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Logistics Intelligence Brief
Wednesday, October 20, 2021

Trucking

Tonnage Jumps in September

Transport Topics October 19, 2021

Truck tonnage increased on both a sequential and year-over-year basis in September, recording a 2021 high mark amid an environment in which a shortage of drivers and trucks is keeping rigs fully loaded on most runs, American Trucking Associations reported Oct. 19.
The ATA For-Hire Truck Tonnage Index was 112.9 in September, an increase of 1.7% compared with year-ago levels, and up 2.4% compared with August’s 110.2 result. For the purposes of the index, the year 2015=100.
“September’s sequential gain was the largest in 2021,” ATA Chief Economist Bob Costello said. “It is good that tonnage rose in September, but it is important to note that this is happening because each truck is hauling more, not from an increase in the amount of equipment operated as contract carriers in the for-hire truckload market continue to shrink from the lack of new trucks and drivers.”

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Dedicated business booms for fleets as shippers avoid the pricey spot market

Transport Dive Jim Stinson October 19, 2021

As spot rates remain high and capacity can be just out of reach for some shipments, shippers are turning to for-hire fleets for dedicated carriage. And fleets are responding by adjusting their lanes.
Sixty-six percent of Werner's fleet is now dedicated, according to Craig Callahan, chief commercial officer and executive vice president.
"That continues to grow," said Callahan.
Across the nation, there are no particular regional hot spots for dedicated, according to Avery Vise, FTR vice president of trucking. Instead, anywhere spot rates have crept up is likely where dedicated is booming, he said.
"It's pretty widespread because the spot market is widespread," said Vise. "And that's what [shippers] are trying to work around."

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Industry

Citing costs, LA-LB marine terminals say 24/7 push unrealistic

The Journal Of Commerce Bill Mongelluzzo October 19, 2021

Subscription-Based

Southern California marine terminals have thrown cold water on the much-publicized effort to run their operations 24/7 to relieve historic port congestion, saying they will not commit to round-the-clock gates for retailers and truckers while 30 percent of existing appointment slots go unused. That comes as key port metrics deteriorate and 70 container ships were at anchor awaiting berthing space off Los Angeles-Long Beach on Monday.
Terminal operators told JOC.com that with almost one-third of their trucker appointment slots going unfilled each week, they cannot afford to run the costly 3 a.m. to 8 a.m. “hoot” gates that would be needed to close the gap between the night shift and day shift to achieve 24/7 operations.
“I don’t see how the terminals are going to be reimbursed. It’s big money,” said Ed DeNike, president of SSA Containers. SSA Marine operates three terminals in Long Beach.

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September Port Numbers Remain Strong as Leaders Address Congestion

Transport Topics Dan Ronan October 19, 2021

“The cargo surge we’ve experienced for more than a year continues,” Port of Los Angeles Executive Director Gene Seroka said.
Workers at Los Angeles in September processed 898,941 TEUs, making it the busiest September in the port’s 114-year history. That compares with 883,624 a year ago. Seroka said the facility could process a record 10.8 million containers by Dec. 31, compared with 9.2 million a year ago. If that number is reached, it will be up 17% over 2020 and the best calendar year for a Western Hemisphere port.
“We’ve been averaging more than 900,000 container units for the past 14 consecutive months. “The duration of this cargo run is quite remarkable,” Seroka said. “All of the indicators are pointing to a strong and steady volume flow over the months ahead.”
The Port of Long Beach had its second-busiest September on record, even though it was down 5.9% from September 2020. Dockworkers moved 748,472 TEUs compared with 795,580 a year ago.

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Union Pacific expands hours to support LA port’s 24/7 schedule

Supply Chain Dive Edwin Lopez October 19, 2021

Union Pacific expanded its hours at a near-dock rail facility by the Port of Los Angeles to align with the port's goal to move to 24/7 operations, Kristen South, a spokesperson for the railroad, confirmed Tuesday.
The railroad's Intermodal Container Transfer Facility, known as ICTF, began operating on a full 24/7 schedule as of Sunday. Previously, the facility was open "148 of 168 hours per week," South said. "We've opened those remaining 20 hours to support our customers and provide them every opportunity to move freight in and out of the terminal."
The news comes less than a week after the Port of Los Angeles announced a goal to operate on a 24/7 schedule. In a statement on LinkedIn, the port said collaboration with Union Pacific had contributed to rail wait times reducing by more than half in the last 30 days.

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Hub Group sees big cross-selling opportunity following Choptank purchase

Freight Waves Mark Solomon October 19, 2021

Hub Group Inc. said Tuesday it acquired Preston, Maryland-based Choptank, which specializes in truck brokerage for refrigerated goods, for $130 million in cash. The move gives Oak Brook, Illinois-based (NASDAQ: HUBG) Hub a foothold in the refrigerated business, which generates about 70% of Choptank’s total over-the-road revenue. Choptank is on pace to generate $470 million in annual revenue, Hub executives said Tuesday in an analyst call. Choptank is a non-asset-based provider, meaning it owns no transportation assets and relies on motor and rail carriers to haul its customers’ freight. All of Choptank’s 400 employees, including Turner, will join Hub.
The acquisition pushes Hub’s brokerage revenue above the $1 billion mark and, according to Hub executives, represents a big step toward reaching its goal of between $5.5 billion and $6.5 billion in revenue by 2025. Hub posted 2020 revenue of just under $3.5 billion, of which brokerage represented $431 million. Hub’s giant intermodal business accounted for more than half of its 2020 revenue. With the acquisition, non-asset-based business accounts for 40% of Hub’s total revenue.

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Shippers/3PLs

US retailers won’t use charters in long term: container lessors

The Journal Of Commerce Peter Tirschwell and Cathy Morrow Roberson October 19, 2021

Subscription-Based

Container leasing executives don’t see a long-term market emerging based on shippers chartering their own container ships and needing to secure containers along with them.
A number of retailers — including Walmart, Home Depot, IKEA, ASOS, Target, Dollar Tree, and Costco Wholesale — have turned to freight forwarders and charter brokers to lease container ships on their behalf amid global capacity constraints. Ocean carriers providing traditional container shipping services supply the container as part of the service, but shippers are on their own when using their own ships.
Leasing executives doubt they are seeing a new market for containers take shape, suggesting that the unusual phenomenon of shippers charting their own tonnage will prove to be short-lived.

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Panic ordering by retailers is making the supply chain crisis ‘even worse’

CNN Weizhen Tan October 20, 2021

Retailers and manufacturers are overordering or placing orders too early amid panic over the massive supply chain crisis, and that’s making things much worse, those in the industry told CNBC.
“Suddenly, retailers and manufacturers are overordering because of these supply chain issues, and that’s just leading to essentially an even worse scenario,” Jonathan Savoir, CEO of supply chain technology firm Quincus told CNBC’s “Squawk Box Asia” on Monday.

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Workforce

There are lots of drivers out there, but they’re finding work elsewhere

CCJ Josh Fisher October 19, 2021

A smaller labor pool
However, since the pandemic began nearly 20 months ago, the U.S. has seen a large number of people exit the labor market, Eric Starks, FTR's chairman and CEO, said. “This is creating some structural problems. This is a big deal, and it’s going to continue to drain the markets as we go forward. You should not have an expectation that the labor markets are going to be freed up relatively quickly.”
This is creating a smaller labor pool for trucking. Some of that has to do with retirements, as truck drivers this century have skewed older than the general workforce, Vise noted. It also has to do with reduced CDL training and licensing during last year. “But according to DOT, we have fully recovered from last year and are actually running ahead of 2019,” he said.
Traditional truck drivers are shifting to other industries, such as parcel and local delivery, warehousing and storage, and home improvement stores, Vise said. “All of those have fully recovered and then some. That implies they are drawing workers from other segments. Local delivery is especially likely to be a competitor because fundamentally it’s the same job, but it’s free from federal regulation.”

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Wanted: 80,000 truck drivers to help fix the supply chain

CNN Vanessa Yurkevich October 19, 2021

The trucking industry is short 80,000 drivers, a record high, Chris Spear, President and CEO of the American Trucking Associations, tells
That's a 30% increase from before the pandemic, when the industry already faced a labor shortage of 61,500 drivers.
"That's a pretty big spike," Spear added. Many drivers are retiring, dropping out of the industry. Increased consumer demand, prompting a need for more drivers, also plays a big role in the shortfall.
Truck drivers move 71% of the US economy's goods, but represent just 4% of the vehicles on the roads, said Spear. If nothing is done, the latest figures put the industry on track for a shortage of 160,000 drivers by 2030, and the need for 1,000,000 new drivers over the next ten years, according to the American Trucking Associations.

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GE, Union Pacific Mandate Covid-19 Vaccine for U.S. Workers

The Wall Street Thomas Gryta and Paul Ziobro October 19, 2021

Subscription-Based

Employees of government contractors are required to get vaccinated against Covid-19 under an executive order signed in September by President Biden. Contractors can request an accommodation for a religious belief or disability, but cannot opt out of the shot through Covid-19 testing. The White House has also said it plans to require companies that employ 100 or more workers to require their employees be vaccinated or undergo regular Covid-19 testing, but that policy is awaiting a formal rule from the Occupational Safety and Health Administration.
While some large companies, such as Walt Disney Co. and meatpacker Tyson FoodsInc., have imposed vaccine mandates, most businesses are awaiting more details from OSHA. Some companies have pushed back return-to-office plans and some business groups have raised concerns about the burden of complying with the standard.
Union Pacific said it is abiding by the executive order pertaining to federal contractors because the railroad operator ships items like military equipment around the country for the armed services.
“Along with being our best defense against severe Covid-19 illness, vaccines are our best path forward out of the pandemic,” Beth Whited, Union Pacific’s human resources chief, said in a note to staff last week.

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Government/Safety/Sustainability

White House has weighed tapping National Guard to address mounting supply chain backlog

The Washington Post Jeff Stein October 19, 2021

The people involved in discussions stressed the White House has looked at the option as part of its due diligence in assessing all potential ways to address the backlog, which has slowed down imports and shipping all over the country. One person with knowledge of the matter said the White House has not considered activating the National Guard at a federal level but could instead work through states to deploy service members.
Major questions remain unresolved as to how the National Guard could be deployed, given the extent of the logistical challenges. White House officials have weighed whether members of the guard could drive trucks amid a shortage of operators, or if they could be used to help unload packages and other materials at ports or other clogged parts of the supply chain. As part of the review, White House officials have studied what kinds of driver’s licenses are held by National Guard members and if they would be sufficient to deploy them as truckers without hurting their ability to fulfill their existing responsibilities to the guard, the people said.

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