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Logistics Intelligence Brief
Thursday, December 2, 2021

Trucking

2022 rate increases arrive early; Forward Air leads pack at 7.9%

Freight Waves Todd Maiden December 1, 2021

Forward (NASDAQ: FWRD) implemented a 6% GRI last February with most other less-than-truckload providers installing 5.9% increases around the same time. The asset-light trucking and logistics provider also announced that capacity surcharges will extend beyond the end of 2021, through June 30, 2022.
“The GRI is intended to offset rising costs associated with the challenging operating environment and we believe will allow Forward to continue investing in service enhancement, fleet maintenance, technology innovations and other areas to serve customers more effectively and efficiently,” a press release read.
Privately held Estes implemented a 5.9% GRI on Monday.
“This GRI is necessary for offsetting our investment in operational resources such as equipment and personnel, as well as the rising costs of technology enhancements that provide our customers with online transportation tools to simplify their shipping experience,” an Estes statement read.
Link: Forward Air Press Release Forward Air Announces 2022 General Rate Increase

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ATA’s Bob Costello: Economy Is Strong, but COVID, Inflation Threats Remain

Transport Topics Dan Ronan December 1, 2021

To maintain a growth trajectory, however, trucking must address the ongoing driver shortage, he said, warning that the industry could see the number of drivers leaving increase over the next eight to 10 years.
If these trends persist, “We’re going to be over 150,000 short and we’ll be getting to that point of looking at a world of hurt,” he said.
Costello noted the shortage has worsened even as carriers continue to increase driver pay, a trend he asserts has “stopped the hemorrhaging.”

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ATA’s Costello: Freight will remain strong in 2022

Fleet Owner Cristina Commendatore December 1, 2021

During a Nov. 30 U.S. Bank webinar, Costello said he expects freight will remain “robust” in 2022, with inventory-to-sales ratios at an all-time low.
“That’s why you see a lot of retailers try to get in as much product as possible,” he said. “People still have high expectations as to how fast stuff is going to get to their doorstep. So even if sales slow a bit early next year, retailers will have to bring in a lot of freight to get us back to where we were prior to the pandemic.”
Those healthy freight expectations, however, are in an environment where the labor force participation rate remains “stubbornly low,” Costello pointed out. There are more than 10 million job openings and a labor participation rate below 62%.

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Seacoast Capital invests $20M in regional delivery provider LSO

Freight Waves Mark Solomon December 1, 2021

Austin, Texas-based LSO operates in 10 states, including every ZIP code in Texas and the main commerce centers of Oklahoma. In September, the company expanded into Missouri, Illinois and Kansas and deepened its existing coverage areas in Louisiana and Arkansas. Like all regional delivery carriers, LSO has experienced tremendous volume growth due to spikes in e-commerce fulfillment and moves by UPS Inc. (NYSE:UPS) and FedEx Corp. (NYSE:FDX) to cap the traffic they traditionally accepted from their large customers. Many of those businesses have increasingly turned to regional providers like LSO as delivery alternatives.

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Shippers/3PLs

Ashley Furniture buys US truckload carrier

The Journal Of Commerce Ari Ashe December 1, 2021

Subscription-Based

Ashley Furniture is acquiring Wilson Logistics, a US truckload carrier and logistics provider, the second major US retailer in as many months to assume greater control over its supply chain during the latest capacity crunch.
The two sides agreed to the deal for an undisclosed sum on Nov. 22, according to Ashley Furniture, and Wilson Logistics has been informing customers of the transaction this week. Wilson owns 800 trucks and 2,000 trailers and was a carrier serving Ashley Furniture in the Pacific Northwest, namely in California, Idaho, Montana, and Washington states. The Wilson brand will operate under the Ashley Distribution Services subsidiary and provide services not just to the parent company but other customers too.
The deal is expected to close by the end of the year, Ashley Furniture told JOC.com.

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TIA survey says: 3PLs’ revenue up over 10% quarter-over-quarter

Freight Waves John Kingston December 1, 2021

Total shipments for the participants surveyed by TIA across all modes — truckload, LTL and intermodal — were up 6.8% in the third quarter compared to that of the second. Total revenue was up 10.3%, compared to the second quarter, and the size of the invoice per shipment rose 3.3%, increasing to $2,419 from $2,341.
Gross margin for the entire range of the 3PL industry surveyed by the TIA rose to 13.4% from 12.8% in the second quarter.
“Problems attracting capacity have hurt the most among the smallest brokers,” the TIA said in its report. “They have responded by concentrating on the most attractive loads.”

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November manufacturing output sees growth, reports ISM

Logistics Management Jeff Berman December 1, 2021

New orders, which are commonly referred to as the engine that drives manufacturing, increased 1.7%, to 61.5, growing, at a faster rate, for the 18th consecutive month, with three of the largest manufacturing sectors—Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical products—expanding at strong-to-moderate levels. This also marked the 16th time in the last 17 months, in which the reading topped a reading of 60.
Production—at 61.5—headed up 2.2% over October, growing, at a faster rate, for the 18th consecutive month, with four of the largest manufacturing sectors—Petroleum & Coal Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products— expanding at strong-to-moderate levels. ISM said that raw materials shortages remain a constraint to production growth, with suppliers continuing to struggle, coupled with factory floor staffing still an issue and direct-labor turnover remaining negative.

Related:  The Wall Street Journal Manufacturers’ Reprieve Could Be Ruined by Omicron—or Not
Link: Institute For Supply Management Manufacturing PMI® at 61.1% November 2021 Manufacturing ISM® Report On Business®

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Industry

Record Volumes at L.A. Ports to Become ‘New Normal’ After Crisis

Bloomberg/Transport Topics Augusta Saraiva December 1, 2021

The record volume of cargo moving through the busiest U.S. port complex is likely to continue amid high consumer demand for goods, the head of the Port of Long Beach said.
“It’s going to be the new normal in terms of the amount of containers that you’re going to be seeing here going to this complex,” Executive Director Mario Cordero said Dec. 1. “That 20 million number is not going to get reduced even after the crisis,” he said, referring to the number of 20-foot equivalent units moving through Long Beach and neighboring port of Los Angeles.
The two ports together make the biggest gateway for ocean trade in the U.S., handling more than one-third of inbound containers. The bottlenecks at West Coast ports are tying up container capacity and underpinning already-soaring rates for transpacific ocean freight.
Despite efforts to ease congestion, long delays continue. Forty-nine container vessels were anchored off the southern California coast as of Nov. 30, seemingly an improvement from the more than 80 waiting a few weeks ago.

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Intermodal expert Larry Gross offers up straight talk on the state of the sector at RailTrends

Logistics Management Jeff Berman December 1, 2021

Addressing the ongoing supply chain crisis, Gross quipped that responsibility for it can be spread like peanut butter, with that being directed towards freight railroads, shippers, chassis suppliers, ocean carriers, and ports.
“That is what makes this problem so difficult to unravel, because it is the product of 100,000 individual companies making individual decisions that make total sense for them individually but collectively it is a disaster,” he noted. “When everyone tries to get goods through the same spot, and the quickest route to the nation’s heartland, as Christmas approaches is the Port of Los Angeles and the Port of Long Beach, it does not work.”
And as a result of this capacity limitation, in looking at intermodal participation versus imports, he said it shows a number that has declined, explaining that what is happening now.
“What we are seeing now is a trend away from IPI and towards transloading, and that is because of the difficulties we are seeing inland in Chicago and places like that a few months ago, when these routing decisions were being made…and people went away from IPI towards transloading as a way to get around that,” he said.
In more normal times, he said intermodal is seen as what he called a safety valve, but in a role reversal this year, it was trucking serving as that safety valve instead, due to a lack of capacity, hindering the ability to flex upward.

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Supply-Chain Snarls Hit Production of Trailers Needed to Haul Goods

The Wall Street Journal Lydia O'Neal December 1, 2021

Subscription-Based

Manufacturers were producing 25% more dry vans—the most common type of semitrailers used to haul goods—in 2019 than they are now, and industry turnaround times for orders now stretch as long as eight months after peaking at 13 months earlier this year, according to transportation data provider ACT Research.
Lafayette, Ind.-based equipment maker Wabash National Corp. expects to produce about 25% fewer trailers this year than it did before the pandemic because of shortages of everything from foam insulation to suspension components and taillight wiring.
The factory backups are driving down U.S. trailer orders as transportation equipment manufacturers put a lid on sales because their production slots are filled deep into 2022.
The lack of new trailers is slowing the flow of goods and contributing to higher trucking rates for retailers and other shippers, said Don Ake, vice president of commercial vehicles at freight industry research firm FTR. Many older trailers are also idle, Mr. Ake added, because of a lack of replacement parts.

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Government/Safety/Sustainability

Transportation Committee Chairman Rep. DeFazio Won’t Seek Re-Election

Associated Press/Transportation Topics December 1, 2021

"Chairman Peter DeFazio is without question a gifted legislator and leader who, over the span of four decades, has made a difference in the lives of all Americans," said American Trucking Associations President Chris Spear. "His absence will come at a time when we need more elected officials willing to put the nation’s interest ahead of themselves.
“Amidst bitter partisanship throughout Washington, Chairman DeFazio stands out as one of the rare solution-seekers committed to advancing the legislative process. Our industry appreciates the fact that he will solicit members’ thoughts, listen to logic and make decisions based on facts, not knee-jerk rhetoric and emotion. That collaboration is something our industry looks for in an elected official and what ultimately shapes sound public policy.
“Few legislators have been more instrumental in driving national infrastructure policy than Chairman DeFazio. He’ll leave the House having cemented a lasting legacy that his constituents and all Americans will see."

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