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Logistics Intelligence Brief
Thursday, October 14, 2021

Trucking

Little relief seen for US domestic shippers in 2022

The Journal of Commerce William B. Cassidy October 13, 2021

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Shippers looking for relief from high transportation rates and searching for more transportation capacity may get part, but not all, of what they want in 2022. Transportation capacity is expected to become more readily available next year but freight demand will remain high enough to keep pricing elevated, economists said Tuesday during the North American Freight Outlook session of the JOC Inland Distribution webcast.
“Inventories have not been able to catch up [to demand] and as we move into 2022 this becomes a tailwind for demand for freight transport even as consumer demand starts to ease,” said Paul Bingham, director of transportation consulting at IHS Markit, the parent company of JOC.com. “Retailers and manufacturers will still be rebuilding inventories towards more and more normal levels.”
The rapid growth of e-commerce also won’t be walked back, and that has raised the bar when it comes to inventory management. “Our forecast is that rates are going to be sticky in 2022 because of the supply demand and the tailwind of inventory restocking,” said Bingham. “Some sectors of the marketplace are still yet to fully rebound, such as the non-socially distant service sector.”

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Cass Freight Index

Cass Transportation Systems October 13, 2021

Cass Freight Index - Expenditures
The expenditures component of the Cass Freight Index measures the total amount spent on freight, which rose 32% y/y in September. This index slowed from 42% growth in August, largely on tougher prior-year comparisons. If normal seasonality were to play out for the rest of this year, the full-year increase in this index would be 34% in 2021, after a 7% decline in 2020 and no change in 2019.
After an 11.3% month-to-month jump on an SA basis in August, expenditures fell 2.5% m/m in September as a result of lower volumes and higher rates.
On a two-year stacked basis, the Cass expenditures index was up 34% in September, more than explained by higher rates, as shipment volumes were down slightly on this basis.
Tougher comparisons in the coming months will naturally slow these y/y increases further, but normal seasonality implies a 25% y/y growth rate in Q4.
Related: Freight Waves September Cass data underscores stalled shipments; expenditures surge

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Industry

Fixing Supply Chain Won’t Be Easy, Experts Say

Transport Topics Dan Ronan October 13, 2021

“What we have is a storm within a storm,” University of Houston Logistics Professor Margaret Kidd told Transport Topics. “Consumers have insatiable demand, and consumers are spending. E-commerce numbers through the second quarter this year are up 57% from two years ago.”
“We don’t have an infrastructure that was prepared for this,” said Esper, who noted that in 2018 e-commerce represented 13.8% of retail sales, and that figure is expected to grow to nearly 26% by 2025. “This is not just a holiday thing. This is not just a demand spike thing. This is about the economy being able to function.”
Adding to the supply chain challenges, the U.S. Department of Labor said in July the warehouse and transportation industry was short a record 490,000 employees, a gap that experts predict will widen in coming months. Included in that number is the 60,000-plus truck drivers needed to fill some of those positions, according to American Trucking Associations.

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Biden: 24/7 Operations to Help Supply Chain

Truckinginfo.com Deborah Lockridge October 13, 2021

On Oct. 13, President Biden announced that the Port of Los Angeles will move to 24/7 operations, following a similar recent announcement from the Port of Long Beach. Some 40% of all the shipping containers imported into the U.S. come through these two ports, and the global pandemic scrambled normal supply chain operations. Dozens of container ships have been anchored offshore for weeks waiting to unload.
Noting that 24/7 operations are standard at large ports in most other large countries, Biden explained that traditionally, the ports are only open weekdays, and not overnight. Staying open 7 days a week, through nights and weekends, will open up another 60 extra hours a week – nearly double the number of hours the port is open for business. That means more hours for workers to move containers off ships and onto trains and trucks. And opening up those off-peak hours, he said, will also help speed operations. During off peak hours, he said, cargo leaves port at a 25% faster pace than during the day shift.
Related: The Wall Street Journal L.A. Port to Operate Around the Clock to Ease Cargo Logjams

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September imports show no relief for stressed US ports

The Journal Of Commerce Bill Mongelluzzo October 13, 2021

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US containerized imports from Asia totaled almost 1.6 million TEU in September, meaning every month this year has seen imports average almost 20 percent higher than the historical monthly average of about 1.3 million TEU. That sends a clear message to retailers and other importers that the port-related congestion problems they have experienced all year will continue well into 2022.
Asian imports of 1.59 million TEU last month were up 2.2 percent from September 2020 and 13.8 percent from pre-COVID September 2019, according to PIERS, a JOC.com sister product within IHS Markit.
August imports from Asia were 1.6 million TEU, 2.2 percent lower than August 2020. Except for February, when many factories in Asia were closed for the Lunar New Year holidays, imports from Asia each month this year have totaled about 1.5 to 1.7 million TEU.

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LaserShip Is Buying Package Carrier OnTrac in a $1.3 Billion Deal

The Wall Street Journal Jennifer Smith October 13, 2021

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The combined entity would have over 100 sorting and delivery hubs in 30 states and the District of Columbia, getting LaserShip closer to offering “a coast-to-coast solution which doesn’t exist outside UPS or FedEx, ” Mr. Dinneen said.
Acquiring smaller regional operators in those markets could help LaserShip grow faster than building capacity on its own, given the tight labor market, said Satish Jindel, president of ShipMatrix Inc., which analyzes parcel-shipping data.
“LaserShip’s acquisition of OnTrac is a transformative step to becoming a national last-mile delivery company by combining the eastern and western regional networks of LaserShip and OnTrac, respectively,” Moody’s said in its assessment.

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Will regional parcel deal spark PE interest in national network?

Freight Waves Mark Solomon October 13, 2021

There is a player that might be emerging on the U.S. parcel delivery landscape: private equity.
In a deal that banking sources said was consummated about two weeks ago, regional parcel delivery carrier LaserShip, which is owned by PE firm American Securities LLC, acquired fellow regional carrier OnTrac for what is believed to be $1.3 billion, a significant sum for a regional parcel company. Greenbriar Equity Group LP, another PE firm, sold LaserShip to American Securities early this year but retains a minority position.
The deal combines the two largest footprints in the regional parcel industry. LaserShip, based in Vienna, Virginia, serves 23 states from Maine to south Florida. Its network extends as far west as Indianapolis. The company in late May expanded into Tennessee and has publicly expressed an interest in entering Chicago.
OnTrac, based in Chandler, Arizona, serves eight Western states, including all of California. Its network stretches as far east as Colorado and touches the country’s northern and southern borders from Washington to Arizona. OnTrac has not geographically expanded since entering Idaho in 2013.

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Government/Safety/Sustainability

Truckers warn federal regulators of drug-testing bottlenecks

Freight Waves John Gallagher October 13, 2021

A shortage of available drug and alcohol testing clinics, personnel and equipment threaten to unfairly ban truck drivers from the road, according to the Owner-Operator Independent Drivers Association.
In a letter sent to the Federal Motor Carrier Safety Administration on Wednesday, OOIDA President and CEO Todd Spencer said that disruptions affecting FMCSA’s testing system are causing “significant challenges” for drivers.
To remain compliant with federal drug and alcohol rules, drivers are required to submit to random testing. However, “increasingly, our association has experienced difficulties finding facilities to schedule and complete necessary tests for our members,” Spencer wrote to FMCSA Administrator Meera Joshi.
“Drivers have reported to facilities that lack equipment, like drug testing specimen cups, due to the current broader shortages of plastics. In other instances, facilities don’t have qualified personnel to administer the test. From what we have heard from testing facilities, these disruptions are due to the continuing impacts of the COVID-19 pandemic.”

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XPO settles 2 California worker classification cases for nearly $30M

Freight Waves John Kingston October 13, 2021

XPO has settled a pair of worker classification cases in California that will pay out close to $30 million to a group of almost 800 drivers.
The settlement documents were filed with the U.S. District Court for the Central District of California last week. The final settlement, approved by the court, covers two cases that were consolidated in the class action, both of them filed in the same court. The suits were originally filed in September 2018 and certified for class action in September 2020.
The Teamsters aided the suit against XPO, a longtime nemesis. In a prepared statement, the union declared the settlement a “significant victory for working people.”
James Hoffa, the outgoing Teamsters president, said in that statement, “Today, we commend these brave XPO drivers, who decided not to back down and instead fought hard to demand that XPO pay them the money they were rightfully owed.”

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OSHA sends vax mandate rule to White House for review, trucking vows fight

CCJ Jason Cannon October 13, 2021

American Trucking Associations (ATA) CEO Chris Spear in an email to members Tuesday night said his group "is working to ensure the ultimate rule, if and when it issues, takes into account the vital work that ATA members do every day in delivering life-saving COVID vaccines, medical supplies and the necessities of life."
Spear also noted that during the throes of the pandemic, trucking companies and drivers, "have done our work as safely as was possible ... and [ATA has] explained that to the administration," adding that truck drivers spend most of their work hours alone in the cab of a truck – "literally one of the safest places possible during a pandemic – so why do they need to be regulated in this way?"
He also questioned the practicality of implementing the rule on an industry that spends very little time at a central location. "Testing hundreds of thousands of truck drivers moving across the country every day is a virtual impossibility," Spear said, adding that ATA has made its concerns known to the Biden administration, as well as potential effects on the nation’s supply chain, which is already stressed to a level not seen in generations. "Assuming the administration moves forward without heeding our concerns, we will be examining all options and choose a path that protects our industry and the 80% of the country that depends on us."

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Trucking and the COVID-19 Vaccine Mandate

Truckinginfo.com Deborah Lockridge October 13, 2021

The logistics of getting truck drivers, especially long-haul drivers, vaccinated (or tested weekly), are daunting. Vaccines, at least, are a one- or two-time thing, depending on the vaccine. Some truckstops have even been holding vaccine clinics. But weekly testing? Companies would have to route drivers to someplace they could get tested every week. You can’t stop the hours-of-service clock for a driver to take a COVID test. Labs offering testing typically don’t provide truck parking.
There seems to be little rhyme or reason for an emergency order that only affects large companies. If you want to address COVID-19 as a health danger in the workplace, wouldn’t it make more sense to mandate vaccines or testing for all companies? Or to apply it based on the number of people working in a specific location rather than total employees? A former OSHA administrator told Time magazine that limiting the vaccination and testing rule to larger businesses has no precedence in past guidelines.

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