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Logistics Intelligence Brief
Friday, July 16, 2021

Trucking

Economy, Trucking Industry Roar Back

Transport Topics Dan Ronan July 15, 2021

“It’s remarkable to me that demand for freight transportation is up, pricing is up, yet in the truckload industry, some fleets that we measure, they’re actually reducing their tractor counts — not because they want to, but they can’t find drivers to put in their trucks. This is a supply-side story over and over,” Costello said. The June Logistics Manager Index Report registered 75.0, the second-highest reading ever. A year ago the index registered 61.7. Authors of the index, which includes transportation and academics, said this is the fifth consecutive month the rate has come in above the 70-point mark, marking the longest streak in the index’s history. However, the report said available transportation capacity has been contracting for five straight months and that for every four loads of freight, only three are being picked up. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, said because of the COVID-19 pandemic the U.S. economy is in the midst of a fundamental shift. E-commerce continues to rapidly gain market share, and that changing dynamic will continue to have a huge impact on trucking as more items are shipped directly to homes.

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Industry

Pandemic changed rail’s product mix as e-commerce grew intermodal volumes

Supply Chain Dive Edwin Lopez July 15, 2021

Retailers have sought to diversify their carrier mix, in the face of an e-commerce surge and myriad supply chain constraints. They're looking for more transport providers and often turning to intermodal services to move their products. "What you're looking at is a trend that's been going on for a long time," Schofer said. "But the pandemic gave it a boost, if you will, because of changes in consumer purchasing patterns." Cumulative intermodal units for the first 27 weeks of 2021 are up nearly 17% YoY, according to the Association of American Railroads. But rail's growth story looked a lot different at the start of the pandemic. ​Railroads, like the rest of the economy, suffered from declines in spending, production and labor availability.

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BTS reports Freight TSI is up sequentially and annually

Logistics Management July 15, 2021

According to BTS officials, the Freight TSI measures the month-to-month changes in freight shipments in ton-miles, which are then combined into one index. The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and airfreight. The May reading—at 137.7—eked out a 0.1% gain from April to May, heading up for the third straight month. On an annual basis, it rose 8.1%, essentially reversing the 8.9% decline, for the same period in 2020, and a 2.3%, for the same period, in 2019. BTS noted that the May Freight TSI reading trailed the all-time high, of 141.9 in August 2019, by 3.0%. And it added that the 0.1% increase from April to May was due to seasonally-adjusted increases in rail carloads, air freight, truck and water, despite declines in rail intermodal and pipeline, coupled with the increase occurring against the backdrop of mixed results for other indicators from April to May. Link: Bureau Of Transportation Statistics May 2021 Freight Transportation Services Index 

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UP temporarily stopping eastbound container service to Chicago

Freight Waves Joanna March July 15, 2021

UP hopes this suspension, which will start on Sunday and last for about seven days, will not only help relieve port backlogs for Chicago-bound container traffic but also ultimately help address backlogs for containers destined to other markets. The suspension applies to UP-served terminals at the ports of Los Angeles, Long Beach and Oakland, California, and Tacoma, Washington.

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TSMC Expects Auto-Chip Shortage to Abate This Quarter (Subscription Based)

The Wall Street Journal Stephanie Yang And Yang Jie July 15, 2021

The company is further increasing production of semiconductors used in cars and other products that require less advanced technology by expanding capacity at plants such as in the Chinese city of Nanjing. Executives said Thursday that the company is also in talks to build a new facility in Japan. TSMC has pledged to spend $100 billion on increasing production over the next few years to meet surging demand for semiconductors. The Covid-19 pandemic hastened the trend by popularizing electronics for remote work. The company said revenue from customers in North America made up 64% of its second-quarter revenue, down from 67% in the first quarter, while revenue from China accounted for 11% of the total, up from 6% in the previous quarter, with high-performance computing as the major driver.

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Shippers/3PLs

Limited Auto Supplies Cloud Broader June Retail Sales Gains

The Wall Street Journal Amara Omeokwe July 16, 2021

U.S. shoppers likely boosted spending at many retailers in June, but weak auto sales linked to supply disruptions could have restrained revenue gains as the economy more broadly reopened. Economists estimate the Commerce Department will report Friday that retail sales—a measure of purchases at stores, at restaurants and online—fell by 0.4% last month compared with May. Auto sales have shown signs of slowing amid supply-chain disruptions that have limited the number of vehicles for sale, likely dragging down overall retail sales in June, economists said. Excluding autos—a sometimes volatile category of products—sales are estimated to have risen by 0.4% in the same period.

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Dollar General plans to hire 50K new employees amid blazing store growth

Retail Dive Ben Unglesbee July 15, 2021

Dollar General plans to hire up to 50,000 new employees by Labor Day, according to a press release. The company is looking for additional staff for its stores, distribution centers, trucking fleet and store support center. The hiring blitz comes as the dollar store retailer plans 1,050 new stores for fiscal 2021.

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Technology/Innovation

Self-Driving Startup Aurora to Go Public Through SPAC

The Wall Street Journal Kimberly Chin July15, 2021

Self-driving technology company Aurora plans to go public through a special-purpose acquisition company backed by founders from LinkedIn and Zynga Inc., in a transaction that values the startup at $11 billion. Aurora is expected to generate $2.5 billion in cash through the deal, including up to $977.5 million of cash held in Reinvent’s trust account from its initial public offering, which closed March 18. The rest will come from a private investment in public equity, or PIPE, associated with the transaction. Volvo AB, Paccar Inc. and Uber Technologies Inc. are among the investors in the PIPE transaction.

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Diesel trucks may get new life in electrified world

Fleet Owner John Hitch July 15, 2021

According to Sandy Munro, CEO of Munro & Associates, battery-electric or hybrid-electric powertrains will comprise more than half of the commercial and off-highway powertrain market by 2028. It's a big change, but on the plus side, electricity costs less than gas or diesel fuel, electric trucks require less maintenance, and the ride is smoother and quieter. Negative factors include a far shorter period between recharging (battery-electric trucks may get 200-mile range, versus 2,000 miles between diesel fill-ups), the need for installing charging infrastructure, and higher initial cost, to name a few. On that last point, a startup called Trova Commercial Vehicles, founded and run by former longtime Volvo Group executive Patrick Collignon, has a plan to lower initial adoption cost: diesel-to-electric conversion of existing Class 7-8 diesel trucks.

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Government/Safety/Sustainability

Werner’s 2018 Appeal of $89.7M Jury Verdict Still Awaiting Decision

Transport Topics Eric Miller July 15, 2021

The stakes in its outcome are high for both Werner and the trucking industry, said Richard Pianka, deputy general counsel for American Trucking Associations. “Setting aside the large number, the idea that Werner would be held negligent and liable is very alarming, in that they didn’t really do anything wrong,” Pianka told Transport Topics. “They were driving below the speed limit, they were hit by a pickup truck. The only thing that went wrong is that the pickup truck lost control.”

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Watchdog knocks FMCSA on CDL compliance oversight

Freight Waves John Gallagher July 15, 2021

Gaps in how the Federal Motor Carrier Safety Administration oversees state CDL programs threaten the agency’s ability to prevent large truck crashes, a federal watchdog agency warns. A performance audit conducted by the U.S. Department of Transportation’s Office of Inspector General (OIG) between November 2019 and May 2021 revealed that a portion of state CDL agencies were not properly transmitting electronic notifications of truck driver convictions, the oversight of which is part of FMCSA’s responsibilities. “Specifically, we estimate that States of Conviction [states in which a driving conviction occurred] did not timely transmit 18% of 2,182 major offenses and 17% of 23,628 serious traffic violations in our universe,” according to the report, which was made public on Thursday. “We also estimate that 11% of 2,182 major offenses were not timely posted and 2% of 23,628 serious traffic violations in our universe were not posted to driver records at all.” Link: U.S. Department Of Transportation FMCSA Has Gaps and Challenges in Its Oversight of CDL Disqualification Regulations

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