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Logistics Intelligence Brief
Friday, July 30, 2021

Industry

LA-LB terminals sound congestion alarm well ahead of peak season (Subscription Based)

The Journal Of Commerce Bill Mongelluzzo July 29, 2021

There were 26 container ships waiting at anchor for berthing space at Los Angeles and Long Beach terminals on Tuesday, according to the Marine Exchange of Southern California. The number of vessels at anchor peaked at 40 in February, but decreased steadily in March and April, and had been hovering in the midteens until last week. The sudden torrent of ship arrivals comes on the back of imports through Los Angeles-Long Beach that spiked 41.1 percent year over year in the first six months of 2021, according to PIERS, a JOC.com sister product within IHS Markit. From the beginning of the US economic rebound from initial COVID-19 lockdowns in July 2020 through June 2021, terminals in Los Angeles and Long Beach have handled an average of 855,411 TEU per month in laden imports. To put that in perspective, imports through the port complex averaged 697,892 TEU in pre-pandemic 2019 and only eclipsed 800,000 TEU in a single month once that year.

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Asia-West Coast container rates hit new high ahead of surcharges (Subscription Based)

The Journal Of Commerce July 29, 2021

A key indicator of container shipping rates from Asia to the US West Coast broke a new record this week in shattering the $10,000 ceiling for 40-foot units as container lines ready another wave of surcharges that kick in next week, many of them focused on routings through Southern California. The average price to ship an FEU from Shanghai to Los Angeles reached $10,503 this week, up 5.5 percent from the prior week, according to the Drewry World Container Index. Spot rates on the trade were below $3,000 per FEU a year ago and under $1,500 in 2019. Asia rates to the US East Coast also hit new highs this week, according to Drewry. The average rate to ship an FEU from Shanghai to New York surged 13.1 percent to $13,434. For comparison, an FEU cost under $3,4000 a year ago and below $2,800 two years ago, on average. To ensure the cargo gets loaded in weeks rather than months, it generally costs shippers an additional $2,000 to as much as $7,000 per FEU just to guarantee space on a vessel, according to rate sheets forwarders have shared with JOC.com, and conversations with forwarders and carriers.

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U.S. Import Surge Overwhelms Warehouse Space Near Ports (Subscription Based)

The Wall Street Journal Paul Berger July 29, 2021

Surging demand for warehousing close to major ports driven by the growth of e-commerce and the flood of container imports hitting U.S. shores is making storage space harder to find and more expensive, adding new stresses to already strained supply chains. Logistics service providers and real-estate firms say competition for warehouses close to ports such as those in Southern California and New York City is intense, pushing up rents and forcing companies to look to neighboring regions to serve shippers’ needs. The pinch is most pronounced in the industrial region close to the nation’s busiest ports at Los Angeles and Long Beach. “You can literally count on your hand at best how many spaces are available in that entire region,” said Carl DeLuca, head of real estate in the Americas for DHL Supply Chain, a unit of global logistics giant Deutsche Post AG. Traditionally, landlords have required business tenants to sign leases of between three and five years, according to Mr. DeLuca. Today, landlords in the area are requiring seven- to 10-year leases to lock in space at current rates, he said.

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Memphis I-40 Bridge Set to Reopen

Raleigh Observer/Transport Topics Bailey Aldridge July 29, 2021

A major Memphis bridge that closed in May because of a steel beam fracture will start reopening the week of Aug. 2. The Interstate 40 Hernando de Soto bridge — a major trucking corridor that runs over the Mississippi River and connects Tennessee and Arkansas — was closed to interstate and waterway traffic May 11 after a crack in one of its steel beams was discovered during a routine inspection. It reopened to waterway traffic shortly after but has remained closed to interstate traffic, sparking concerns about shipping delays as the area is one of the heaviest freight corridors in the country. “If you compare it to a body, this looks like the arteries and this is the heart of the country,” Adel Abdelnaby, a civil engineering professor at the University of Memphis, told Local Memphis in May. “So if you cut the heart of the country, it’s like you are giving the country a heart attack by shutting down the I-40 bridge — because that is what connects the east and the west to the rest of the U.S.”

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Norfolk Southern Posts Increase in Earnings, Revenue for Q2

Transport Topics Connor D. Wolf July 29, 2021

Railway operating revenue includes merchandise, intermodal and coal shipment categories. Merchandise increased 29% to $1.68 billion from $1.31 billion during the same time last year. Intermodal increased 41% to $801 million from $569 million. Coal operations climbed 52% to $318 million from $209 million. “In the second quarter, we showed sequential improvement in terminal dwell and train velocity after we got through the severe winter weather in the first quarter,” Chief Operating Officer Cindy Sanborn said. “However, our progress was uneven and we lost ground in June in part due to several discreet, but geographically impactful, operating disruptions. We aren’t satisfied with our service levels, and we are working extremely hard to seize the opportunity [precision scheduled railroading] presents to recover faster from disruptions.”

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Trucking

Major carrier June on-time performance ratings are mixed, based on ShipMatrix data (Parcel)

Logistics Management Jeff Berman July 29, 2021

“The industry continues to be challenged with balancing increased demand resulting from federal government’s Covid-19 related stimulus payments and reduced ability to hire workers resulting from extension of unemployment benefits,” said Satish Jindel, president of SJ Consulting. “With these two major factors changing by September, the shippers should see improvements in on-time performance for all three national parcel carriers. Most shippers (whether businesses or consumers) do not realize that carriers incur higher operating cost when their network is operating beyond capacity with then results in lower on-time performance and hence the carriers are even more incentivized to achieve OTP in high 90s.” ShipMatrix did not provide June OTP data for Amazon Logistics. Amazon Logistics is a very different situation,” noted Jindel. “It is not even apples and oranges, it is apples and pork. Over 95% of Amazon Logistics deliveries are within 100 miles of the fulfillment and hence it does not face the same challenges associated with moving parcels from west to east coast or from Chicago to Dallas.”

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Government/Safety/Sustainability

Werner Gets ‘En Banc’ Review of $89.7 Million Verdict

Transport Topics Eric Miller July 29, 2021

Werner’s attorneys wrote in a court pleading: “At the time of this accident, [driver] Shiraz Ali was proceeding in his lane, in control of a Werner tractor-trailer and well below the speed limit, when the [plaintiff’s] vehicle suddenly careened into his path, leaving him no time to avoid a collision.” The plaintiff’s attorney in the case, Eric Penn, told the jury that the driver was inexperienced, driving too fast, and should not even have been driving during the icy conditions. He also charged that Werner was negligent for failing to adequately train and supervise the driver for operating in bad weather. Werner has denied those allegations and is asking the appellate court to “reverse the trial court’s judgment and render judgment in their favor or, at a minimum, remand this matter for a new trial.”

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Pennsylvania Truckers Object to Proposed Doubling of Registration Fee

PennLive/Transport Topics Jan Murphy July 29, 2021

A mileage-based user fee, package delivery fee and a toll to use limited-access lanes are among the new revenue options a governor-appointed panel is making to meet Pennsylvania’s transportation funding needs going forward. The options also include a doubling of vehicle registration fees that a trucking leader said would result in interstate trucking companies registering their trucks in other states. No doubt the ideas the Transportation Revenue Options Commission (TROC) came up with will spark lively debate within the General Assembly but in the eyes of state Transportation Secretary Yassmin Gramian, who chaired the commission, they are 21st century solutions to help close a $9.25 billion a year funding gap that grows wider by the year.

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Senate Infrastructure Plan Receives Bipartisan Backing

Transport Topics Eugene Mulero July 29, 2021

According to the White House, the infrastructure measure would dedicate about $110 billion for roads and bridges; $40 billion for bridge repair and replacement projects; $11 billion for safety programs; $39 billion to modernize transit; $66 billion for Amtrak; $7.5 billion to build a national network of electric vehicle chargers; $2.5 billion for zero-emission buses; $17 billion for ports; $25 billion for airports; $65 billion for broadband internet. The White House also explained the legislation would be financed partly via redirecting unspent federal COVID-19 relief aid, certain corporate user fees, enhanced tax enforcement and other methods. A full view of the measure’s details was yet to be unveiled by the bill’s sponsors.

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Biden emphasizes ‘Buy American’ during Mack Trucks Lehigh Valley visit

Fleet Owner Cristina Commendatore July 29, 2021

“John Mack started this iconic American company in 1890, but things really didn’t get off the ground until four years later when he brought his brother William down from Scranton,” said Biden, who was born in Scranton. “So, it goes to show you, if you want to get things moving, bring a guy from Scranton to get it going. Mack recently completed an $84 million investment in plant improvements at LVO, which included the insourcing of chassis assembly, the addition of new equipment, and a 300,000 square-foot expansion of the facility. The plant upgrades were completed in 2020. LVO currently employs more than 2,500 people and plans to hire up to 400 more this year, the company stated.

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Nikola electric-truck prototypes were powered by hidden wall sockets, towed into position and rolled down hills, prosecutors say

MarketWatch Lukas Albert July 29, 2021

Prosecutors said that, in fact, the prototypes that had been unveiled didn’t function and were Frankenstein monsters cobbled together from parts from other vehicles. At public events, the vehicles were allegedly towed into position and were powered by plugs leading from hidden wall sockets. In one instance, in which the vehicle was filmed for a promotional film, tape was used to keep the doors of a truck prototype from opening, prosecutors said. To make it appear the truck was driving, it was towed to the top of a hill and then rolled down to the bottom, according to the indictment.

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Shippers/3PLs

Shippers struggle to land carrier space despite preparing for peak early

Supply Chain Dive Max Garland July 29, 2021

"Retailers are going to have to order holiday shopping products now in order to get them onto the shelves by the time the season rolls around," said Eric Oak, a supply chain research analyst at S&P Global Market Intelligence, in a Q3 outlook for supply chains Monday. The need to stock up for peak comes as many companies have waited to replenish their inventories until shipping costs fell from elevated levels, said Neel Jones Shah, global head of airfreight at Flexport, in a company webinar Tuesday. But the clock is ticking, ahead of major spending events like back-to-school shopping and Black Friday. Shah said "intense demand" for air shipping will start in August, driven by a low inventory-to-sales ratio. The ratio was 1.09 in May, the most recent month available, down from 1.34 in May 2020, according to Census data. "(Consumers are) ready to spend their money, but sometimes they're finding empty shelves, and this situation now over the coming months with back to school and lots of big events coming up could drive this ratio even lower, is our expectation," Shah said.

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Technology/Innovation

TuSimple to Use Ryder Facilities to Expand Autonomous Trucking Network

Truckinginfo.com July 29, 2021

By leveraging Ryder's existing freight trucking terminals, TuSimple can quickly scale across the country without needing to build new facilities, company officials said. TuSimple's fleet of more than 50 autonomous trucks (SAE L4) transport freight for customers across the states of Arizona, New Mexico and Texas. Later this year, TuSimple expects to expand operations to the East Coast, carrying freight between Phoenix, Arizona, and Orlando, Florida. "The trucking industry is on the verge of a massive disruption, and we're seeing strong demand for access to reliable autonomous capacity from shippers, carriers, and fleets," said Cheng Lu, president and CEO at TuSimple. "The partnership with Ryder will enable us to grow our operational footprint to continue to meet these needs and set the pace for industry adoption."

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Ready by 2024? New developments paving way to full-scale autonomy

CCJ Aaron Huff June 29, 2021

The trucking industry being mired in a driver shortage has raised the level of interest in artificial intelligence-enabled trucks with autonomous capabilities. Owners and executives of motor carriers see untapped potential to improve operating efficiencies, safety and productivity. Several technology companies have been testing self-driving trucks in real-world conditions for several years. Drivers are in the vehicles now, but the switch could flip to full autonomous mode as early as 2023, experts say. With the future of self-driving trucks coming into sharper focus, technology companies are working on applications to digitize the full transportation ecosystem to automate steps, like inspecting vehicles and exchanging paperwork, which until now have required human involvement.

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