head start on it,” says Brulte.

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Government/Safety/Sustainability

Truck driver availability hit new low in March, ACT says

DC Velocity May 3, 2021

The pool of truck drivers in the U.S. labor market hit a new low in March, further tightening transportation market tensions as the economy continues its swift recovery from pandemic restrictions, according to a report from the industry analysis firm ACT Research. Columbus, Indiana-based ACT’s latest For-Hire Trucking Index showed a Driver Availability Index that tightened to another new low point in the past three years, the fourth in a row, the firm said Thursday.

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2 Ways the Roadcheck 2021 Inspection Blitz Will Be Different

DAT.com May 3, 2021

What’s different for the 2021 Roadcheck This year’s Roadcheck week will be different from previous inspection blitzes in two important ways: • It’s happening earlier. Roadcheck 2021 will take place in May instead of June. (Although last year’s Roadcheck was delayed to September due to the pandemic.) Freight rates traditionally peak in June, so many shippers already expect to pay more at that time. Shippers may not anticipate rate increases in May. • Truckload capacity is tight. We’re seeing tight load-to-truck ratios across the van, reefer and flatbed segments. All three segment ratios have increased by more than well over 100% compared to March of 2020, before widespread lockdowns. Flatbed’s national average load-to-truck ratio nearly tripled. What we can expect Drivers working during Roadcheck tend to be less productive due to the time lost during inspections. Many choose to take time off to avoid inspection hassles. With CVSA announcing Roadcheck dates back in February, there was plenty of time for drivers to plan vacations (or staycations). Due to fewer drivers during the first full week of May because of Roadcheck, we expect: • Fewer trucks posted to the loadboard network • Higher load-to-truck ratios • Increased spot rates

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Business

Auto Makers Retreat From 50 Years of ‘Just in Time’ Manufacturing (Subscription Based)

The Wall Street Journal Sean McLain May 3, 2021

Toyota Motor Corp. is stockpiling up to four months of some parts. Volkswagen AG is building six factories so it can get its own batteries. And, in shades of Henry Ford, Tesla Inc. is trying to lock up access to raw materials. The hyperefficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them. “The just-in-time model is designed for supply chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co.’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.”

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