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Logistics Intelligence Brief
Monday, December 6, 2021

Trucking

What Do New Small Carriers Mean For Trucking Capacity?

Truckinginfo.com Deborah Lockridge December 3, 2021

From July 2020 through September 2021, the Federal Motor Carrier Safety Administration approved more than 104,000 new for-hire trucking companies, and that’s excluding private fleets that have added authority. These are huge numbers, but they do not account for the other side of the ledger. Even during periods of robust market conditions like today, many carriers exit the market for a variety of reasons.
To understand how the profile of for-hire trucking has changed during the pandemic, FTR compared a snapshot of data filed with FMCSA as of September 2021 to data filed as of March 2020 for carriers that held operating authority as of those two months. The number of purely for-hire carriers (excluding private fleets with authority) holding authority rose by more than 78,000, or nearly 39%, during the period. The number of one-truck for-hire carriers jumped 52%.

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Industry

Inability to produce pushes Class 8 orders to lowest November in 26 years

Freight Waves Ala Adler December 4, 2021

Class 8 truck orders in November were the lowest for that month in 26 years, reflecting a huge backlog of unbuilt trucks rather than a demand issue.
The backlog of bookings in queue at major OEMs exceeded 14 months, according to ACT Research. That means that with few exceptions, an order for a Class 8 power unit placed this month would be delivered in February 2023.
“Long backlog lead times resulting from ongoing supply constraints continue to pressure new order activity,” said Kenny Vieth, ACT president and senior analyst.
“With backlogs stretching into late 2022 and still no clear visibility about the easing of the ‘everything’ shortage, modest November order results suggest the OEMs are continuing to take a more cautious approach to booking orders so as not to extend the cycle of customer expectations management.”
ACT reported preliminary Class 8 orders of 9,800 in November. FTR Transportation Intelligence said its preliminary estimate was 9,500. Both analytics firms will report actual numbers for November around the middle of December.

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Supply chain stakeholders offer incentives to keep trucks moving through West Coast ports

Transport Dive Jim Stinson December 3, 2021

Dive Insight:
Supply chain problems, many jointly related to trucking and West Coast ports, have frustrated transport executives and national leaders for months. But the regulatory relief may be chipping away at a persistent problem in 2021. Much of that relief, of late, has been aimed at the trucking end.
Trucking is key to unclogging the ports because trucks are the main tool to move the containers, full and empty, out of the yards. Frustration with systems at the ports led Matt Schrap, CEO of Harbor Trucking Association, to tell Transport Dive that the empty containers were not being sent back to the ocean carriers fast enough. Instead, drivers with empty containers were being turned away at their appointed times. That also led chassis to run short, because the containers sit atop the chassis.
This bottleneck has caused massive media attention to focus on the ports, with many citing the driver shortage as a cause. Schrap denied that and said it was a productivity issue inside the ports. And there is a lot of productivity needed.

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It’s official: 96 container ships are waiting to dock at SoCal ports

Freight Waves Greg Miller December 5, 2021

There were 40 container ships waiting for berths within 40 miles of the ports of Los Angeles and Long Beach on Friday. But there were also 56 container ships waiting farther out to sea, putting the actual tally at an all-time-high of 96, according to new data from the Marine Exchange of Southern California.
The Marine Exchange has just unveiled its new methodology for counting container ships waiting outside the 40-mile “in port” zone.
A new queuing system has been in place since mid-November that encourages container ships to wait outside of a specially designated Safety and Air Quality Area (SAQA) that extends 150 miles to the west of the ports and 50 miles to the north and south.
This has sharply reduced the number of ships closer to shore, leading to suggestions that efforts to tackle port congestion are cutting into the offshore queue — a misconception that should be dispelled by the Marine Exchange’s new counting method.
In addition to the 96 ships waiting offshore on Friday, there were 31 container ships at terminal berths, bringing the grand total to 127, at or near an all-time high. The total number of container ships either at berths or waiting offshore continues to rise: It is up 25% from the beginning of November, 41% from the beginning of October and 79% from the beginning of September.

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How the Supply Chain Crisis Unfolded

The New York Times Lazaro Gamio And Peter S. Goodman December 5, 2021

Subscription-Based

Ships stuck at sea, warehouses overflowing, trucks without drivers: The highly intricate and interconnected global supply chain is in upheaval, with little end in sight.
The turmoil has revealed how the need to ship surgical masks to West Africa from China can have a cascading effect on Ford’s ability to put back-up cameras on its cars at factories in Ohio and delay the arrival of Amazon Prime orders in Florida in time for the holidays.
In one way or another, much of the crisis can be traced to the outbreak of Covid-19.

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American supply chains face a dire threat from China’s water shortages

The Hill Gopal Reddy December 3, 2021

Water — or rather, the lack of it in China — may be the factor that pushes U.S. supply chains over the edge.
Water is an unseen, vital input for all economic activity. Beyond agriculture, water is critical for power generation, mining, industry and the consumer products we rely on every single day. Like the estimated 3000 gallons of water that it takes to make the typical smartphone.
China’s water shortages are showing up most acutely in electrical power generation, where the nation’s hydroelectric and coal power producers are struggling with irregular water access. Authorities have responded to the widespread power outages by clamping down on industrial energy consumption, resulting in major disruptions to China’s manufacturers.

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Inflation Pressure Hits New Warehouse Leases

The Wall Street Journal Lydia O'Neal December 6, 2021

Subscription-Based

Prices to lease industrial properties are up an average of 25% over the rates at the end of five-year contracts that expired this year, according to a report real-estate firm CBRE Group Inc. released Monday. The increases, which come as strong consumer demand and a surge in e-commerce business have triggered a rush on distribution space, are extending higher supply-chain costs to customers that had long-term contracts that insulated them from the rising warehouse expenses.
“We don’t see any mitigation in demand for industrial space,” said John Morris, who leads industrial and logistics at CBRE, adding that the company has never seen increases this high.
Warehousing typically takes up 4% to 6% of a company’s overall logistics costs, CBRE’s Mr. Morris said, and is far outweighed by labor and transportation expenses. “But strategically, there’s very little an occupier can do” to cut expenses for warehouses, he said, “when their business depends on them.”

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No relief for US warehouse pinch in 2022: JLL

The Journal Of Commerce Bill Mongelluzzo December 3, 2021

Subscription-Based

With new occupancy of warehouse and distribution space on track to reach a record high this year, and vacancy rates at a record low, importers and exporters must move quickly to lock in space for 2022 and accept that rents will be even higher next year, according to commercial real estate services firm Jones Lang LaSalle (JLL).
Further, shippers that prioritize location over cost as they seek more warehouse space should expect to lease properties that may not have the capacity, configuration, yard space, or physical condition they might prefer, said Kris Bjorson, head of the retail industrial task force at JLL.
No let-up in demand
Although US imports in 2022 are projected to come down from the unsustainable double-digit percentage growth rates this year, the baseline for imports is now 20 percent higher than in pre-pandemic 2019, so even low to mid-single-digit growth rates will stress the industrial space available to importers in seaport-served markets.

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Drayage appointment tech gaining traction in LA-LB amid record congestion

The Journal of Commerce Eric Johnson December 3, 2021

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Use of a digital platform that allows drayage providers and importers to search for available empty return appointments across all 12 container terminals in the ports of Los Angeles and Long Beach terminals has risen dramatically in the wake of historic congestion in Southern California.
Despite having launched just three years ago, Los Angeles-based BlueCargo is widely used today, a half-dozen drayage providers confirmed to JOC.com, including Cargomatic and fellow digitally focused drayage provider NEXT Trucking.
“Why reinvent the wheel when you have a partner that’s working well for you?” Weston LaBar, head of strategy at drayage operator Cargomatic and former CEO of the Harbor Trucking Association (HTA), told JOC.com. “We continue to enhance the Cargomatic platform, but they are a good partner on fighting per diem.”

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Shippers/3PLs

The changing landscape of omnichannel fulfillment

DC Velocity Diane Rand December 3, 2021

The pandemic-driven surge in e-commerce has left virtually no aspect of the retail supply chain untouched, forcing retail leaders to rethink everything from how and where they prepare orders to the delivery options they’ll provide. A new survey conducted by the Massachusetts Institute of Technology (MIT) Center for Transportation & Logistics in partnership with DC Velocity examines some of the changes they’ve made and the challenges that remain. Here’s a look at some of the findings.
Link: DC Velocity Infographic The changing landscape of omnichannel fulfillment

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It Was a Pretty Good Year in the Car Business—Except for Suppliers

The Wall Street Journal Mike Colias December 5, 2021

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Peter Anthony, the head of a Chicago-area auto supplier, has spent much of this year feeling left on the sidelines in an industry delivering solid profits to car makers and dealers.
Raw-material prices and labor costs have soared for his firm, UGN Inc., which makes insulation products for vehicles. Hiring had become such a challenge that the company eased its drug-screening policy and recruited former inmates to fill factory vacancies, he said. All the while, car companies keep canceling orders last minute due to their own challenges with a computer-chip shortage, denting revenue.
“We’re being hit from all sides,” Mr. Anthony said.
It has been a pretty good year for many in the car business. But one swath of the sector has largely missed out: parts suppliers.

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Ashley Furniture doubles down on private fleet with Wilson Logistics asset purchase

Transport Dive S.L. Fuller December, 2021

It can be a capital-intensive burden for shippers to maintain a private fleet. The asset-heavy nature of trucking can be a deterrent, and some business even opt to convert their private fleet into a dedicated service run by a trucking company.
But large shippers with in-house trucking capabilities consider them an advantage. A PepsiCo Foods North America executive, for example, cited Frito-Lay's ability to allocate resources and follow consumers wherever they are — a strategy that became key during the pandemic as buying habits evolved.
Having a private truck fleet also lends itself to improved levels of customer service. It's the primary reason shippers with private fleets say they have one, according to a recent survey by the National Private Truck Council. Businesses want "to provide a differentiated value that is often tangibly rated by customers and measured by management," the report said.

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Amazon is making its own containers and bypassing supply chain chaos with chartered ships and long-haul planes

CNBC Katie Schoolov December 4, 2021

Amazon has been on a spending spree to control as much of the shipping process as possible. It spent more than $61 billion on shipping in 2020, up from just under $38 billion in 2019. Now, Amazon is shipping 72% of its own packages, up from less than 47% in 2019 according to SJ Consulting Group.
It’s even taking control at the first step of the shipping journey by making its own 53-foot cargo containers in China. Containers are in short supply, with long wait times and prices surging from less than $2,000 before the pandemic to $20,000 today.
“Amazon has produced probably 5,000 to 10,000 of these containers over the last two years I’ve been tracking it,” Ferreira said. “When they bring these containers onto U.S. soil, once they unload them, guess what? They get to be used in the domestic system and the rail system. They don’t have to return them to Asia like everyone else does.”

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Workforce

Trucking jobs nearing pre-pandemic numbers

Land Line Mark Schremmer December 3, 2021

According to the Labor Department, there are nearly 6,000 more drivers than there were a month ago. For the first time, employment in trucking is higher than it was in March 2020 when the impacts of the coronavirus began to hit. The industry is down only a few thousand drivers compared to February 2020, the month before stay-at-home orders were first implemented. Last April alone, the industry lost nearly 90,000 trucking jobs.
Older drivers are leading the charge in the owner-operator sector of the trucking industry, according to a Convoy analysis. Specifically, the digital freight broker claims increases in owner-operators are largely the result of truckers 58 and older.

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Government/Safety/Sustainability

Hours-of-service challenge laid out in DC appeals court

Freight Waves John Gallagher December 3, 2021

Three safety groups and the Teamsters union have filed their initial petition in federal appeals court challenging the federal truck driver hours-of-service (HOS) final rule that went into effect last year. The groups zeroed in on the new short-haul and 30-minute rest-break provisions.
In a filing late Friday with the U.S. Court of Appeals for the District of Columbia Circuit, Advocates for Highway and Auto Safety, Parents Against Tired Truckers, Citizens for Reliable and Safe Highways, and the Teamsters claimed that by making the rules more flexible for the industry, the Federal Motor Carrier Safety Administration made truck driving more dangerous.
“Overall, although the final rule pays lip service to safety and driver health, it ignores factors that affect safety and health, and it fails to demonstrate that the changes were the product of reasoned decision making,” the groups assert. “The final rule’s provisions on short-haul operations and the 30-minute break requirement are arbitrary and capricious and should be set aside.”

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