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Logistics Intelligence Brief
Thursday, September 9, 2021

Economy

The Federal Reserve Beige Book August 2021

The Federal Reserve Board of Governors September 8, 2021

Cleveland District
Several contacts indicated that they were raising wages across pay grades. Also, several contacts said they were giving more frequent raises than usual. One trucking company said it had already given five pay raises this year.
Demand for freight services grew modestly from already high levels. One contact attributed the increased activity to customers’ adding to their supply stockpiles and some firms’ storing their products offsite when customers further down the supply chain were behind schedule. Several freight haulers reported that shortages of drivers or equipment led them to turn away some orders. Looking forward, contacts expected demand for freight ser vices to remain elevated.
Richmond District
Trucking companies in the Fifth District reported that demand remained robust in recent weeks. Volumes were high across most goods, with contacts noting particular strength in home goods. Truckers reported turning away business amid high demand as a lack of
drivers restricted capacity. Contract and spot market rates were high, giving many companies record margins despite high operating costs. Contacts also noted that a long backlog of parts for repairs is leaving trucks and trailers out of use for extended periods of time.
Atlanta District
Trucking companies saw robust freight shipments. Railroads experienced significant increases in intermodal traffic; however, dwell times in rail yards increased. Air cargo contacts noted steady demand, though there was growing uncer tainty surrounding the impact of COVID-19 outbreaks on activity. Transportation contacts anticipate further strengthening in activity but no relief from supply chain disruptions over the next 3-6 months.
District contacts continued to cite increasing nonlabor costs, especially for steel and freight, with multiple con tacts referencing record increases in shipping container rates.

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Industry

No Hurricane Has Hit US Energy Markets Like Ida Has

Bloomberg/Transport Topics Kevin Crowley And Sheela Tobben September 8, 2021

Just over 20% of U.S. Gulf of Mexico oil and natural gas production is back online after Hurricane Ida battered southeast Louisiana, marking an even slower comeback than in the wake of Katrina.
More than a week after the Category 4 storm made landfall, about 77% of the region’s offshore production remains shut, according to the Bureau of Safety and Environmental Enforcement. By comparison, about 60% of oil output and 40% of gas was still offline this long after Hurricane Katrina devastated New Orleans and its environs in 2005.
Many in the energy industry were expecting Gulf supplies to return faster than refining capacity, but now “it seems that it may be the other way around,” said Rebecca Babin, senior equities trader at CIBC Private Wealth Management.
Related: The Wall Street Journal Hurricane Ida’s Fallout Continues to Cripple U.S. Oil Production

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RoadOne acquires eastern US drayage operator

Freight Waves William B. Cassidy September 8, 2021

RoadOne IntermodaLogistics is expanding its domestic intermodal reach by acquiring Rose Transportation, an intermodal transportation services company serving rail and port facilities in the Mid-Atlantic and southern US. The company, which will be renamed Rose IntermodaLogistics, brings 13 terminals and more than 200 much-needed truck drivers to RoadOne in multiple East Coast markets.
“Our business model is always going to call for acquisitions,” Kellaway told JOC.com. But booming demand for intermodal rail and truck services accelerates acquisitions. So does the need for truck drivers who Kellaway says are leaving drayage for jobs in regional and local e-commerce trucking.
“Amazon uses a tremendous number of independent contractors for regional delivery programs,” he said. “A lot of final-mile delivery guys are ex-tractor-trailer drivers who’ve decided to step down from the big rig and try something different.” Former long-haul truckers and drayage drivers are going to shorter-haul driving jobs that did not exist five or 10 years ago, Kellaway said.

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Government/Safety/Sustainability

5 Takeaways From a Billion-Dollar Verdict

Transport Topics Deborah Lockridge September 7, 2021

Four years ago, a teenager was killed as he waited in a traffic backup on Interstate 95 near Jacksonville, Florida, caused by an overturned truck, when a distracted truck driver slammed into the line of traffic. A few weeks ago, it took a jury only four hours to deliver a $1 billion verdict in the case, most of it punitive damages against the trucking company whose driver caused the backup in the first place, AJD Business Services Inc.
The verdict blew the previous record for a nuclear verdict against a trucking company out of the water. As recently as 2018, the industry was stunned by a record verdict of $101 million, which was later thrown out on appeal. And less than a year ago, that was surpassed by a $411 million verdict handed down by another Florida jury, this in favor of a veteran partially paralyzed in a 2018 45-vehicle interstate pileup.
Distracted Driving Just the Beginning
According to the plaintiffs’ lawyer, as reported in the Florida Times-Union, the driver working for AJD was distracted by his cell phone, over his hours of service limit, and did not even have a commercial driver’s license.

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Fleets reluctant to mandate vax, but it might not matter

CCJ Jason Cannon September 8, 2021

At just under 62%, the current labor participation rate is more than 5% lower than it was 20 years ago and only about 1.5% higher than it was in the depth of the pandemic. By comparison, about 5 million job openings have been added in that same time, and the BLS currently estimates there are more than 10 million non-farm job openings in the U.S.
The pressure to get vaccinated seems to build almost daily.
Responding to a recent poll conducted by CCJ sister publication Truckers News, about 25% of company drivers polled said they had already been vaccinated. Almost 7% said they would comply and get the vaccine if an employer required it.
Just how many of the drivers who said they would quit or be fired will actually dig in that deep? Probably nothing to the tune of 46%. Data and polls conducted pre-ELD rollout suggested drivers would park their trucks en masse before having an hours nanny plugged into their dashboard, and that didn't happen. However, I realize there's a significant fundamental difference between being forced to use an ELD and having something injected in your body.

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Push to Let Teens Drive Trucks Interstate Divides the Industry

The Wall Street Journal Lydia O'Neal September 9, 2021

Subscription-Based

The American Trucking Associations, another trade body that represents trucking companies, hopes the pilot program will demonstrate that young people can safely drive tractor-trailers interstate, said Bill Sullivan, its executive vice president of advocacy.
Proponents of lowering the federal age limit say that plenty of young commercial-driver’s-license holders already drive long distances within large states like Texas and California and that the proposed apprenticeship program’s required 400 hours of training would add another layer of safety beyond what is needed to get a commercial license.
“We would always have several hundred job openings in the best of times,” said Derek Leathers, chief executive of Werner Enterprises Inc., a large truckload carrier based in Omaha, Neb. But now the company has more than 500 job openings, he said, and the hardest to fill are those for long-haul drivers. Like many companies, Werner is trying to attract more drivers by offering higher pay, but ensuring they get home regularly is an important incentive as well, he said.
The infrastructure bill’s pilot program would allow up to 3,000 drivers to take part in the test, in a heavy-duty and tractor-trailer trucking sector that altogether employs about 1.8 million people, according to BLS. The House is due to take up the bill this month.

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