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Friday, May 14, 2021

Logistics Intelligence Brief


Trucking conditions hit record high in March, ‘perhaps the strongest freight market ever’

CCJ May 13, 2021

FTR’s Trucking Conditions Index (TCI) for March, as reported in FTR’s May Trucking Update, surged to a record high of 16.27, up about five points from February. The prior record was 16.17, set in October 2020. According to FTR, contributions from freight volume, rates and capacity utilization all strengthened in March. “March’s record TCI was especially remarkable considering that the index’s fuel component – the month’s lone weakness – was the most negative it had been since before the Great Recession,” said Avery Vise, FTR’s vice president of trucking. “Robust demand and tight capacity no doubt are big operational headaches for many trucking operations, but those factors are supporting the best market conditions ever for carriers. We have yet to see signs of a loosening in driver capacity, so the near-term outlook is strong.” FTR expects the TCI to remain in positive double-digit territory at least through the third quarter, with the possibility of one or more record readings.

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Disruptions Add More Stress to Already Strained Capacity Market

Transport Topics Connor D. Wolf May 13, 2021

Already stressed capacity is facing new pressure as the economy recovers from the coronavirus pandemic and demand increases. “There are short-term and longer-term implications,” Noah Hoffman, vice president of retail and supply chain solutions at C.H. Robinson, told Transport Topics. “The retail space continues to put demand on all suppliers. The retail community can’t keep up with both inbound and outbound constraints and e-commerce continues to fuel that space. So certain inventory for retailers are at record lows. This is going to compound the demands on capacity that’s already not readily available.” "I would say it’s not only just the increase in the demand, it’s the volatility and the unanticipated levels of demand,” Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, told TT. “Managing the supply chain networks for known demand is much easier than managing unknown demand. So we’ve got variability and volatility in demand. When you combine that with the concerns around capacity in the overall network, this is like the perfect storm of chaos.” Kent added since companies are dealing with limited capacity they need to optimize. But when it’s so volatile it becomes less clear where to put workers and resources. He pointed to the semiconductor chip shortage as an example. He noted it’s unclear who is going to win out between industries such as consumer electronics and automotive production.

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Fuel shortages further tighten Southeast truck capacity (Subscription Based)

The Journal Of Commerce William B Cassidy May 13, 2021

Southeastern slowdown A slowdown in truck movement that may be attributable to the pipeline shutdown is evident in data from visibility technology provider FourKites. On Thursday, outbound truck movements from Alabama, Georgia, the Carolinas, and Virginia were lower than the two-week rolling average. The decreases were greatest in South Carolina, which saw an 8.0 percent drop, and Georgia, with a 1.7 percent decline. The fuel shortages hit a week after International Roadcheck 2021, a three-day truck inspection blitz, temporarily tightened capacity in the truckload spot market. The annual Commercial Vehicle Safety Alliance inspection event puts short-term stress on the spot market as a substantial number of independent truck drivers across the US and Canada park their trucks for the week. Technology company and spot market load board operator Truckstop.com saw the number of trucks available drop 11.1 percent in the week that ended May 7 from the previous week, while loads posted by shippers rose 11.8 percent. That pushed dry van spot rates up 3 percent on average to $3.07 per mile, including surcharges. This week’s fuel shortages will keep pressure on those rates.

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Colonial Restarts Pipeline With Supply Chain Far From Normal

Bloomberg Jeffrey Blair And Jill R. Shah May 14, 2021

The largest fuel pipeline in the U.S. restarted its entire system after a cyberattack nearly a week ago, but said it will take several days for the supply chain to return to normal. Colonial Pipeline Co. has started delivering products like gasoline, diesel and jet fuel to all of the markets it serves, the pipeline operator said in a statement on Thursday, but some areas may experience service interruptions during the restart process. The system, which transports products from Gulf Coast refineries as far north as New York, is running at less than half of capacity, according to people familiar with the matter. Earlier, it emerged that the operating company paid almost $5 million in untraceable cryptocurrency to Eastern European hackers last week to help get gasoline and jet fuel flowing again along the Eastern Seaboard. Fuel shortages from Florida to Virginia continue and Colonial said its system is about 5.5 days behind its current schedule.

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Port of Los Angeles and Port of Long Beach turn in record-breaking April volumes

Logistics Management Jeff Berman May 13, 2021

The two largest ports in the United States—the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) each had record-breaking months in April, according to data respectively issued by the ports this week. POLA reported that total April volume—at 946,966 TEU (Twenty-Foot Equivalent Units)—marked a 37.4% annual increase, for its busiest April in the port’s 114-year history. April POLA imports came in at 490,127 TEU, for a 32.4% annual increase, with exports off 12.2%, to 114,449 TEU. And empty containers—at 342,391 TEU—climbed 81.6% compared to April 2020. On a year-to-date basis through April, total POLA volume—at 3,539,397 TEU—is up 42.2%. When compared to 2019, the last full pre-pandemic year, April is still up 20%.

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Fleets embrace memes, social media to connect with drivers

Transport Dive Jim Stinson May 12, 2021

As drivers talk, so should execs Shaver told a WorkHound webinar on April 7 that drivers are sharing information online, some of it negative. The drivers are eagle-eyed when it comes to perceived slights, such as a shipper posting a sign that warned it had no facilities for drivers. During the webinar, she shared a picture of the post, although she did not name the shipper. Shaver noted that fleets and shippers need to pay attention in this time of driver shortages and capacity challenges. Drivers know they have an advantage in the current market conditions, and even dollars are not attracting them to certain jobs, she said. Strategies can vary. But stories are a big part of the strategy. Stories shared through social media about team success can attract driver candidates, Dunn said. A story of a firm driver who has passed 1 million miles with the company can make a candidate confident about applying. Or stories about strong pay or how drivers can spend more time at home with their families can increase interest. General company objectives are good to share, too, Dunn said, as is an anonymous story about how a customer had an issue, and how the fleet responded to it.

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McDonald’s, Amazon Accelerate Push Toward Higher Minimum Wage

Bloomberg Michael Sasso May 13, 2021

McDonald’s Corp. announced Thursday it will raise hourly wages by about 10%, bringing the average wage at its restaurants to more than $13 an hour. Chipotle Mexican Grill Inc. said earlier this week it will set hourly starting wages at $11 to $18. Target Corp. and Costco Wholesale Corp. have increased theirs to $15 and $16, respectively. Amazon.com Inc. also upped the labor market ante Thursday by announcing plans to hire 75,000 people in the U.S. and Canada at starting pay that will average more than $17 an hour. New employees will get hiring bonuses of $1,000 and those fully vaccinated for Covid-19 will get additional $100. For Walmart, boosting average wages rather than the starting pay rate is a calculated gamble to entice enough workers while not taking the big hit to profits that a minimum-wage hike would entail. Keeping its minimum wage at $11 an hour presents a “ladder of opportunity” for employees to earn more as they climb the ranks, Walmart Chief Executive Officer Doug McMillon has said.

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Optimal Dynamics lands big investment for fleet decision making (Subscription Based)

The Journal of Commerce Eric Johnson May 13, 2021

Powell told JOC.com he envisions three levels of uses emerging for Optimal Dynamics users. At the highest level is a strategic use — for example, a fleet manager modeling and simulating what would happen if it changed a key variable, such as hiring more drivers. In the middle is a tactical use, where a fleet operator might generate load recommendations over the next one to 15 days. At the simplest level is a day-of use, where the system might inform a dispatcher which drivers are best suited to take a load that day. “All three use the same underlying technology,” Powell said. “Operational systems run every 60 seconds, while the strategic modeling, which a company would use to do calibrations, that’s offline, but you can bring it online if you’re satisfied with the results.”

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Driver Positive Drug Tests Continue at Last Year’s Rate So Far in 2021

Transport Topics Eric Miller May 13, 2021

The rate of positive truck driver drug tests recorded in the Drug & Alcohol Clearinghouse in the first three months of this year remains on pace with last year’s, and the number of drivers who have yet to enroll in return-to-duty programs remains persistently low. As of April 1, there were 14,303 driver positive drug tests recorded this year, compared with 55,955 failures during all of 2020. That’s an average of 4,663 failures a month during 2020, and 4,767 a month for the first three months of 2021. The overwhelming majority of the positive tests were for marijuana, followed by cocaine, and then roughly equal numbers of methamphetamine and amphetamine. Link: FMCSA Drug And Alcohol Clearinghouse March 2021 Report

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Red-hot renewable diesel encouraging producers to buy into upstream supply chains

Freight Waves John Kingston May 14, 2021

Renewable diesel is not the same as biodiesel, in which a diesel-like product produced from some of the same feedstocks as in renewable diesel is blended into petroleum diesel. The process to make that sort of biodiesel is far less complex than what is needed to make renewable diesel. It mostly involves crushing soybeans or other feedstocks at a biodiesel processing facility, doing a somewhat limited level of further treatment and then blending the resulting product into diesel or heating oil. Renewable diesel is different. It is a process that goes on at a petroleum refinery. What comes out of the renewable diesel plant is a product whose quality is identical to that of petroleum diesel. If a trucker wants to fill a truck with 100% renewable diesel, there is no mechanical limitation. That isn’t the case with biodiesel. Phillips 66’s renewable diesel strategy has at its core the Rodeo Renewed project in the San Francisco Bay Area, where the petroleum refinery is being closed but a renewable diesel facility is being constructed. Some perspective is needed on the size of the switch at Rodeo. The 120,000-barrel-per-day refinery that is being closed there will be replaced by facilities that will make 8,000 barrels a day of renewable diesel.

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