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Logistics Intelligence Brief
Tuesday, July 27, 2021

Trucking

Freight activity rises sharply in the latest week

FTR Freight Intelligence July 26, 2021

Dry Van: The Dry Van segment jumped about 33% from the prior week. Volume was about 37% below the spike in February that was related to extreme weather conditions, but it is nearly 148% above the pre-pandemic baseline.

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June DAT Truckload Volume Index reflects how capacity is not keeping up with demand

Logistics Management Patrick Burnson July 26, 2021

“It is a function of direction, duration (how long rates are up or down), and magnitude,” he said. “Spot rates have been up for a long time by a large amount so that almost necessarily brings up contract rates. Shippers are trying to move their freight back into the contract market. If you take the rate aspect out of it, they are trying to lower their freight transactions on the contract market and get their routing guides back in shape. The only way for that is for carriers to forgo the very hot spot market and go back to their old contract rates and entice them with increases in their contract rates, whether they are a common carrier or a main carrier in the routing guide.” What’s more, for the better part of the last year, Adamo said that shippers have been putting in higher and higher contract rates, with the intent of enticing capacity back into the routing guide, which has largely failed, as spot market rates are still high and there has been no enticement back to the contract market. “If the market is normally 85%-15%, for contract to spot and it goes to 80%-20%, five percent of a trillion dollars is a lot of money,” he said. As for July, DAT said that when comparing rates entering the market to those exiting shipper routing guides, contract rates were rising at the beginning of July: new routing guide contract rates increased by 7% in the two weeks ending July 1 compared to the prior two-week period.

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Freight spending hits high point as driver shortage and expensive diesel squeeze capacity

DC Velocity Ben Ames July 26, 2021

These robust gains stem from extremely tight truck capacity due to a profound driver shortage, as motor carriers have been unable to increase supply sufficiently to meet the growing demand. As a result, pricing increased considerably as shippers worked to get loads moved in the time frames needed,” U.S. Bank said in its report. “As industries ramp up output from increased demand in the second half of the year, truck freight demand will grow as well. The challenge for the motor carrier industry will be meeting that demand in the face of one of the largest supply crunches in history. Increased new driver training and rapidly rising pay will help, but it will take time to get additional drivers into the market,” the bank said.

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Shippers/3PLs

Hasbro Stocks Up on Toys to Work Around Shipping Constraints (Subscription Based)

The Wall Street Journal Dave Sebastian July 26, 2021

The Pawtucket, R.I.-based company is among the many U.S. retailers and manufacturers that are restocking inventories as the economy reopens from Covid-19 lockdowns and more consumers head back to stores. “We’re out to source product and to bring it in via any number of new carriers,” said Hasbro Chief Executive Brian Goldner. “The team secured more ports, and we’ve got more shipping lanes than we’ve had in the past.” Hasbro said in April that it would raise prices to offset rising freight and input costs. Those price increases are going into effect in the third quarter, executives said. Ms. Thomas said ocean-freight prices are likely to more than quadruple this year from last year.

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Industry

UP ramping up West Coast service to Chicago (Subscription Based)

The Journal Of Commerce Ari Ashe July 26, 2021

Union Pacific Railroad has resumed international intermodal train service between West Coast ports and its primary ocean container terminal outside of Chicago at reduced levels with the aim of restoring full service Tuesday night, the railroad told JOC.com Monday. UP said it began running trains from Los Angeles, Long Beach, Oakland, and Seattle-Tacoma to the Global IV terminal in Joliet, Illinois, on Sunday at “controlled levels” to avoid overwhelming the Midwest hub with cargo that has been sitting at the ports for a week. “We will continue to look for ocean carrier support and engagement with shippers to outgate both carrier haulage and merchant haulage shipments to maintain fluidity,” the railroad said in a statement to JOC.com. “Union Pacific will continue to monitor and adjust eastbound volumes to Global IV based off the pace of outgates and available chassis supply.” UP suspended service July 18 for seven days to clear the backlog of thousands of containers stacked in the Global IV terminal in Joliet and Global III terminal in Rochelle, Illinois. UP CEO Lance Fritz said on a July 22 quarterly earnings call that by eliminating the container stack, Global IV could reset and then restart with more fluid terminal operations.

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Diesel Sheds 0.2¢ a Gallon to $3.342

Transport Topics July 26, 2021

Diesel declined for the first time after 12 consecutive weekly increases, totaling 22 cents, beginning May 3. The last time trucking’s main fuel dropped in price was April 19, when it went down a half-cent to $3.124 a gallon. Of the 10 regions in EIA’s survey, the cost of diesel went down in five and up in five. The Midwest region had the biggest dip at six-tenths of a cent. The Rocky Mountain region had the biggest rise at 1.3 cents. The national average for a gallon of gasoline also fell, by 1.7 cents, landing at $3.136.

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Workforce

American Airlines, Southwest Warn of Jet Fuel Delivery Delay (Truck Driver Shortage Reference)

Bloomberg Mary Schlangenstein July 26, 2021

This is the latest example of disrupted fuel supplies because of trucking woes. While the whole country has plenty of gasoline and even a glut of jet fuel, truck drivers who distribute supplies have been hard to come by just as travel demand comes roaring back. That’s left some far-flung filling stations at least briefly without fuel in states from Florida to Iowa to Oregon and has now sparked the warnings from airlines.

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Technology/Innovation

Tesla delays electric Semi for third time

CCJ Jason Cannon July 26, 2021

Tesla on Monday said it would delay the debut of its electric Class 8 tractor to next year, marking at least the third time Semi truck production has been pushed back since it was unveiled in 2017. Citing ongoing supply chain issues – including a global shortage of semiconductors and challenges ramping up vehicle production at new manufacturing sites around the world – the company said the "pace of the respective production ramps will be influenced by the successful introduction of many new product and manufacturing technologies, ongoing supply-chain related challenges and regional permitting. To better focus on these factories, and due to the limited availability of battery cells and global supply chain challenges, we have shifted the launch of the Semi truck program to 2022."

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Hyundai to Deploy Hydrogen-Fuel-Cell Trucks in California

Truckinginfo.com Avery Vise July 26, 2021

Hyundai is bringing more than 30 of its hydrogen fuel-cell electric heavy-duty trucks to California as part of two publicly funded demonstration projects, which it says will be the largest deployment of Class 8 hydrogen-powered fuel cell trucks in the country. The demo trucks will be based on Hyundai’s Xcient Fuel Cell truck, which the company claims is the world's first mass-produced, heavy-duty truck powered by hydrogen. They are scheduled to be deployed starting in the second quarter of 2023. Debuting last year in Switzerland, Xcient Fuel Cell trucks have racked up a million kilometers of driving in real-world conditions, according to the company. The U.S. model provides a maximum driving range of 500 miles.

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Who’s set to win Big Tech’s ‘insanely hot’ race to self-driving trucks?

CCJ Alex Lockie July 26, 2021

According to Glasgow George, Waymo now sits comfortably ahead of the pack and has a decent shot at completely dominating the market, just as Google Search and Google Maps dominate their respective sectors. "If you look at the company beyond trucking, they are about the data," she said. "My opinion is that Alphabet always goes for trying to monetize data. Usually Google companies don't have a long term patent need, they tend to buy companies. Waymo's portfolio doesn't cover enough to go into the vehicle applications, so they're going to have to make their technology vehicle agnostic."

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With autonomous trucks on the horizon, insurance questions need answers

Transport Dive Heather Larson July 26, 2021

For a fully autonomous vehicle, the question is not "Who's at fault?" It becomes, "What's at fault?" There are sensors, software and hardware to point a finger at. "Most observers say it's still a long way off," Mike Birge, president of Hub International Transportation Insurance Services, said in an email about AV insurance. "The debate about whether the insurance implications are of a technology or operational nature is ongoing." But AV manufacturers like TuSimple are in line to start production in 2024. Soon enough, these questions will demand answers.

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Government/Safety/Sustainability

US Senators Introduce Bill to Repeal New Truck Excise Tax

Transport Topics Eugene Mulero July 26, 2021

Two U.S. senators proposed repealing the excise tax on new trucks as an effort to modernize the freight industry. Sens. Ben Cardin (D-Md.) and Todd Young (R-Ind.), policymakers on the highways and freight committees, respectively, recently introduced legislation that would undo a 12% tax on new truck and trailer purchases. Specifically, the bipartisan Modern, Clean and Safe Trucks Act of 2021 would repeal the federal excise tax, which is considered among the highest percentage excise tax levied on any product. The tax has been in place for more than a century.

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