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Logistics Intelligence Brief
Monday, January 3, 2022

Trucking

ATA’s ‘U.S. Freight Transportation Forecast 2021 to 2032’ points to future trucking volume growth

Logistics Management Jeff Berman December 29, 2021

A top-level look at the report’s findings found the following takeaways:
• total freight tonnage will grow from an estimated 15.1 billion tons in 2021 to 19.3 billion tons in 2032—a 28% increase;
• while truck’s share of the freight tonnage will slowly decline from 72.2% in 2021 to 71% in 2032—overall volumes will grow across all segments of the industry: truckload, less-than-truckload and private carrier. Truck tonnage should grow from 10.23 billion tons this year to 13.7 billion tons in 2023; and
• the total revenue derived from primary freight shipments in the U.S. will increase from an estimated $1.083 trillion in 2021 to $1.627 trillion in 2032

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DAT Truckload Volume Index remains on strong growth path

Logistics Management Jeff Berman December 30, 2021

DAT’s data highlighted the following takeaways for truckload volumes, load-to-truck ratios, and rates, for the month of November, including:
• the national average spot market rate for van freight, at $2.93 per mile, saw a $0.04 increase over October, with the flatbed rate falling $0.04 to $3.04, for the month;
• loads posted to the DAT One load board network saw a 9.5% November decline, with truck posts seeing a 3.6% increase, which DAT observed represents a continued theme of less volume and more equipment;
• the national average van load-to-truck ratio, at 5.2, fell from October’s 5.6, and the reefer load-to-truck ratio, at 11.9, was flat from October, with the flatbed ratio, at 37.5, down from October’s 48.6;
• the national average contract van rate, at $2.92 per mile, was up $0.04, from October to November, with the reefer rate up $0.05, to $3.11 per mile, and the average flatbed contract rate was down $0.02, to $3.33 per mile; and
• the national average fuel surcharge, at $0.41 a mile for van freight, marked its highest monthly average going back to November 2014

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Central Freight Lines’ cautionary tale

Freight Waves Mark Solomon December 29, 2021

With the carrier gone, smaller shippers accustomed to low rates will face sticker shock as their traffic gets repriced in a seller’s market for space, said C. Thomas Barnes, chief revenue officer of transportation technology platform MyCarrier and a longtime LTL executive. The last big LTL closure, New England Motor Freight Inc. in early 2019, came at a time when capacity was looser and freight desired by other carriers could be readily absorbed. That is not the case heading into 2022.
Kent Williams, executive vice president, sales and marketing, at regional LTL and truckload carrier Averitt Express, said the carrier has been very cautious about onboarding CFL accounts because it doesn’t want to put undue stress on its network and compromise its service standards. CFL’s departure could result in short- to medium-term dislocations as spikes exceed the availability of drivers and equipment to haul them, Williams said. He added, however, that he doesn’t expect the impact to be overly significant across the entire market.

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LTL: How do general rate increases work?

Freight Waves Todd Maiden January 2, 2022

Less-than-truckload carriers use general rate increases (GRIs) to make adjustments to base rates. The increases are applied to general tariff codes and vary by lane and weight tier. Some LTL pricing agreements with shippers work off a base rate schedule and utilize account-specific negotiated discounts. The base rate will increase when a GRI is taken but shippers continue to apply their discounts to the new rates. The headline percentage change announced by the carriers is the expected average increase the rate adjustments will have across all of the impacted accounts.

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UPS to hike air, ground fuel surcharges on Jan. 3

Freight Waves Mark Solomon December 27, 2021

Effective Jan. 3, surcharge levels on domestic air and ground services — including transborder shipments — will rise by between 8% and 10%, according to calculations from consultancy TransImpact LLC from information posted on UPS’ website. Surcharges on international air services will increase as well, according to the website notice.
UPS’ (NYSE: UPS) surcharges on diesel and air fuel apply to the company’s base rate and to any of 10 delivery surcharges that UPS can impose if it deems appropriate to do so.
The increase will be UPS’t third fuel surcharge hike in less than 8 months. The most recent was in mid-November. The first was over the summer.

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Workforce

Truck Driver Shortage Looms Over 2022

Transport Topics Connor D. Wolf December 27, 2021

American Trucking Associations estimates that the industry needs 80,000 more drivers. That could be the same or worse next year with those estimates expected to surpass 160,000 by 2030. High demand, a lack of new drivers and retirements play into the issue.
The industry has been pursuing a range of solutions. The primary method carriers have used to attract drivers is raising pay. ATA estimates earnings are increasing at a rate five times their historical average, with the average weekly earnings for longhaul drivers being up more than 25% since the beginning of 2019. But those efforts mostly have amounted to carriers competing over the same limited pool of drivers with the lack of new entries.
“I think as long as the freight market continues to do what it’s been doing and from everything that I’ve been hearing from the folks that we work with, I don’t expect that to change, at least through the first two quarters and possibly the first three quarters,” said Scott Dismuke, director of operations at Professional Driver Agency. “I think it’s just going to be more of the same at this point. Unless we can start getting more drivers, newer drivers, attracted to the market, we’re still going to be up against the wall.”

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Where have all the truck drivers gone?

Vox Jen Kirby January 2, 2022

The United States is experiencing a shortage of more than 80,000 truck drivers, according to an estimate from the American Trucking Associations. The ATA also estimates that about 72 percent of America’s freight transport moves by trucks, which shows just how dependent consumers are on the drivers who deliver turkeys to stores or gas to pumps or the Christmas presents to you order to your doorsteps.
This is not just an American problem. Trucks haul comparable amounts of freight in places like the European Union and China, and countries and regions around the world are experiencing driver shortages. The International Road Transport Union documented shortages in a survey of 800 transport companies in more than 20 countries; according to the survey, about 20 percent of positions went unfilled in Eurasia last year.
Around the world, the trucking workforce is aging. In the US, the average age of a truck driver is 46, according to a 2019 report from the American Trucking Associations. Across Europe, it’s 44. In the United Kingdom, the average age of heavy-goods vehicle drivers is 53. Some of these folks are nearing retirement, and the risk of getting sick and the uncertainty and early slowdowns of the pandemic helped accelerate truck drivers’ departures from the industry.

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Shippers/3PLs

Outlook 2022: Shippers seek resilience in upended transportation markets

The Journal Of Commerce William B. Cassidy December 27, 2021

Subscription-Based

Redirecting the ‘flow’
Just how long consumer demand will remain elevated — and how much inventory will be needed to satisfy that demand — is top of mind for shippers as 2022 gets under way.
“I can’t think of a worse job to have right now than inventory forecaster,” Jason Bergman, chief commercial officer at less-than-truckload (LTL) operator Yellow, said in a Nov. 10 online seminar on securing LTL capacity. “Peak predictions have been flipped upside down, and we’re going to see overflow into the first quarter we haven’t seen before. The predictability is no longer there.”
The professionals who are responsible for those projections are managing their businesses on short cycles. “We do not believe we can accurately predict how the external environment and cost pressures will evolve and how they will ultimately impact consumer spending,” Richard McPhail, CFO and executive vice president at The Home Depot, said during the home improvement retailer’s third-quarter earnings call Nov. 16.
Home Depot and other retailers aren’t waiting for predictability to return. They are adding distribution centers and warehouses closer to customers. Many are likely to hold more inventory going forward — a “just-in-case” model, as the industry has dubbed it — as they move goods through both brick-and-mortar stores and e-commerce delivery channels.

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Industry

What to Expect When You’re Expecting: Supply Chain Issues

The New York Times Sydney Ember And Sapna Maheshwari December 29, 2021

Subscription-Based

Unlike many products that are ferried through the supply chain, things like cribs, car seats and strollers for newborns have an unforgiving deadline in the form of a due date. And some parents-to-be, either superstitious or simply dilatory, hesitate to purchase baby items far in advance. That puts them at odds with supply chain turmoil that has sometimes made it necessary to buy items weeks or months ahead of time.

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More Trucking Acquisitions Ahead for 2022

Transport Topics Connor D. Wolf December 27, 2021

The trucking industry experienced a surge in acquisitions during the past year, with more expected to occur in 2022.
The past year saw a perfect storm of factors that drove acquisitions. Among them were deals that were put on hold during the pandemic finally coming through, along with concerns over potential changes to capital gains taxes pushing deals forward. Headed into 2022, the deal market may remain hot as long as motor carriers continue seeing high valuations, experts said.
“[Based on] everything I’m seeing and hearing in the conversations we’re having with clients and companies in the space, I would say that the expectation is for next year to have very similar dynamics to this year,” Jonathan Britva, principal at investment banking and advisory firm Republic Partners, told Transport Topics. “I think those supply chain constraints aren’t going away anytime soon. I think with interest rates still at a level that they are, with stock prices at a good level, with earnings being strong, I think all of that will cause another really good year.”

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US chassis supply fragile heading into new year

The Journal Of Commerce Ari Ashe December 29, 2021

Subscription-Based

US chassis manufacturers believe it will take until the third quarter of 2022 before every chassis order placed in 2021 will be fulfilled, which will keep the US container shipping system in a fragile state through the first half, absent a significant slowdown in imports.
Chassis are circulating more slowly than usual as importers take longer to unload containers and trucking companies struggle to return empty boxes. When terminals do not accept empty containers, the chassis underneath are also stuck in limbo.
Ports, railroads, and trucking companies are desperate to inject chassis to address the supply shortage, but several of the same issues disrupting the supply chain are also hurting chassis production.
Chassis manufacturers in the US, for example, have generally been unable to hire enough workers to operate production lines.
our area.”

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Government/Safety/Sustainability

Supply Chain, Midterms to Dominate Freight Policy in 2022

Transport Topics Eugene Mulero December 29, 2021

At a December meeting at the White House among stakeholders, administration officials touted the industry’s contributions to respond to workforce concerns and efforts to alleviate supply chain bottlenecks. According to the White House on Dec. 16, “Several participants spoke of the high return on investment they had seen from creating registered apprenticeships, and the speed at which the Labor Department had approved new programs for their industry in recent months.”
Per the White House: “Industry participants discussed the steps they were taking to both recruit and retain a diverse workforce into the industry, from women to underrepresented minorities to veterans, and to create a safe and welcoming career path for these new drivers.”
Bill Sullivan, Executive Vice President of Advocacy at American Trucking Associations, applauded the steps the administration outlined in the new trucking action plan.
“We are encouraged that the Biden administration has not only recognized the importance of adding new and well-trained Americans to the trucking workforce, but has announced a path forward with what we believe will become a robust training opportunity for future commercial truck drivers,” said Sullivan.

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Technology/Innovation

TuSimple watch party for driverless Ghost Rider feat left executives speechless

Freight Waves Alan Adler December 30, 2021

As they gathered around a video screen tracking progress of Ghost Rider — the first Class 8 truck with no human driver — navigating its way west toward Phoenix from Tucson, Arizona, TuSimple executives found themselves speechless.
“I mean, we had to kind of take in that moment,” TuSimple President and CEO Cheng Lu told FreightWaves. “You know, with all the work we put into this, and to see it really happen on the highway, I think the word we used most was speechless.”

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Investors Are Piling Into Supply-Chain Technology

The Wall Street Journal Jennifer Smith December 30, 2021

Subscription-Based

An investment rush into logistics technology is creating a herd of unicorns in the race to digitize operations at the center of the world’s supply-chain gridlock.
Newly minted unicorns, or companies that exceed $1 billion valuations, in the logistics sector in 2021 include e-commerce fulfillment specialist ShipBob Inc., digital warehouse and distribution provider Stord Inc. and Flock Freight, a platform that matches shipper loads to trucks and is backed by a venture arm of Japan-based conglomerate SoftBank Group Corp.
Backers including big investment funds are pumping money into logistics technology at a rapid pace, driving up valuations for digital-focused ventures across freight, delivery and warehousing.

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6 lessons learned about cybersecurity and freight in 2021

Freight Waves Nate Tabak January 2, 2022

Big carriers are still in the crosshairs: The cyberattack on Wisconsin-based Marten Transport in October showed yet again that major carriers continue to be vulnerable. Marten never officially described the incident as a ransomware attack. But the company’s description of it in an SEC filing and the appearance of stolen data on a ransomware gang’s leak site suggest one may have occurred. Sources told FreightWaves that the attack brought down the company’s operations system — something Marten disputes. Regardless of what befell Marten, the incident marked the single largest publicly known cyberattack on a major carrier in 2021.

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