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Logistics Intelligence Brief
Tuesday, December 7, 2021


Where’s my parcel refund? Don’t hold your breath

Freight Waves Mark Solomon December 6, 2021

Notably, neither carrier has said it plans to restore refunds on late or missed ground deliveries, by far the largest part of their domestic delivery businesses. FedEx and UPS added refund programs to their ground-delivery services in 1998. Before that, refunds were reserved for air services, which typically involve urgent, high-value shipments.
The parcel-delivery market is adjusting to the possibility that FedEx and UPS may never restore money-back guarantees on their ground services, at least in their pre-pandemic form. In the near-term, FedEx is not in a position to do anything because its ground-delivery performance over the past few months has been wanting. UPS’ service levels have been better, but that metric alone is unlikely to move the needle.

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Plummeting truck orders dampen hopes for new capacity

The Journal of Commerce William B. Cassidy December 6, 2021

IHS Markit predicts semiconductor delivery lead times will stabilize in the first half of 2022, but will continue to be 26 weeks and longer, slowing production of heavy-duty trucks and lighter vehicles alike. Lead times should improve later in 2022, and new chip manufacturing capacity will help reduce those lead times in the first half of 2023, the parent company of JOC.com said in an analysis Monday.
But that doesn’t help shippers and carriers looking to move freight in the near-term, as demand continues to rise in the last weeks of 2021 and is expected to remain strong in at least the first half of 2022. In October, the last month for which full data is available, the backlog of Class 8 orders was nearly 281,000 units, according to ACT Research, and the backlog-to-build ratio was 14.6 months.
Widespread equipment challenge
In the current robust freight market, 14.6 months might as well be 14.6 years. The unavailability of not just new Class 8 trucks and tractors but trailers and chassis as well sends ripples throughout the market, with tight capacity keeping trucking rates elevated and propelling shippers to take more direct control of transportation, even to the point of acquiring brokers and trucking companies.

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Lender’s transportation sector write-offs flat, size of impaired loans down

Freight Waves John Kingston December 6, 2021

Underlying financials for the thousands of trucking-related borrowers serviced by Canadian bank BMO remain strong, based on the numbers reported in the bank’s latest quarterly earnings.
BMO (TSO: BMO.TO) is a major lender to the trucking sector, with the size of its clientele believed to be well above five figures. As a result, the breakdown it provides each quarter on the performance of its transportation group, which is overwhelmingly geared toward trucking, is seen as a strong indicator of financial trends.
As strong as the third quarter of 2021 was, the numbers released last week for BMO’s fourth quarter show even further improvement when conditions are measured by troubled borrowers. (BMO’s fourth quarter ended Oct. 31).
Write-offs in the transportation sector at BMO remained at CA$6 million ($4.69 million), unchanged from the third quarter. Write-offs were as high as CA$35 million in the second quarter of 2020, during the heart of the pandemic. Even in 2018, an exceptionally strong freight market, write-offs that year trended around CA$15 million per quarter.

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Diesel Falls 4.6¢ to $3.674 a Gallon

Transport Topics December 6, 2021

• The price decrease was the third in as many weeks for trucking’s main fuel, totaling 6 cents. Prior to Nov. 22, it had risen for nine consecutive weeks.
• A gallon of diesel now costs $1.148 more than it did at this time in 2020.

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What’s Going On with Fleet Employment Numbers?

Truckinginfo.com Avery Vise December 6, 2021

Local vs. long-haul
Another limitation in the most up-to-date figures is that they do not tell us how different segments of the industry are faring. If we look back a month at September numbers, we can get more granular. We can look at “production/nonsupervisory employees,” which in trucking gets us closer to the truck driver population. We also can look at data for local and long-distance trucking in both general freight and specialized freight.
When we view the data through these prisms, it is much easier to reconcile the recruiting struggles of long-haul truckload carriers with what appears in the very broad picture like nearly full recovery.
Total trucking employment in September was 1.1% below February 2020, but those production/nonsupervisory employee jobs were still down 2.3%. This implies that drivers are a drag on trucking’s recovery, not a contributor to it.
Nor has the recovery been uniform across industry segments. All segments of trucking in the BLS data were down in September — except for local general freight trucking, which has seen a 5.2% increase in total payroll employees and a 7% increase in production/nonsupervisory employees. Contrast that to long-haul general freight truckload, down 2.9% in total jobs and 5.3% among production/nonsupervisory employees.

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Traffic in Cities Is Rising but Still Largely Below Pre-Pandemic Levels

The Wall Street Journal Scott Calvert December 7, 2021


Traffic congestion around the U.S. is creeping back up but remains lighter than before the pandemic, according to a new analysis, a result of many workers not yet returning to the office full time despite many officials’ efforts to get people back into core business districts.
On average, U.S. commuters are on pace to lose 36 hours to congestion in 2021, 10 hours more than in 2020 but 63 hours less than in 2019, transportation analytics firm Inrix said in its 2021 Global Traffic Scorecard, released Tuesday. The analysis is based on data through October.
Commuting is still less time consuming in all but one of the 25 most-congested cities compared with 2019. Drivers in Las Vegas, site of a major interstate repair project, have lost more time to backups this year. Congestion dropoffs from prepandemic levels vary in other cities, from 19% in Miami to 65% in Washington, D.C.
Link: INRIX 2021 Traffic Scorecard

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