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Logistics Intelligence Brief
Monday, July 19, 2021

Shippers/3PLs

Shipper to Congress: Inflation ‘rampant’ through supply chain

Freight Waves John Gallagher July 16, 2021

Congress received an on-the-ground report from an industrial shipper on how rapid price increases for goods and services can be traced directly to bottlenecks in the supply chain. Testifying before the Senate Commerce Committee on Thursday, William Taylor, CEO of Taylor Group, a heavy equipment manufacturer, told lawmakers that delays in inbound deliveries from freight carriers and rapidly increasing transportation rates have forced the company to boost prices he charges to customers. “The supply chain is a disaster,” said Taylor, whose family-owned, Louisville, Mississippi-based business, which generates $500 million annually in revenue, relies on road, rail, water and air transportation. “This situation is causing inflation to run rampant throughout the supply chain. So far, we have kept our lines running but are facing 30% to 75% price increases from our vendors and transportation companies. The worst part is that we have orders, but we don’t have confidence in our supply chains to meet the demand. The same story is playing out in thousands of manufacturers across America.” 350% container rate surge Taylor said that average transportation rates for an ocean container has jumped from $4,000 to $18,000 due to low supply and high demand. To ensure that his manufacturing lines are supplied, his purchasing managers are seeking out alternatives like hot-shot delivery services and air transport instead of ocean — all of which cost more.

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June retail sales see solid annual gains, reports Commerce and NRF

Logistics Management July 16, 2021

NRF officials observed how June sales were boosted by the annual Amazon Prime Day promotion, and promotions from other retailers, too. It added that record-high temperatures in some parts of the U.S., coupled with tropical storms in other parts, may have impacted sales and methodology used by the Commerce Department’s Census Bureau to adjust results for seasonal variations. On a year-to-date basis through June, NRF reported retail sales grew 16.4% annually. For the entire calendar year, NRF said that in its revised forecast, retail sales are expected to be up between 10.5%-to-13.5%, to between $4.44 trillion and $4.56 trillion. “We’re continuing to see an impressive recovery,” NRF Chief Economist Jack Kleinhenz said in a statement. “The economy and consumption are particularly sensitive to government policy, and the boost we saw from government support earlier in the year is continuing to show benefits. Reopening of both stores and the overall economy has progressed, and even higher prices seen in some retail categories reflecting the push-and-pull of supply chain challenges haven’t proven to be a deterrent to spending. As more people get vaccinated and get out, some of the growth will shift to services rather than retail but there’s enough momentum to support both.” Link: National Retail Federation June Retail Sales Increase as Recovery Continues

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Industry

Oil Refiners Hold Out for Price Cuts After OPEC+ Output Deal

Bloomberg Sharon Cho et al. July 19, 2021

Global benchmark Brent lost as much as 1.7% on Monday after Sunday’s deal for a 400,000 barrel-a-day increase each month from August. Goldman Sachs Group Inc. warned near-term prices may gyrate amid concern about the delta virus variant, despite the deal being supportive of its constructive view on oil.

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AAR reports mixed U.S. rail carload and intermodal volumes, for week ending July 10

Logistics Management July 16, 2021

Intermodal containers and trailers—at 241,528—slipped 2.4% annually, trailing the weeks ending July 3 and June 26, at 276,073 and 279,050, respectively.

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Union Pacific pauses service from West Coast to Chicago as congestion hits inland terminals

Supply Chain Dive Matt Leonard July 16, 2021

Dive Insight: The decision to halt service between the West Coast and Chicago comes as the supply chain is dealing with a significant amount of congestion at just about every node. And without containers moving inland as expected, experts expect this decision to temporarily worsen congestion on the West Coast. "The system is a flow-through system, so anytime things stopped flowing, you know, it's like you're putting a dam up in a river," Larry Gross, founder and president of Gross Transportation Consulting, said Thursday. The West Coast has been dealing with its own congestion issues for months at this point due to high import volumes that have pushed up dwell times. And it has not shown any signs of improvement in the most recent figures released by The Port of Los Angeles. "The dwell time on container terminals continues to hover near its peak of five days," Port Of Los Angeles Executive Director Gene Seroka said in a media briefing earlier this week.

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Technology/Innovation

Digitizing Freight: What Does It Mean For Your Fleet?

Truckinginfo.com David Cullen July 16, 2021

From linear to nodular “Digital freight-matching is a subset of the digitization of the supply chain,” explains LeAnne Coulter, VP of freight management for Penske Logistics. The Reading, Pennsylvania-based firm provides supply chain management and logistics services on four continents. “Supply-chain stakeholders join in this ecosystem, where digitizing data can help each party work together to improve efficiency and visibility to their end customers.” The players in this digital world include motor carriers, brokers and 3PLs, warehouse providers, shippers, and suppliers and vendors of the shippers. “We’re now seeing efforts to connect more loads to go downstream to link the supplier’s suppliers,” she points out. Coulter says the purpose of bringing them all together “is to change from a linear to a nodular freight distribution so that decisions can be made collaboratively versus needing to move them through silos along a chain.”

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Workforce

New association aims to build pipeline of truck drivers, technicians

Transport Dive S.L. Fuller July 16, 2021

The trucking industry has a new association. The Next Generation in Trucking Association officially launched Tuesday, with partnerships with schools in California, Kentucky and Wisconsin, to create driver and technician training programs. The association has a nationally registered apprenticeship program through the Labor Department, said Co-Founder Lindsey Trent. Trucking companies and technical colleges can partner with the association to establish those programs, which can allow fleets to hire drivers immediately after they receive a CDL. "If somebody goes through an apprenticeship program, after a year of service, they're 90% more likely to still be employed," Trent said. "So, driver retention through an apprenticeship program is pretty big." Link: Next Generation Trucking Association  

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Government/Safety/Sustainability

Draft of bill reveals scope of US shipping act overhaul effort (Subscription Based)

The Journal of Commerce Peter Tirschwell July 18, 2021

A fast-moving effort led by agricultural exporters and their allies in Congress to hold ocean carriers accountable for grievances arising from and predating the pandemic has yielded a sweeping draft bipartisan overhaul of US shipping law that sources say is likely to be introduced before the August recess begins in a few weeks. Though there is no guarantee the bill will pass in its current draft form, the initial salvo by Rep. John Garamendi, D-Ca, dubbed the Ocean Shipping Reform Act of 2021, would take US shipping law in a starkly different direction, reversing the deregulatory trajectory of the most recent shipping law rewrites in 1984 and 1998 in placing a heavy regulatory burden on ocean carriers and strengthening the oversight role of the Federal Maritime Commission. The bill draft, seen by JOC.com, would make it much more difficult for container lines to refuse to carry export cargo or prioritize repositioning of empties at the expense of ports And the bill, addressing a longstanding shipper grievance, would prohibit carriers from collecting detention and demurrage fees in cases when “obstacles to cargo retrieval or return of equipment are…beyond the control of the invoiced or contracting party.”

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Some States Fail to Transmit Timely Driver Convictions to Regulators

Transport Topics Eric Miller July 16, 2021

A new Department of Transportation Inspector General audit criticized states for too often failing to transmit driver electronic conviction notifications in a timely manner to federal regulators. The audit also concluded that the Federal Motor Carrier Safety Administration’s annual review process lacks adequate quality control measures for verifying that state commercial driver license programs meet federal requirements. “States did not timely transmit electronic conviction notifications 17% of the time,” said the audit, made public on July 14. “Specifically, we estimate that states of conviction did not timely transmit 18% of 2,182 major offenses and 17% of 23,628 serious traffic violations in our universe.”

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DOT Officials Offer Overview of Automated Vehicle Testing

Transport Topics Eleanor Lamb July 16, 2021

At the Federal Highway Administration, one ongoing project is a truck platooning effort along a stretch of Interstate 10 running from California to Texas. Dopart said final safety testing will occur either late summer or early fall. He said the team is planning to conduct operational field tests late fall or early winter. ADS will be a federal focus over the next four years, according to Steven Cliff, acting administrator of NHTSA. Cliff delivered remarks at the event prior to Dopart’s presentation. He noted the COVID-19 pandemic offered opportunities for automated systems to be used and appreciated, such as through contactless delivery methods. Besides acknowledging technology-related concerns such as privacy and cybersecurity, Cliff recognized ADS systems’ potential to shift roles within the transportation workforce.

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Infrastructure Bill to Drop Tax Enforcement, GOP Senator Says

Bloomberg Erik Wasson And Ian Fisher July 18, 2021

‘Crumbling Infrastructure’ Senator Bill Cassidy, a Louisiana Republican who’s also part of a core group of senators negotiating the bill, said how to pay for the measures remains a sticking point. “It can absolutely happen, but you need the pay-fors,” Cassidy said on “Fox News Sunday.” “We can get it done, but if they refuse to cooperate on the pay-fors it’s not going to pass.” Cassidy and Portman were among a group of senators who joined Biden at the White House in June to announce the deal was moving ahead. The Senate is proceeding with a two-pronged approach to enacting Biden’s agenda, a $3.5 trillion tax and social spending plan, backed only by Democrats, and the bipartisan infrastructure bill. Portman said the infrastructure talks involving 11 Republicans and 11 Democrats should be allowed to run their course and produce legislation “when it’s ready.”

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