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Logistics Intelligence Brief
Tuesday, November 16, 2021

Trucking

Freight volumes ‘capacity-constrained’ in October, rates surge further

Freight Waves Todd Maiden November 15, 2021

A lack of transportation capacity continued to weigh on freight shipments in October. The shortfall in supply to meet demand led to another significant jump in costs during the month, according to a Monday report from Cass Information Systems.
“The current supply chain issues are building pent-up demand, and a broad range of freight demand fundamentals remain supportive, suggesting a positive demand environment will continue well into next year,” Denoyer concluded. “Though the near-term direction of freight rates remains higher, cyclical forces like driver hiring and wafer fab construction, which take time, are diligently occurring in the background and will dictate the direction of capacity, volume and rate trends in 2022.”

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Cass Transportation Index Report October 2021

Cass Transportation Systems November 15, 2021

Cass Freight Index - Expenditures
The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, rose to a new record level of 3.96, up 37% y/y in October. This index reaccelerated from 32% growth in September despite a slightly tougher prior-year comparison.
• On an SA basis, expenditures rose 3.9% m/m in October, mostly due to higher shipment volumes, and to a lesser degree from higher rates.
• On a two-year stacked basis, the Cass expenditures index was up 41% in October, mostly explained by higher rates, as shipment volumes were up just 3.2% on this basis.
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.
Tougher comparisons in the coming months will naturally slow these y/y increases further, but normal seasonality implies double-digit increases through most of the first half of 2022.

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Industry

As supply lines strain, some corporations rewrite production playbook

The Washington Post David J. Lynch November 15, 2021

As the disruptions persist, executives are embracing more lasting measures, moving production to new suppliers or different countries and relaxing their traditional fixation with low costs. But what they are not doing is equally important: There is no sign of any wholesale return of jobs to the United States. U.S. corporations remain believers in globalization, importing more than $2 trillion of industrial parts, raw materials and consumer goods each year from suppliers they regard as best suited to produce them.
The shifts that are occurring cap four years of supply chain volatility, including the Trump administration’s trade wars, a once-in-a-century health crisis and increasingly frequent natural disasters on multiple continents.

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Last-minute reprieve: LA/LB delays pulling trigger on congestion fee

Freight Waves Greg Miller November 15, 2021

It came down to the wire, but the highly controversial Los Angeles/Long Beach congestion fee backed by the Biden administration is not happening — at least, not yet.
The ports were scheduled to begin charging ocean carriers $100 per import container starting Monday for boxes moving by truck that dwelled for nine or more days, and for boxes dwelling for six or more days that move by rail. The charge was scheduled to escalate by $100 a day until the container left the property.
The ports announced Monday that they will “delay consideration” of the fee until Nov. 22, citing a 26% reduction in long-dwelling containers since the plan was announced on Oct. 25.
“There’s been significant improvement in clearing import containers from our docks in recent weeks,” said Port of Los Angeles Executive Director Gene Seroka. According to Port of Long Beach Executive Director Mario Cordero, “Clearly, everyone is working together to speed the movement of the cargo and reduce the backlog of ships off the coast as quickly as possible.”

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Shippers, truckers must look beyond current disruption to create capacity

The Journal Of Commerce Brian Fielkow November 15, 2021

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Collaborating to create capacity
There is no such thing as a single “truck market.” The industry is so fragmented that some market segments may have excess capacity while others are booked out for weeks at a time. Shippers must learn the dynamics of the trucking market segment that is most important to their business, as a slow — or robust — market in one niche such as retail goods may have little impact on other regions or types of freight such as energy-related cargo.
It’s important for truckers and shippers to have candid conversations about the fundamental economics of trucking. Some shippers might seek long-term fixed pricing, perhaps with periodic fuel adjustments, assuming all other trucker costs are static. But as wages, insurance, maintenance, and capital costs continue to rise, pricing discussions must allow for appropriate levels of communication and adjustment to account for those escalating costs.
When it comes to the current capacity crunch, shippers must be part of the solution, collaborating with trucking carriers to free up existing capacity by increasing the efficiency of loading and unloading operations. A well-organized shipper plans and is ready when a truck arrives. Last-minute demands are reserved for requirements that cannot be anticipated.

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Diesel Continues Slow Climb, Rises 0.4¢ to $3.734

Transport Topics November 15, 2021

Diesel has risen 2.1 cents a gallon over the past three weeks. It surged 30.7 cents from Sept. 27 to Oct. 25.
Trucking’s main fuel now costs $1.293 more than it did at this time in 2020.

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Fleets turn to eBay, rural shops in a scramble to find parts

Transport Dive Jim Stinson November 14, 2021

A parts shortage has hit fleets hard — so hard that fleet managers are using unconventional methods to find parts.
Robert Braswell, executive director of the American Trucking Associations' Technology & Maintenance Council, said some fleets have had to behave as if they own rare cars whose OEMs no longer make the parts and accessories. Fleets with bigger wallets are snapping up what they can early, if and when they find parts.

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Shippers/3PLs

Uber Freight takes on $550M in new ownership, closes Transplace deal

Freight Waves John Kingston November 15, 2021

Uber Freight has completed its acquisition of Transplace, a $2.25 billion deal that also involved Uber Freight taking on another investment of more than a half-billion dollars.
The completion of the Transplace deal had been expected in the fourth quarter, so its timing was expected. What wasn’t expected was that a little more than a year after it took on a half-billion-dollar investment from Greenbriar Equity Group, it would take on an even bigger investment than the cash that Greenbriar put into the company.
The latest investment in Uber Freight is $550 million. Investors in this transaction are Abu Dhabi Growth Fund, D1 Capital and GCM Grosvenor.

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Workforce

‘Beyond unprecedented’ surge in authorized drivers continues to flood market

Freight Waves Mark Solomon November 15, 2021

Over the past 16 months, more than 113,000 for-hire trucking applications have received federal operating authority, according to data from consultancy FTR. More than 100,000 of those applicants representing a pool of 195,000 drivers still held authority as of Nov. 1, according to FTR’s analysis of government data.
Solo operators have accounted for more than 70% of the approved applicants, said Avery Vise, FTR’s vice president of trucking. The six-figure size of approved drivers, which Vise called “beyond unprecedented,” reflects an ongoing trend of owner-operators already with trucks who have obtained their own authority. However, the population includes a significant number of former company drivers who have also obtained trucks and operating authority, another trend that shows no signs of abating, Vise said.
Through October, the Federal Motor Carrier Safety Administration has authorized more than 92,000 for-hire carriers, according to an FTR analysis of FMCSA data. With still two months left in the year, the number smashes 2020’s total of 59,000 approved applications, FTR said. Before last year, 2018 was the most active year with 44,000 authorized applications.

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Lack of overtime pay a contributor to the driver shortage

CCJ Alec Costerus November 15, 2021

The Fair Labor Standards Act (FLSA) is the law that guarantees overtime pay to many workers, however, the same law has a motor carriers exemption, which says that “any employee with respect to whom the Security of Transportation has the power to establish qualifications and maximum hours” is not guaranteed overtime pay.

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6 Strategies to Boost Retention Through the Great Resignation

HBR.org Frank Breitling Et Al. November 15, 2021

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There is a widening mismatch between the job environment employees want — and now expect — and the one their organizations have. That’s the finding of conversations we’ve had with top executives of dozens of companies over the last several months, multiple global surveys we’ve conducted to learn what employees want, and our examination of 20 years of data on the expectations and workplace satisfaction of 800,000 employees from a wide range of industries and job categories.
This may explain why so many workers have been quitting their jobs and why companies are having trouble filling the millions of current openings across the U.S. economy. It also may hint at an immediate, though partial, remedy to the talent squeeze: reduce employee attrition by making your company a more attractive place to stay. In this article, we offer six ways to do so.
We have some 800,000 data points collected over 20 years telling us what people value at work. The responses, from both white- and blue-collar workers in a wide variety of industries, fall into four broad categories: value, purpose, certainty, and belonging.

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Government/Safety/Sustainability

Biden signs historic infrastructure bill to get ‘America moving again’

Logistics Management John Schulz November 15, 2021

The American Trucking Associations (ATA) estimated its members testified 24 times on Capitol Hill in the last five years on the need for Congress to act in a bipartisan manner to shore up America’s faltering roads and bridges.
“Roads and bridges are not political—we all drive on them,” ATA President and CEO Chris Spear said in a statement. “A majority in the House and Senate realized this truth and did what’s right for the country, not themselves.
“From farmers to truckers, the millions of hard-working people who make this country great won today. Those lawmakers who put their constituents before themselves have now cemented a lasting legacy that the American people will see, feel and use for many decades to come,” Spear added.

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Former New Orleans Mayor Landrieu to Manage Infrastructure plan

Associated Press/Transport Topics Zeke Miller November 15, 2021

President Joe Biden has chosen as supervisor of his $1 trillion infrastructure plan Mitch Landrieu, who as New Orleans mayor pushed the city into recovery after the devastation from Hurricane Katrina.
Landrieu will be tasked with coordinating across federal agencies to work on roads, ports, bridges and airports, the White House said Nov. 14. Biden is expected to sign the infrastructure bill into law on Nov. 15.

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