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Logistics Intelligence Brief
Friday, September 17, 2021

Trucking

National dry van spot rates broke $2.50/mile for the first time

DAT.com Dean Croke September 15, 2021

Dry van capacity is still tight as the Los Angeles market average spot rates reach $3.18/mile — up $0.10/mile in the last three weeks. On the e-commerce benchmark lane from Los Angeles to Phoenix, spot rates are averaging $4.26/mile, which is $0.42/mile higher than the same week last year.
Despite declining volumes, capacity continues to tighten in the Philadelphia market following four weeks of rate increases:
• Spot rates have climbed $0.16/mile since mid-August to reach an average outbound rate of $2.55/mile last week
• On the 250-mile haul to Richmond, VA, spot rates hit a record-high $4.38/mile last week — up $0.17/mile compared to the average for August
• Loads to Atlanta hit $2.40/mile last week following a $0.24/mile increase over the prior week
• The 469-mile haul to Columbus, OH, averaged $3.02/mile last week, $1.35/mile higher than the same week last year
Spot rates
After remaining relatively flat for the last month, national dry van spot rates broke through the $2.50/mile barrier for the first time last week. Rates increased by $0.05/mile last week to $2.51/mile despite a 20% decrease in load volumes. This is a sign of just how tight truckload capacity is ahead of peak shipping season.

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Shippers/3PLs

Big-Box Retailers Battle for Inventory in Bet on Strong Holiday Sales

The Wall Street Journal Lydia O'Neal September 16, 2021

Subscription-Based

Retailers are loading up on goods for the holiday season in a strong show of confidence in consumer demand even as the Delta variant and supply-chain disruptions add uncertainty to restocking efforts.
Best Buy Co. , Target Corp. and other large merchants are amassing more inventory compared with last year’s pandemic-depressed levels, in some cases logging double-digit percentage increases as the stockpiles also exceed 2019 values.
Covid-related factory shutdowns in Asia and global shipping bottlenecks have businesses jockeying for merchandise and vessel space to avoid losing critical fourth-quarter sales, a contest that tends to favor deep-pocketed big-box retailers over smaller competitors.
Global inventories at Walmart Inc., for example, rebounded this summer after dropping in the same period of 2020 compared with pre-pandemic levels, as the company stepped up efforts to meet strong consumer demand, including chartering vessels to bypass ocean shipping bottlenecks.
“In 2020, at the end of the second quarter, we were way too light in stores and on the e-commerce side,” Walmart Chief Executive Doug McMillon said at a Sept. 9 investor conference. “So we would take even more inventory if we could get it.”

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Lowe’s places larger orders with suppliers to avoid holiday stockouts

Supply Chain Dive Sarah Zimmerman September 16, 2021

Retailers are working to keep shelves stocked during the holiday season by getting products into warehouses and stores as early as possible.
"We already had Halloween early," said Denton during the retailing conference call. "If we look at the Christmas holiday, that is coming in earlier than we originally planned last year."
The company, which is in the midst of a $1.7 billion supply chain overhaul, has deepend its relationship with suppliers and has largely avoided major shortages by increasing "lead times for the most part," Denton said.

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August Retail Sales Rise Despite ‘Trifecta of Macroeconomic Headwinds’

National Retail Federation September 16, 2021

“Retail sales in August overcame unusual twists and turns that have affected shopping behavior both in terms of the timing and composition of sales,” NRF Chief Economist Jack Kleinhenz said. “The consumer remains rock solid despite the trifecta of macroeconomic headwinds we’ve seen this year, including tapering off of government stimulus, elevated COVID-19 infections and ongoing supply chain challenges in the form of shortages of labor and goods. Higher sales came even with a disjointed back-to-school season that also affected the timing of sales as many school districts returned to in-person learning but some delayed classes until after Labor Day. These results pave the way for sturdy consumer spending and a strong economy in the fourth quarter.”
The U.S. Census Bureau today said overall retail sales in August were up 0.7 percent seasonally adjusted from July and up 15.1 percent year-over-year. That compares with a decline of 1.8 percent month-over-month and an increase of 15.1 percent year-over-year in July. Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.
NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed August was up 2.3 percent seasonally adjusted from July and up 12 percent unadjusted year-over-year. That compared with a month-over-month decrease of 1.8 percent and a year-over-year increase of 8.9 percent in July. NRF’s numbers were up 11.4 percent unadjusted year-over-year on a three-month moving average.

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Echo’s Waggoner talks about company’s move from public to private

Logistics Management Jeff Berman September 15, 2021

“We are not going to change how we do business,” he said. “In fact, our mantra throughout this transition has been ‘business as usual.’ I would hope a shipper or carrier would not even notice. But I do think what they will notice over the longer term is that we are continuing to invest in our technology. With carriers, we always focus on how we can be easy to do business with...we want to be the logistics company of choice for trucking companies that want to make their capacity available. And if we are easy to do business with—and treat them right and fairly—then we become really good partners. I think our investments are going to make us better at that than we already are. For shippers, it is all about execution. Shippers want great service, a fair price, and they want transparency, execution, and service recoveries when something gets broken or does not go according to plan. A lot of the technology investments we are working on will give them what I call proactive customer service.”

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Walmart teams up with Ford, Argo AI for autonomous delivery in 3 cities

Supply Chain Dive Max Garland September 16, 2021

Walmart said Wednesday it is teaming up with Ford and Argo AI to deliver goods to customers' homes via self-driving vehicles. It is the latest move by the retail giant to leverage autonomous technology for transportation in its supply chain.
The delivery program will span "defined service areas" of three cities — Miami, Washington, D.C. and Austin, Texas — and expand over time, the release said. Initial testing will begin later this year, but the announcement did not provide a specific date.
Through the service, a Walmart customer will place an order online, and Argo AI will route the order and schedule its delivery time. A Ford vehicle using Argo AI's self-driving system will then deliver the order. A video accompanying the release shows a Walmart store employee loading the vehicle with goods and the end customer unloading it.

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Industry

‘Just Get Me a Box’: Inside the Brutal Realities of Supply Chain Hell

Bloomberg Brendan Murray September 15, 2021

Two years ago, a 40-foot container cost less than $2,000 to transport goods from Asia to the U.S. Today the service fetches as much as $25,000 if an importer pays a premium for on-time delivery, which is a luxury. That’s translated into big money for container carriers, with the industry on track to post $100 billion in net profit this year, up from about $15 billion in 2020, says John McCown, an industry veteran and founder of Blue Alpha Capital.
The snarls don’t end when Thomas’s containers land on a dock in North America. They next need to travel by truck or train to Gerber’s distribution centers in California, Illinois, New Jersey, Texas, and Canada. Those journeys got more complicated this summer when western Canadian wildfires slowed rail operations, and when Union Pacific Corp., a rail haulage company, stopped containers moving inland from West Coast ports so it could clear a logjam of the boxes outside Chicago as the influx of goods overwhelmed the system. A couple of containers filled with Gerber products were stuck in the gridlock for 10 weeks after a truck driver Thomas sent to the location couldn’t dig them out, she says. So even though the railroad’s temporary embargo was aimed at easing congestion, it probably pushed the delays back to the ports. Indeed the number of ships anchored outside the twin ports of Los Angeles and Long Beach more than doubled to 45 from late July to a month later.

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Record shattered: 61 container ships stuck waiting off California

Freight Waves Greg Miller September 16, 2021

There were an all-time-high 61 container ships in the queue in San Pedro Bay on Wednesday, according to the Marine Exchange of Southern California. Of those, a record 21 were forced to drift because anchorages were full.
Theoretically, the numbers — already surreally high — could go a lot higher than this. While designated anchorages are limited, the space for ships to safely drift offshore is not.
“There’s lots of ocean for drifting — there’s no limit,” Capt. Kip Loutit, executive director of the Marine Exchange of Southern California, told American Shipper.
“Our usual VTS [Vessel Traffic Service] area is a 25-mile radius from Point Fermin by the entrance to Los Angeles, which gives a 50-mile diameter to drift ships. We could easily expand to a 40-mile radius, because we track them within that radius for air-quality reasons. That would give us an 80-mile diameter to drift ships,” said Loutit.

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Mileage between breakdowns rises, but so do repair costs

Transport Dive Jim Stinson September 16, 2021

• Labor costs for repair and maintenance increased 2.6% between Q1 and Q2, according to Decisiv's and the American Trucking Associations' Technology & Maintenance Council's North American Service Event Benchmark Report. Overall, cost of parts increased by 2.8% in the same time period, with tires increasing 10.7% and the cost of transmission parts rising 9%.
• But time between breakdowns is improving. TL carriers averaged 23,769 miles between breakdowns, up 8.8% from Q1, according to a survey by TMC and FleetNet America.
• LTL carriers bettered their performance by 4.1% from Q1 to Q2, increasing to 46,186 miles from 44,380 miles, according to the TMC/FleetNet America survey. The tank sector had a 4.7% improvement, running 18,241 miles in Q2, up from 17,420 in Q1.

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Workforce

A Record Number Of Women Are Driving Trucks To Pay The Bills

NPR.org Stephan Bisaha September 16, 2021

After losing jobs during the pandemic, more and more women are becoming truck drivers. Many have been attracted by the high demand and higher pay.

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Amazon’s New ‘Factory Towns’ Will Lift the Working Class

Bloomberg Connor Sen September 16, 2021

The campaign against economic inequality has put a bullseye on cities. Local governments are encouraged to raise minimum wages, change their zoning laws and build more housing, particularly in affluent communities that are squeezing out the lower class.
But what if you shifted that focus to a different kind of community? Consider these burgeoning new places strung along the interstate and other highways leading away from urban cores, populated by warehouses and fulfillment centers that are being built to serve the needs of e-commerce customers. Let’s call them “factory towns.”
It used to be that when you were driving out of a metro area on a highway you'd note the change in scenery as it went from urban to rural. Today what's most noteworthy is the transition to humongous warehouses and distribution centers, both currently in use and many more being built. Retail and e-commerce goliaths Amazon.com Inc. and Walmart Inc. have distribution facilities everywhere, and while they may have the biggest footprint, companies that make building materials have their fair share, as do other e-commerce players like pets-supplies company Chewy Inc.

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Logistics company thanks drivers with $100K in giveaways

DC Velocity September 16, 2021

Transportation and third-party logistics services provider (3PL) C.H. Robinson is extending its nationwide ThankTruckDrivers.com campaign due to overwhelming response, the company said today. The online campaign is in conjunction with National Truck Driver Appreciation Week, which runs through this Friday, September 14. The company will give away $100,000 to truck drivers from around the country.
“Truck drivers and carriers are essential to the global economy, and the work they do impacts our lives every day,” Bob Biesterfeld, president and CEO of C.H. Robinson, said in a statement announcing the program’s extension. “While they have always played a significant role in the logistics industry, working with platforms like us to deliver goods where and when they’re needed, this past year has truly underscored their importance. During the pandemic, while so many began working remotely and getting more at-home deliveries, truck drivers never left the road. They delivered when it mattered most. We are proud to recognize them for the commitment they show every day, but especially now.”

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Government/Safety/Sustainability

USDOT Officials Praise Truckers’ Contributions

Transport Topics Eugen Mulero September 17, 2021

Meera Joshi, deputy administrator at the Federal Motor Carrier Safety Administration, emphasized their contributions.
“As we become more and more reliant on e-commerce, and through pandemic and climate crises, their critical role is even more evident,” she said. “Truck drivers, with their broad highway presence, set the tone for highway driving.”
Joshi continued, “Careful, professional truck drivers, attentive to driving, are saving lives every day.”
American Trucking Associations President Chris Spear, noted, “In times of crisis, they are among the first to respond. And when others stay home, we hit the road delivering the things this country needs to keep moving.

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FMCSA Medical Board to Review Recalled CPAP Machines

Transport Topics Eric Miller September 16, 2021

Members of the Federal Motor Carrier Safety Administration’s medical review board are due to address uncertainties connected to a voluntary recall of some continuous positive air pressure machines, warning that truck drivers using them face potential health risks.
Continuous positive air pressure (CPAP) machines are commonly used to treat truck drivers diagnosed with obstructive sleep apnea, a condition in which a person repeatedly stops breathing during sleep.
However, a website announcement of the voluntary recall posted by the U.S. Food and Drug Administration in late June, said the machines pose a threat to users due to risk of exposure to debris and chemicals.

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Technology/Innovation

How fleets can adapt to inevitable proliferation of electric, alt-fuel trucks

CCJ Jason Cannon September 16, 2021

By 2030 fuel cell technology provides a viable solution to decarbonize heavy-duty long-haul transportation and decline of clean hydrogen production cost (increasing availability of cheap renewable energy) and lower fuel cell technology cost leads to cost parity with diesel.
EV penetration rates are projected to reach 36% in medium-duty and 12% in heavy-duty by 2030. Declining battery pack prices are a key adoption driver, Aulbur said. Market growth, however, will differ by region as electricity prices vary greatly across the U.S.
Fleet electrification brings challenges for local grid reliability, Aulbur said, but capacity issues at a local level can be managed by pursuing proactive infrastructure build out or engaging in managed charging efforts to shift incremental EV load into off-peak periods.

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