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Logistics Intelligence Brief
Thursday, September 16, 2021

Trucking

Up 5% may not be enough for truckload rates in 2022

Freight Waves Todd Maiden September 15, 2021

Up 5% would be ‘disappointing’
Asked if he would be disappointed with a 5% increase next year, Schneider National (NYSE: SNDR) President and CEO Mark Rourke said, “I’d put that on the disappointing side of the equation.”
He said that every metric Schneider uses to gauge fleet performance remains “strong” and that it is hard to observe traditional seasonal patterns as demand has been in peak mode for more than a year now.
A lack of drivers, trailing equipment strewn throughout the supply chain and port and rail congestion are just some of the headwinds constraining capacity currently. Throw in a consumer that is still buying at a high level alongside retailers still chasing inventory and the supply-demand imbalance remains historically skewed.

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Shippers/3PLs

Rising Shipping Costs Are Companies’ Latest Inflation Riddle

The Wall Street Journal Thomas Gyrta September 16, 2021

Subscription-Based

The Covid-19 pandemic has driven a long-lasting surge in transportation costs, putting pressure on many businesses already confronting higher wages and raw-material prices. Some CEOs are saying they expect elevated freight costs stretching into 2023.
The cost of transporting goods is a component in every step in a company’s supply chain. Everything from iron ore, steel, parts and finished products has to move as raw materials are processed in global manufacturing. The cost of shipping containers across the ocean is higher, truck drivers are in short supply, and gasoline is more expensive than many expected earlier this year.
“We are not counting on material improvements in 2022, especially in the first portion of the year,” Michael Witynski, CEO of the discount retailer Dollar Tree Inc., DLTR 0.01% said last month. He noted that experts expect ocean-shipping capacity to normalize no later than in 2023.

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U.S. Retail Sales Unexpectedly Jump in Sign of Resilient Demand

Bloomberg Reade Pickert September 16, 2021

U.S. retail sales unexpectedly rose in August as a pickup in purchases across many categories more than offset weaker demand for vehicles.
The value of overall retail purchases climbed 0.7% last month following a downwardly revised 1.8% decrease in July, Commerce Department figures showed Thursday. Excluding autos, sales advanced 1.8% in August.
The median estimate in a Bloomberg survey of economists called for a 0.7% decline in overall retail sales, with forecasts ranging from a 3.3% drop to a 1.1% gain.

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Industry

GlobalTranz survey highlights Peak Season expectations

Logistics Management Patrick Burnson September 15, 2021

About three quarters (76%) of decision makers expect that their 2021 peak season revenue will be higher than the previous year. Additional findings include:
• 9 in 10 decision makers indicate they need to increase hiring to meet customer demand
• Over 70% agree that they’ve seen an increase in customers wanting last mile delivery solutions and higher demand for white glove services (e.g. in-home installation, haul away)
• 94% noted that partnerships with supply chain/logistics companies are necessary to get through peak season successfully
Workforce needs, rising costs and supply chain congestion take precedent
While supply chains have proven resilient and adaptable over the course of the last 18 months, a strain on available resources and increasing costs are a cause for concern. Issues around workforce availability and material shortages are likely to persist well into 2022 as companies make moves to address them in the coming months.
• Nearly half (47%) of respondents say they will be paying higher salaries or wages to both attract new talent and retain current employees before the end of the 2021 calendar year
• More than 30 percent of respondents note having enough resources to meet the demand of consumers and keeping deliveries to end-users on time as more challenging this peak season than in 2020

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Canadian Pacific and Kansas City Southern agree on terms of $31 billion takeover

DC Velocity Ben Ames September 15, 2021

After federal regulators knocked down a rival bid, Canadian Pacific Railway (CP) today agreed with the U.S. freight rail line Kansas City Southern on a plan to merge, saying the $31 billion deal would create the first single-line rail network linking the U.S., Mexico, and Canada.
The acquisition is now subject to approval by the U.S. Surface Transportation Board (STB), which has approved earlier stages of the plan. According to CP, the STB review is expected to be completed in the second half of 2022. And upon obtaining that approval, the two companies will be integrated fully over the ensuing three years.
The combined companies would operate approximately 20,000 miles of rail, employ close to 20,000 people, and generate revenues of approximately $8.7 billion, Calgary-based CP said.

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U.S.-bound shipments see continued gains in August, reports Panjiva

Logistics Management Jeff Berman September 16, 2021

Total August U.S.-bound shipments—at 1,353,550—increased 3.1% annually and were 23.2% above 2019’s 1,098,272. And containerized freight imports—at 3,016,706 TEU (Twenty-Foot Equivalent Units)—headed up 11.2% annually (and up 18.1% compared to August 2019) and were up 4.4%, from July to August—trending down from July’s 14.3% annual spread. Despite the slowing of annual growth percentage, August’s TEU tally represented the second highest month on record, for U.S. shipments, with March 2021’s the highest, at 3,028,143 TEU.
Panjiva explained that these numbers continue what it referred to as the “year-long peak season” in which U.S. logistics facilities have been “running flat out, exposing weaknesses in supply chains from Suez to Long Beach.” And it added that while these market conditions have translated into high profits for container shipping lines, it also “removes flexibility to work around any unforeseen events.”

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Workforce

Amazon pushes average hourly pay above $18 to lure 125K new fulfillment, transportation employees

Supply Chain Dive Daphne Howland September 15, 2021

• Amazon on Tuesday said it is working to hire 125,000 fulfillment and transportation employees and has increased its starting pay in some areas; the average starting hourly wage for those roles tops $18, reaching $22.50 in certain places.
• While the hiring is underway, the e-commerce giant on Wednesday will host a career day and is taking applications online, according to a company press release.
• Depending on where they are, candidates could receive signing bonuses up to $3,000, plus benefits, paid tuition and "access to training programs that make these roles a springboard into a long-term career," per the release.

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Sam’s Club boosts minimum wage to $15 in bid to win more workers

Retail Dive Maria Monteros September 15, 2021

• As retailers inch closer to the holiday shopping season and the competition for labor gets tighter, Sam's Club announced it is raising its starting wage to $15 per hour effective Sept. 25, according to a company memo emailed to Retail Dive.
• The minimum wage for select roles was $11 an hour before the announcement, a spokesperson for Sam's Club said. In certain locations and roles, some Sam's Club workers can make up to $34 per hour.
• Sam's Club CEO Kath McLay said in a memo that 95% of workers are making at least $15 hourly. Sam's Club will have an average hourly rate of over $17, slightly more than parent company Walmart's $16.40 average.

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Who Is Driving the Great Resignation?

HBR.org Ian Cook September 15, 2021

Subscription-Based

According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021. Resignations peaked in April and have remained abnormally high for the last several months, with a record-breaking 10.9 million open jobs at the end of July. How can employers retain people in the face of this tidal wave of resignations?
Addressing the root causes of these staggering statistics starts with better understanding them. To explore exactly who has been driving this recent shift, my team and I conducted an in-depth analysis of more than 9 million employee records from more than 4,000 companies. This global dataset included employees from a wide variety of industries, functions, and levels of experience, and it revealed two key trends:
1. Resignation rates are highest among mid-career employees.
Employees between 30 and 45 years old have had the greatest increase in resignation rates, with an average increase of more than 20% between 2020 and 2021. While turnover is typically highest among younger employees, our study found that over the last year, resignations actually decreased for workers in the 20 to 25 age range (likely due to a combination of their greater financial uncertainty and reduced demand for entry-level workers). Interestingly, resignation rates also fell for those in the 60 to 70 age group, while employees in the 25 to 30 and 45+ age groups experienced slightly higher resignation rates than in 2020 (but not as significant an increase as that of the 30-45 group).

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Government/Safety/Sustainability

McLeod leverages AI to help fleets make better decisions on freight

Fleet Owner Josh Fisher September 15, 2021

“We’ve made a much easier way to gain a deeper understanding of market pricing in near-real-time,” Cubine said. “There are a lot of people who can look at a spreadsheet and not deduce everything that’s happened there. But when you start looking at some of the AI tools, machine learning tools, and analysis tools that we’ve layered on top of the data, it’s much easier for all respectable people to see and understand the whole rate question.”
MPact gives McLeod customers a clear picture of the current market for the various categories of truckload freight on a lane-by-lane basis. MPactPro will integrate its customers’ internal data to present a picture of the market that is more specific for their company and operating costs and enable them to improve load profitability and lane optimization for their network.

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Technology/Innovation

Walmart Teams With Ford, Argo to Launch Driverless Delivery Service

Bloomberg Keith Naughton September 15, 2021

Walmart Inc. is teaming up with Ford Motor Co. and self-driving startup Argo AI to launch a driverless delivery service in three U.S. cities.
Testing will begin in three cities later this year -- Miami; Austin, Texas; and Washington, Argo said Wednesday in a statement. Ford is providing Escape hybrids outfitted with Argo’s self-driving technology to deliver groceries and other merchandise in what’s billed as Walmart’s first multicity self-driving service.
Customer Interaction
“We will have to make sure someone’s home, and we will be experimenting with how the interaction is when someone goes to pick up the groceries or the package from the car,” Kwon said. “It should be a seamless and enjoyable experience.”
For Ford, the partnership with Walmart is separate from a pilot program it tested with the retailer three years ago that has since concluded.
“Pairing Walmart’s retail and e-commerce leadership with Argo and Ford’s self-driving operations across these multiple cities marks a significant step toward scaling a commercial goods delivery service,” Scott Griffith, chief of the automaker’s autonomous vehicles and mobility businesses, said in the statement.

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