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Logistics Intelligence Brief
Thursday, January 13, 2022

Trucking

It Wasn’t Cheap, But the Freight Came Through

Cass Transportation Index Report January 12, 2022

Cass Freight Index - Expenditures
The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, rose to another new record level of 4.419, up 44% y/y in December and 3.4% m/m.
On a seasonally adjusted basis, expenditures were literally off the chart (not to worry, the axis has been adjusted), rising 6.6% m/m in December, with a slightly larger contribution from higher volumes, and to a lesser degree from higher rates.
On a two-year stacked basis, the Expenditures component of the Cass Freight Index was up 62% in December, with shipments up 15% and rates up 41%.
This index rose 38% 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, but just using normal seasonality from here, the increase in 2022 will still be about 25% at this trend level

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Cass index on freight costs to climb 25% in 2022

Freight Waves Todd Maiden January 12, 2022

Another month, another increase in freight shipments and expenditures, according to a Wednesday report from Cass Information Systems. The Cass Freight Index saw shipments move 7.7% higher year-over-year in December with expenditures up 43.6%.
Freight found its way through the supply chain and to consumers during the holiday season even as congestion and bottlenecks remained formidable. The shipments subindex increased 4.2% seasonally adjusted from November with the monthly year-over-year growth rate moving 320 basis points higher, “as shipment volumes held firm despite the normal holiday slowdown.”
Higher freight rates and incremental costs associated with navigating the congestion continue to push freight spend higher. The expenditures subindex increased 6.6% (seasonally adjusted) sequentially in the month, which established another record in the dataset that began in 1990. The contribution from higher volumes was cited as driving the increase more than the rise in rates.

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Outlook 2022: Shorter hauls, specialized services coming to the fore in US truckload

The Journal of Commerce William B. Cassidy January 12, 2022

Subscription-Based

‘Bullish’ on rates
The eventual easing of supply chain disruption will release even more pent-up consumer demand. Economists believe the outbreak of the COVID-19 Delta variant in the US deferred some spending from 2021 into at least the first half of 2022.
That will fuel the next round of rate hikes. “We’re expecting rates are going to be, when all is said in done, up by high-single-digit percentages” year over year in 2022, Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence, told JOC.com in November.
“We’re extremely bullish on rates — whether they’re rail rates, LTL rates, truckload rates, ocean shipping rates — through the first half of the next year,” Klaskow said. “When we get to June or July, it’s going to be hard for rates to be equal or above 2021’s numbers.” But for the full year, rates will climb, he said.

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Workforce

6 charts show how private fleets recruit, retain drivers

Transport Dive Shefali Kapadia January 11, 2022

Private fleets' turnover rates hover in the teens, while the American Trucking Associations reported 2020 TL carrier turnover at 90% for large fleets and 69% for small fleets.
A typical private fleet driver tends to stay with the same company for 10 years, Petty said. Although turnover had been on the uptick for a couple of years, it dropped back down in 2021.
The allures of private fleets
One of the appealing characteristics of private fleet operations is that drivers are home most nights, and very few spend days or weeks at a time on the road like an OTR might.

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Industry

Labor now the ‘number one’ inhibitor of sagging trailer production

CCJ January 12, 2022

“It appears that a labor shortage at domestic suppliers is now the number one constraint. The flow of commodity materials has improved and even imported parts deliveries have increased. The employment level at the OEMs is also a significant issue," said Don Ake, FTR vice president of commercial vehicles. "At least one OEM is offering $1,000 sign-on bonuses for all factory workers. It is anticipated that trailer build will increase steadily once the labor constraints loosen up.”

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‘Insult to injury’: Record rail demurrage adds to shipper costs

Supply Chain Dive Sarah Zimmerman And Edwin Lopez January 12, 2022

Railroads set a new record in 2021 — but not a favorable one from a shipper's perspective.
The seven Class I railroads that operate in the United States collected $1.18 billion in revenues from demurrage fees during the first three quarters of 2021. That's the highest annual figure recorded since at least 2011, according to data reported to the Surface Transportation Board. And shippers often ended up on the receiving end of the bill.
The ballooning revenues, created in part by a surge in imports and transportation demand, have raised a critical question which shippers and railroads fundamentally disagree on: Who's at fault for congestion?

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Imports take ‘dramatically longer’ to reach US as bottlenecks bite

Freight Waves Greg Miller January 12, 2022

Flexport launched its weekly Ocean Timeliness Indicator (OTI) in early December. The OTI uses data from Flexport’s freight forwarding customers back to March 2019, measuring the time from the cargo-ready date at the exporters’ gate to the date when products leave the destination port (i.e., the landside transport time from the factory to the port in Asia, the Asian port wait, the ocean journey, and the North American port wait). The OTI is an average for loads from all Asian countries to all North American ports on any of the three coasts.
Flexport’s Asia-U.S. OTI reached an all-time high of 113 days last week. That’s 41 days or 57% higher than at the same time last year, and 62 days or 121% higher than in early January 2020, pre-COVID.

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Class 8 Sales in December Climb to High Point of 2021

Transport Topics Roger Gilroy January 12, 2022

Class 8 U.S. retail sales in December rose 15.5% compared with a year earlier, and reached the high point for the year, WardsAuto.com reported Jan. 12.
Sales hit 24,716 compared with 21,402 in the 2020 period.
For the full year, sales climbed 15.6% to 221,889 compared with 191,900 a year earlier, according to Wards.

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Government/Safety/Sustainability

Watchdog pushing feds to move on truck user fee pilots

Freight Waves John Gallagher January 12, 2022

According to the GAO report, state DOTs cited public acceptance of mileage fee systems as one of the major challenges faced by their pilot projects. “Specifically, many of the states reported that public acceptance of mileage fee systems remains limited by concerns about protecting privacy and achieving equity.”
“When I go out into the world, the biggest concern is privacy,” Rhode agreed. “But after years of meeting with members of Congress, the main issues seem to be administrative costs and who collects the money.”
“Technology is improving so fast that five years from now I think we’ll start to see costs go down, and in 20 years it might be as cheap as collecting the gas tax, which is what we have to be working toward.”
GAO also pointed out that truck mileage fees could pose fewer concerns over both privacy and costs than passenger vehicle fees. “For example, trucking companies may already monitor commercial drivers as a condition of employment and many commercial trucks have existing GPS technology to enable mileage tracking.”

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Secretary Buttigieg Praises Port Efforts on Supply Chain

Transport Topics Dan Ronan January 12, 2022

Transportation Secretary Pete Buttigieg during a Jan. 11 tour of the ports of Los Angeles and Long Beach lauded the efforts that have kept freight moving through the facilities amid crushing backlogs, but said much work remains to prepare ports, roads and bridges for challenges that lie ahead.
“As long as the pandemic persists — as long as we are making up for decades of past disinvestment — we are going to see impacts on shipping times and shipping cost,” Buttigieg said during a press conference at the Port of Long Beach. “When there is an issue affecting ports here, you will feel it as far away as my Indiana hometown,” added Buttigieg, the former mayor of South Bend, Ind.

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Economy

Supply chain snags continued to drive up prices in December.

The New York Times Ana Swanson January 12, 2022

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“Much of the tumultuous nature of the supply chain that occurred over the entire last year continues, and unfortunately there is not a lot of relief in sight,” said Douglas Kent, the executive vice president of strategy and alliances at Association for Supply Chain Management.
The price to ship a 40-foot container from Asia to the U.S. West coast hit $14,572 this week, down slightly from a peak of more than $20,000 in September, but still nearly a tenfold increase from two years ago, according to data from Freightos Group.
The group’s data also showed that delivery times for ocean shipments from China to the United States stretched to a record 80 days in December, up 85 percent from 2019.

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Fed Beige Book: Economy Grew at Modest Pace to Close 2021

The Wall Street Journal David Harrison January 12, 2022

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The U.S. economy grew at a modest pace in the closing weeks of 2021 as ongoing supply-chain issues and a shortage of available workers held back production, the Federal Reserve said Wednesday.
But demand remained strong and consumer spending grew, ahead of a rise in Covid-19 cases caused by the Omicron variant, the Fed said in its periodic collection of business anecdotes from around the country known as the Beige Book.
Link: Federal Reserve Beige Book January 2022  (30 Supply Chain References)

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Business

U.S. Chamber urges new era of ‘bold’ and ‘loud’ U.S. business advocates

Logistics Management John Schulz January 11, 2022

“We need strategies to maximize the security, efficiency and resiliency of global supply chains... while making smart decisions about manufacturing capacity here at home,” Clark said. "The U.S. Chamber is calling for a new movement of bold—and I mean bold—business advocates committed to defending those elected officials who dare to find the common ground necessary to enact durable policies that move our country forward ... and committed to supporting pro-business champions in both parties.

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