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Logistics Intelligence Brief
Friday, September 3, 2021

Trucking

Truckers Face Outages, Road Closures and Fuel Supply Challenges in Ida’s Wake

Transport Topics Eleanor Lamb September 2, 2021

The Gulf Coast, however, took the brunt of Hurricane Ida’s blow.
Crews continue to clear roadways of debris, ranging from trees to power lines.
“The fact that we have such a huge, massive lack of power in the state has really impacted a lot of the trucking industry, especially if you operate around the city of New Orleans,” Louisiana Motor Transport Association Executive Director Renee Amar told Transport Topics.

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Shippers/3PLs

Ford and GM Scale Back Production Amid Chip Shortage

The Wall Street Journal Allison Prang September 2, 2021

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GM on Thursday said it is idling its two main pickup plants, in Silao, Mexico, and Indiana. Both produce GMC Sierra pickups and Chevrolet Silverados. The company is also suspending production at three other factories for a couple of weeks, meaning no output of various SUV models, including the Chevy Traverse.
Ford is scaling back pickup production at its three truck plants starting next week. The company said Wednesday that it will halt production of the F-150 at its Kansas City, Mo., factory and operate one work shift instead of three at its F-150 plant in Dearborn, Mich. Its Kentucky truck plant, which makes Ford Expedition and Lincoln Navigator SUVs and Super Duty pickups, will operate with two work crews instead of three.
The global chip shortage has crimped production at most car manufacturers since the start of the year. Semiconductors are critical for vehicles, being used in everything from engines and air bags to touch-screen displays.

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Industry

OneRail closes $9M series A investment round, bringing total raise to $21.5M

Logistics Management Jeff Berman September 2, 2021

“We think of it almost as a mosaic or a patchwork of different capabilities, different fleet assets and dispersing them geographically,” said Catania. “The worst thing you want to see is a 16-foot box truck delivering a two-pound parcel on a hot shot [spot] delivery. It is one thing if it is routed, but if it is a hot shot, that is a very expensive delivery. What our platform is doing is it is pulling together various key components: software that makes the decision on the mode and the carrier, or courier; the hand-off, which we refer to as a courier marketplace, and that is the supply. The way that functions is our customers don’t have to think about where their couriers are going to come from, because we have already aggregated so many across all different fleet asset types, from sedan all the way up through box trucks and even into LTL. Being able to handle accessorials and delicate items, whether it is TSA certification or hazmat.

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AxleHire expands last-mile delivery services in the Northeast

DC Velocity September 2, 2021

AxleHire uses its tech-forward platform, an asset-light transportation network, and the gig economy to quickly enable new capacity, keep logistics costs low, and remain agile, the company also said. Powered by proprietary technology, the logistics tech firm utilizes algorithms to optimize delivery routes based on variable demand. In addition, the company locates its sortation centers and delivery hubs in or nearby major metropolitan cities, resulting in greater density that ultimately lowers miles covered and fuel consumed.

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Truck makers struggle to fill backlog of orders as supply chain issues continue

Supply Chain Dive September 2, 2021

Class 8, medium-duty and trailer backlogs are "essentially" filled into 2022, with inventories below traditional levels, Kenny Vieth, ACT Research's president and senior analyst, said in a recent press release for the firm's "Commercial Vehicle Dealer Digest" report.
Vieth said the semiconductor situation is not expected to be fixed this year, although there are reports of supply improvements. Still, that has not led to higher build rates, Vieth said.
The supply chain problem for makers of trucks and trailers is a multi-headed serpent, as steel supplies remain tight and OEMS struggle on their own to provide tires, foams and plastics, Vieth reported. The supply chain problems are a greater driver of capacity constraints than consumer demands, Vieth said.

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Workforce

Walmart Boosts Average Hourly Wage to $16.40

Bloomberg/Transport Topics Jonathan Roeder September 2, 2021

Walmart Inc. said it will raise wages for a swath of its U.S. workforce, bringing its average hourly wage to $16.40 as the big-box retailer competes for employees amid a labor shortage.
The raise of at least $1 per hour will start on Sept. 25 and cover more than 565,000 workers, Walmart U.S. CEO John Furner said in a message to employees. Furner said it’s the third pay rise for store workers over the past year.
The world’s largest retailer has moved to raise pay and improve benefits in the U.S. in recent years — a shift from its previous strategy of keeping wages low. However, Walmart’s focus on increasing average pay contrasts with the higher starting wages that have been implemented by competitors such as Target Corp., which has boosted starting pay to $15, and Costco Wholesale Corp., which has set it at $16. Walmart’s starting rate is $12.

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Government/Safety/Sustainability

Convoy survey: Trucking divided on sustainability, climate change

Freight Waves Alyssa Sporrer September 2, 2021

A survey released Tuesday by Convoy found that U.S. trucking companies are very open to sustainable solutions that save money and reduce emissions, but there are still conflicting views on climate change and environmental regulations.
The digital freight network surveyed about 600 small and midsize trucking companies.
“Truck drivers, especially the nation’s owner-operators and smaller carriers, are a key part in helping the freight industry move to a more sustainable future of freight. Their decisions impact how sustainable trucking can be in the future,” Jennifer Wong, head of sustainability at Convoy, told FreightWaves.
Of carriers surveyed, 76% said fuel economy was very important in their purchasing decisions about new trucks. Increasing fuel economy and decreasing the number of empty miles are two mutually beneficial solutions for the bottom line and the environment.
Nearly 63% of respondents said that reducing empty miles was very important, and only 7% said it was less important or not important.
Link: Convoy Sustainability In Trucking Snapshot Report

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Railroads Brace as Regulator Signals Willingness to Take On Industry

The Wall Street Journal Ted Mann September 2, 2021

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The obscure federal regulator that threw a wrench into a $30 billion railroad merger this week could have more in store for the nation’s freight railways—with implications for both business and consumers.
Like other federal agencies, the five-member Surface Transportation Board has been tasked by President Biden to root out what it considers to be corporate monopolies that hurt smaller companies and consumers.
In a closely watched action, the board in coming months is expected to consider a rule to mandate so-called reciprocal switching, the practice in which railroads can be compelled to share access to their tracks with competitors. That would allow shippers to seek competitive bids for moving freight, which in theory could lower shipping costs and the prices ultimately paid by consumers.
Freight railroads oppose the plan, saying it would be detrimental to their operations and profits. Trucking already serves as a competitive counterweight, they argue. Freight railroads also warn that such a mandate could have unintended consequences, including lower capital investments in infrastructure they are forced to share with rivals.

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Surging crash-death rates that took hold with pandemic continued this year, according to new estimate

The Washington Post Ian Duncan September 2, 2021

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The first quarter of 2021 was the deadliest start of a year on the nation’s roads in over a decade, with car crashes killing an estimated 8,730 people from January to March, according to a new estimate from the National Highway Traffic Safety Administration.
The numbers indicate that a surge in road deaths that began with the coronavirus pandemic has continued into this year, although they offer some early glimmer of hope that unusually high fatality rates might be beginning to come down.
The estimated 8,730 deaths represent an increase of more than 10 percent compared with the same period last year and equate to 1.26 deaths for every 100 million miles driven. That rate is substantially lower than figures for the last nine months of 2020, when the death rate climbed to almost 1.5 per 100 million miles — but NHTSA’s data shows that the beginning of the year is typically the least deadly stretch.
The new estimates suggest significant regional variation in the number of deaths compared with last year. In a NHTSA administrative region that stretches from Nevada northeast to North Dakota, deaths spiked 28 percent. But in the region including Maryland, Virginia and the District of Columbia, they dropped by 6 percent.
Link: NHTSA Early Estimate of Motor Vehicle Traffic Fatalities for the First Quarter of 2021

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Economy

Businesses Surge Ahead Despite Rising Delta Variant Concerns, According to Coupa Business Spend Index

Coupa Software September 2, 2021

• Manufacturing: Increased for the first time in three quarters, though this may put additional pressure on stressed supply chains as well as prices.
• Retail: Increased strongly, indicating business confidence in the sector is rebounding. Recent evidence suggests consumers are returning to brick-and-mortar locations.
• Health and Life Sciences: Increased, modestly, and will likely perform near trend for the next one to two quarters though COVID variants could challenge the sector's growth.
• Business Services: Declined after three consecutive quarters of growth. We expect sector performance to continue to decelerate based on overall deceleration in the BSI.
• Financial Services: Unchanged, the sector has remained stable throughout the pandemic. Income support will likely continue to prop up consumer demand in the near term.
• High Tech: Unchanged, however global chip shortages could disrupt activity in the sector and reduce growth into 2023.
Link: The Coupa Business Spend Index Q3 2021 Report

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Business

Three Ways to Sell Value in B2B Markets

MIT Sloan Management Review Joona Keränen et al. September 1, 2021

The key challenges of VBS often stem from the confusion and uncertainty about the actual value salespeople are supposed to sell, the outcomes they are supposed to price, and the risks and responsibilities the seller and buyer are supposed to share.3 While current literature considers VBS to be essentially a one-size-fits-all approach to sales, it leaves managers clueless about how to apply it in different situations. This is particularly acute in B2B markets, where vendors need different capabilities depending on whether they are selling high-value products, value-intensive services, or performance-based solutions.4
Based on our decade-plus of field research with more than 70 companies in a wide range of B2B industries, we suggest that rather than viewing VBS as a single strategy, vendors should choose from three different approaches. Our findings suggest that vendors can adopt either a product-centric, customer process-centric, or performance-centric VBS approach. In this article, we highlight the key characteristics, requirements, and challenges of each option and provide guidance on how to choose the right approach based on the circumstances.

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