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Logistics Intelligence Brief
Thursday, October 21, 2021

Workforce

Trucking Industry Now Short 80,000 Drivers

Transport Topics Dan Ronan October 20, 2021

Trucking is short at least 80,000 drivers, and as freight volumes rise, so too does the need for more workers behind the wheel. Many have retired because of the COVID-19 pandemic, and new drivers entering the industry have been slow to emerge because of backlogs in training and obtaining commercial driver licenses.
Those are the conclusions of American Trucking Associations Chief Economist Bob Costello, who on Oct. 20 raised the estimate of drivers needed from 61,500 in his annual findings.
“We will be short roughly 80,000, just over 80,000 drivers, and to be clear that is the difference between the number of drivers we have out hauling freight and the number that we ideally need to haul freight,” Costello said. “When you look at the spot market and truckload, freight has gone up enough, and essentially the number of drivers this year, across the board is flat.”

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Are driver wait times nullifying carrier pay increases?

Freight Waves John Gallagher October 20, 2021

Surging wait times
Since June, average wait times for some of the largest truck-centric industries have been hovering at the two-hour mark. Recently, however, those wait times began shooting past two-and-a-half hours, according to data compiled by FreightWaves (see chart).
“Wait times trended worse during the first and second quarter, remained the same through the middle of the third quarter, but they’re starting to climb again as we move into the peak season,” confirmed Kevin Nadeau, Founder and CEO of True Load Time, a web based application created to address truckload detention and inefficient loading and unloading.

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Industry

U.S. Bank Freight Payment Index™

U.S. Bank Freight Payment Services October 20, 2021

The U.S. Bank National Shipments Index increased 1.5% sequentially during the third quarter, which was a smaller gain than the second quarter rise of 4.4%. Compared with a year earlier, the shipments metric grew 2.4%, which was significantly below the 6.8% year-over-year growth in the second quarter. Year-to-date, compared with the first three quarters in 2020, the shipments index was up 1.1%.
The U.S. Bank National Spend Index posted an increase of 5.6% versus Q2 2021. During the second quarter, this metric increased 10.1% sequentially. Tight industry capacity, coupled with growing demand resulted in a robust 32.6% year-over-year gain in spend, the second-largest such increase on record, after the 44% increase last quarter. Due to a tight driver market and with truck and trailer manufacturers able to deliver just a fraction of the equipment ordered, this is not likely to abate anytime soon.

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Shippers’ freight bills soared in the third quarter, U.S. Bank finds

DC Velocity Ben Ames October 20, 2021

“Our new spending data reflects what we’re hearing on the ground from our clients: there’s high demand for truck freight transportation, but truck capacity is limited by both persistent issues of continued driver shortages and emerging challenges of equipment,” Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions, said in a release. “The industry is working tirelessly to meet the increasing demand, but these challenges will take time to address.”

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Oil Reaches Seven-Year High After Surprise Drop in U.S. Supplies

Bloomberg Julia Fanzeres October 20, 2021

“This is just a sign of an economic recovery that continues and the essential nature of crude oil-related products and the role they play in this recovery,” said Rob Thummel, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. “The concerns about demand destruction really aren’t evident.”

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Q&A: Mike Short, president of Global Forwarding at C.H. Robinson

Logistics Management Jeff Berman October 20, 2021

LM: With 2.5% of global maritime workers vaccinated, it seems like it will continue to be an uphill battle to get port throughput to where it needs to be. What can be done to mitigate this situation for shippers?
Short: Certainly, the issue of port congestion is complex right now and shippers are having to work through very challenging situations. Some ports are announcing new measures aimed at alleviating the congestion, such as encouraging terminal operators to incentivize overnight open gate hours or offering extended night and weekend truck gate hours. Hopefully these measures will help, but in the meantime, the best thing shippers can do is remain flexible and be open to diversifying the routes, ports, and modes they use as it makes sense, as well as looking at how freight will move inland.

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As shipping woes drag on, businesses search for alternatives (Audio 4m)

NPR Jackie Northam October 21, 2021

Delays for container ships at the nation's ports are forcing companies to come up with workarounds. Despite the poor reliability, shipping companies are making record profits.

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Supply chain stress is intensifying and showing no signs of fading, Moody’s Analytics says

CNN Matt Egan October 20, 2021

About 200,000 shipping containers, holding everything from toys and sneakers to critical parts for factories, remain stuck on ships floating off the coast of Los Angeles. A record 100 cargo vessels, from barges to container ships, are anchored outside the Ports of Los Angeles and Long Beach.
To measure the logistical strains impacting the economy, Moody's recently created a US supply chain stress index that is made up of various metrics for production, inventory and transportation. That index climbed to 135.9 in August, compared with pre-pandemic levels of about 100.

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Trade Troubles: Learning About the Global Supply Chain and Why It’s Broken

The New York Times Michael Goncher October 21, 2021

Subscription-Based

Throughout the pandemic, businesses of all sizes have faced delays, product shortages and rising costs linked to disruptions in the global supply chain. Consumers have been confronted with an experience rare in modern times: no stock available, and no idea when it will come in.
In this lesson, you will analyze the causes and effects of what the Times correspondent Peter Goodman calls the Great Supply Chain Disruption. Then, in the Going Further section, you will have the opportunity to learn more about Just in Time manufacturing, or delve deeper into understanding the fundamentals of trade and globalization.

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Trucking

Strong Segment Growth Drives Knight-Swift Q3 Results

Transport Topics Connor D. Wolf October 20, 2021

“We continue to generate meaningful free cash flow that we plan to invest in both organic and inorganic growth into the future that will support our expansion into LTL as well as third-party carrier services,” Jackson said. “We are appreciative of our drivers and supporting team members across all of our brands, who are the foundation of our company and continuously work together to safely move goods throughout the supply chain.”
The truckload segment reported that revenue for the quarter increased 3.4% to $933.2 million from $902.6 million during the same time last year. The operating income for the segment increased 22.4% to $206.5 million from $168.8 million.
The newly formed less-than-truckload segment reported revenue for the quarter reached $167.9 million. Operating income for the segment was $17.5 million. Knight-Swift formed its LTL operations with the acquisition of AAA Cooper Transportation in July 2021. The segment currently has approximately 70 facilities with a door count of over 3,400.

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Disruption to shift US freight demand into 2022: J.B. Hunt

The Journal of Commerce William B. Cassidy October 20, 2021

Subscription-Based

With “persistent irregularities in demand patterns” roiling supply chains, the peak season will extend longer this year than ever before, driving inventory replenishment higher in the first half of 2022, J.B. Hunt Transport Services executives told Wall Street analysts.
That is expected to keep transportation capacity, especially on the rails and roads, tight and maintain pressure on pricing well into 2022, especially if some consumer spending is postponed because goods consumers want don’t make it on to store shelves in time for the holiday shopping season.
“We do believe that the first quarter will be unusually stronger than it has been in maybe a more typical environment, [with customers] really trying to get their shelves and inventory in the right places in the right time,” Darren Field, J.B. Hunt’s executive vice president and president of intermodal, said during a conference call last week. “We’re hearing that directly from our customers as they are somewhat surprised as to what's happening in [this] peak [season] and we are as well, pushing peak longer into November and December.”

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Southern California port congestion spreads north

DAT.com Dean Croke October 20, 2021

“The import dwell time is three times what it was,” says Ed DeNike, president of the largest terminal in Seattle, SSA Containers. “Imports are not being picked up at the terminals because the warehouses are full.”
When this happens, everything slows down, including fewer ship-to-shore per vessel operating. This cascades into more vessels bunching up at anchor.
Delays don’t stop there. Further along the supply chain, chassis trailers are sitting longer at shipper warehouses waiting to unload. And even when they’re empty, there isn’t sufficient space back at the overcrowded port to receive the empty containers.
Chassis street dwell time, a measure of how long chassis are stuck at warehouses and rail ramps, now exceeds nine days in Seattle. This has added to the current shortage of 53’ intermodal containers in the PNW.

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Economy

Supply-Chain Crisis Fuels Latest Retreat From Globalization

The Wall Street Journal Greg Ip October 20, 2021

Subscription-Based

Nothing embodied the promise of globalization more than the humble supply chain. Thanks to the integration of production across and within borders, consumers have come to expect infinite variety, instantly available.
That is now under siege. The supply-chain crisis of 2021 is fueling the retreat from globalization, much as the global financial crisis of 2008 did.
Similarly, the supply-chain crisis was made possible by how integrated and efficient global production had become. Businesses adopted outsourcing and offshoring, just-in-time inventories, and “capital-light” models that split design from production. The share of world trade accounted for by global value chains—in which a product crosses at least two borders—rose from 37% in 1970 to 52% in 2008, where it plateaued, according to the World Bank.

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Government/Safety/Sustainability

FMCSA Administrator nominee clears another hurdle in confirmation process

CCJ October 20, 2021

Federal Motor Carrier Safety Administration Deputy Administrator Meera Joshi was confirmed Wednesday morning by the U.S. Senate Committee on Commerce, Science and Transportation to be named Administrator of the agency, moving her one step closer to the agency’s top role.
She was approved by the Committee by a 22-6 vote in favor of her confirmation. Joshi will still need to be confirmed by the full Senate before officially being named FMCSA Administrator.
She underwent a confirmation hearing with the Committee a month ago and answered questions about numerous topics, including the COVID hours of service waiver, port congestion and more.
Joshi has served as FMCSA's acting administrator since January. If confirmed by the Senate, she would be the first official Administrator of FMCSA since Ray Martinez, who stepped down from the post in October 2019. The job has since been held by Jim Mullen, Wiley Deck and Joshi, each as acting administrator.
President Joe Biden also announced Tuesday that he is nominating Steve Cliff to be Administrator of the National Highway Traffic Safety Administration (NHTSA). Cliff has served as deputy administrator of the agency since February.

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Biden Tackles Supply-Chain Crisis With Few Tools, Clock Ticking

Bloomberg Josh Wingrove et al. October 21, 2021

“The port truck driver, for decades now, has basically been the slack adjuster in the whole system,” said Steve Viscelli, an economic sociologist with the University of Pennsylvania who studies labor markets and supply chains. The entire system, he said, is built around free labor from truck drivers as they wait for containers.
The Teamsters union says Biden should try to encourage organization of port drivers so that they can bargain for better pay and benefits.
But the president has instead focused on trying to produce new drivers by streamlining licensing. The White House says an average of 50,000 commercial drivers licenses and learners permits have been issued each month this year, 14% above 2019 and far above 2020 levels, when the pandemic shuttered training programs.

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California Gov. Newsom issues executive order to address supply chain congestion

The Hill Mychael Schnell October 20, 2021

The executive order directs state agencies to determine state-owned properties and other locations that could help alleviate short-term storage needs once goods are taken off of ships, and identify priority freight routes that could be temporarily exempted from vehicle weight limits to allow them to carry more goods.
Additionally, the order instructs state agencies to establish workforce training and education programs.

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