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Logistics Intelligence Brief
Wednesday, July 14, 2021

Industry

How Biden’s Executive Order Could Reshape Rail and Ocean Shipping (Subscription Based) (With Maps/Infographics)

The Wall Street Journal Randy Yeip et al. July 14, 2021

President Biden’s sweeping executive order signed last week laid out the administration’s priorities for promoting competitive markets and limiting corporate dominance. Among the dozens of provisions included in the order are directives aimed at railroads and ocean shipping. The administration says the relatively small number of major players in the ocean-shipping trade and the U.S. freight-rail business has enabled companies to charge unreasonable fees. In the case of the seven Class 1 freight railroads, consolidation has given some railroad companies control of most of the freight tracks in parts of the country. In its actions targeting the transportation sector, the administration is highlighting what it calls the dangers of consolidation. For U.S. importers, the consolidation has given ocean carriers leverage to raise fees such as those for demurrage, essentially late fees on shipments that aren’t picked up from freight terminals on time.

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Oil Tops $75 a Barrel, Hitting 33-Month High

Bloomberg/Transport Topics Jill R. Shah July 13, 2021

Oil rose to the highest price in more than 2 1/2 years as prospects of an imminent flood of crude exports from Iran and other major producers waned while the International Energy Agency warned of a deepening supply crunch. “Even if OPEC decides to raise output in August, that crude will not reach refineries until after the August peak demand period will be over,” Ed Morse, head of commodities research at Citigroup Inc., said in an email.

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Class 8 Sales in June Second-Highest This Year

Transport Topics Roger Gilroy July 13, 2021

U.S. retail sales of Class 8 vehicles in June punched above 19,000, WardsAuto.com reported, and reached the second-highest volume this year. June improved 49.4% to 19,840 compared with a year earlier when sales were 13,276, according to Wards. Only March has been higher this year, when sales cleared more than 22,000.

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June Trailer Orders Reach 11,000

Transport Topics July 13, 2021

U.S. trailer orders in June came in at 11,100 units, down from 13,441 a year earlier, ACT Research reported, citing trailer makers’ preliminary data. The order softness belied ongoing demand for trailers in a strong freight market, but supply chain and labor issues persist — causing production to be less than robust. “June’s negative year-over-year comparison for net orders was the first since May 2020, the tail end of last spring’s COVID-depressed order activity,” said Frank Maly, director of commercial vehicle transportation analysis at ACT.

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China’s Export Engine Accelerates, Defying Expectations (Subscription Based)

The Wall Street Journal Jonathan Cheng July 13, 2021

China’s imports and exports posted stronger-than-expected growth in June as global demand for Chinese goods remained solid and sporadic Covid-19 outbreaks in the country’s biggest export hub didn’t hit outbound shipments as much as expected. China’s exports increased 32.2% from a year earlier in dollar terms, accelerating from a 27.9% gain in May, data from the General Administration of Customs showed Tuesday. The reading was far stronger than the 23.2% growth forecast by economists polled by The Wall Street Journal, defying concerns that China’s post-Covid export boom was coming to an end. China’s exports, a key engine of the country’s economic rebound after the coronavirus outbreak, had shown softness in recent months in the face of rising raw material costs, weakened overseas demand for Chinese-made goods and global shipping delays.

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Shippers/3PLs

Walmart will add transportation pillar to Project Gigaton

Supply Chain Dive Matt Leonard July 13, 2021

Walmart plans to add a pillar to its Project Gigaton effort to reduce supplier emissions that is focused specifically on transportation partners, Zach Freeze, the retailer's senior director for sustainability, said last week. Reducing scope 3 transportation emissions "can be done through more efficient routing, it can be done through a more efficient fleet, so any sort of improved engine efficiency," he said. "And then, of course, the initial transition to zero-emission vehicles." The new transportation pillar will likely focus mostly on ground transportation in its first year, but Freeze said other freight modes could be added down the line. Walmart will add transportation to Project Gigaton in September, but the retailer did not say what drove the timing of adding transportation. "Transportation has long been a sustainability priority at Walmart," a spokesperson said.

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2021 Shipper of Choice profile: The Home Depot

Freight Waves July 13, 2021

Nomination notes for The Home Depot According to the nominator of The Home Depot, the shipper is characterized by “endless collaboration in good times and bad.” The Home Depot is “constantly seeking feedback on their facilities and vendors. Working with their teams on issues such as overcapacity, dwell and peak times has been made easier by the way they manage their carrier base. “All facets of this shipper’s actions strive to strengthen our partnership. The Home Depot team has demonstrated its dedication to its carrier partners time and time again.”

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Stockouts worsen for the chemical industry as shipping delays exacerbate inventory woes

Supply Chain Dive Matt Leonard July 13, 2021

hortages in the chemical industry worsened over the last quarter with nearly 85% of distributors reporting an out-of-stock for at least one imported item, according to a June survey of 84 National Association of Chemical Distributors conducted by John Dunham and Associates. This is up from nearly 47% in March. A report accompanying the survey points out that inventories in the chemical industry have been climbing, but they have yet to reach their pre-pandemic levels as the industry struggles with supply chain issues and disruptions to production. "I think there's a catch-up period that's going on right now where things might get a little better," NACD President and CEO Eric Byer said Monday. "But I still maintain that the demand is very, very strong. And until logistics, supply chain logistics ... gets fixed it's not going to get any better anytime soon."

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Technology/Innovation

Why US Xpress bet on AVs

Transport Dive Amanda Loudin July 13, 2021

U.S. Xpress is betting on the future, and that means an aggressive strategy when it comes to autonomous vehicles. Eric Fuller, president and CEO, said via email that AV investment is front and center to its plans. "We feel autonomous will be a significant component of the trucking industry in the decades to come, so investing time and resources now is a longer-term strategic play," he said. "While we have plenty of other areas of focus, we're keeping autonomous near the top of our priority list." Fuller's company is part of "the first wave" of customers to put in reservations for TuSimple's Level 4 International LT Series trucks, which are set to begin production with Navistar in 2024.

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Government/Safety/Sustainability

Why truck inspectors devote full week to improving brake safety

Fleet Owner Steve Vaughn July 13, 2021

The Commercial Vehicle Safety Alliance (CVSA) has set this year’s Brake Safety Week for August 22-28. Throughout the week commercial motor vehicle inspectors will focus on truck brake systems and components. Every North American Standard Inspection includes brakes, so why devote a full week to them? Let’s start with the numbers: • During the 2020 International Roadcheck, brake adjustment violations accounted for 38.6% of all vehicle out-of-service violations, more than any other category. • A look at the Federal Motor Carrier Safety Administration’s “Large Truck and Bus Crash Facts” shows brake systems rank as the third most cited vehicle factor in fatal crashes. • In 2020, brake-related problems occupied eight of FMCSA’s top 20 vehicle violations. • When CVSA conducted Brake Safety Week last year, 12% of 43,565 inspected CMVs were placed out-of-service due to braking issues.

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Industry experts offer up takes on recent White House EO and impact on rail and ocean sectors

Logistics Management Jeff Berman July 13, 2021

Bentz also observed that consolidation was a natural outgrowth of the changing competitive environment, as deregulation also radically changed the trucking industry, making it much more competitive. “Railroads lost much of their higher revenue from what was generically classified as ‘Merchandise’ traffic as trucks captured greater and greater share,” he said. “The rail industry has morphed over time a greater reliance on bulk commodities, like coal, grain and chemicals and, of course, intermodal (the ‘new’ merchandise traffic). Virtually all of these commodities benefit from longer single-line hauls and reduction or elimination of interchanges with other carriers.”

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Cargo Owners Applaud White House Order on Competitiveness (Subscription Based)

The Wall Street Journal Paul Page July 13, 2021

Groups representing cargo owners are praising President Biden’s executive order on business competitiveness, but say stronger regulatory action and even legislation may be needed to resolve longstanding concerns over freight transport fees and services. “I think it’s a start,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, which represents merchants that import goods into the U.S. Retailers are among the shippers that have seen transport costs surge in recent months amid supply-chain disruptions, including lengthy delivery delays and additional fees, brought on by the upheaval in production and demand during the pandemic. Freight carriers, however, say the executive order is an overreaction to market forces that have roiled supply chains over the past year. John Butler, chief executive of the World Shipping Council, a Washington-based trade group representing container shipping lines, said the rising rates and long delays in ocean transport are “a market aberration” brought on by the impact of the Covid-19 pandemic.

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