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Logistics Intelligence Brief
Wednesday, January 19, 2022

Trucking

LTL rates to stay high in Q1, fueled by price hikes and capacity constraints

Supply Chain Dive Max Garland January 18, 2022

Shippers will see skyrocketing LTL rates persist through March, fueled by labor and capacity constraints, sharp general rate increases and carrier consolidation, according to the January 2022 Cowen/AFS LTL Freight Index.
Per-pound LTL rates are expected to drop slightly in January and then climb through March, resulting in a 35.8% increase compared to the index's January 2018 baseline. That's relatively level with what the index recorded in Q4 2021 — a 35.9% increase.
"Our data and forecasting models indicate that shippers should expect and plan for the higher costs from the last quarter of 2021—which included the peak holiday season—to continue into the first quarter of 2022," said Tom Nightingale, AFS Logistics CEO, in a statement. "It's a perfect storm that's led to rising shipping rates across the board."

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Truck Tonnage in December Increases 1.4% Year-Over-Year

Transport Topics Dan Ronan January 18, 2022

“December’s gain was the fifth straight, totaling 4.4%,” Costello said of the cumulative monthly gains to close 2021. “In December, tonnage reached the highest level since March, but it was still 2.7% below the pre-pandemic high. This is likely due to the fact that ATA’s data is dominated by contract freight. Contractor truckload carriers operated fewer trucks in 2021 compared with 2020 and it is difficult to haul significantly more tonnage with fewer trucks. But overall, we have seen a nice trend up that is reflective of a still growing goods economy.”

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J.B. Hunt blows past Q4 expectations

Freight Waves Todd Maiden January 18, 2022

“Lower productivity on startup accounts and a greater number of open trucks due to the tight labor market and COVID-related labor disruptions” were headwinds. Also, a host of incremental costs, including casualty insurance expense, bonuses and pay increases, and contractual startup costs weighed on margins. The division posted an 89.8% OR, 340 bps worse year-over-year.
A 27% increase in revenue per load moved brokerage profitability nearly four times higher year-over-year at $21 million.
The truckload division leveraged additional drop-trailer capacity to a 15% load count increase. Revenue per loaded mile was up 36%, 32% higher excluding fuel surcharges. Even with higher purchased transportation costs in the quarter, the division recorded 400 bps of OR improvement at 90%.

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Industry

Space crunch speeds up trans-Pac contracting cycle

The Journal Of Commerce Bill Mongelluzzo January 18, 2022

Subscription-Based

With some annual service contracts already signed at rate levels double those agreed to last year, US importers of Asian-sourced goods are rushing to lock in vessel capacity with ocean carriers, and many are finalizing 2022–23 contracts months ahead of past negotiation cycles.
Container lines, for their part, are prioritizing contracts with shippers they view as good partners, and in some cases, those shippers of choice are not their largest accounts. Rather, carriers are committing space to importers who have proven they are capable of accurately projecting their capacity needs and consistently meeting the minimum quantity commitments (MQCs) in their contracts, before pushing even larger rate increases onto their remaining customers.

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Oil Demand to Exceed Pre-Covid Levels in 2022, IEA Says

The Wall Street Journal Will Horner January 19, 2022

In its monthly oil market report, the IEA hiked its oil demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day. The Paris-based agency also raised its demand growth forecasts for 2021 by 200,000 barrels a day to 5.5 million barrels a day.
Total demand this year should stand at 99.7 million barrels a day, around 200,000 barrels a day more than 2019 levels, the IEA said. Last month the IEA was expecting this year’s oil demand to be broadly on par with pre-pandemic levels.

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Government/Safety/Sustainability

Viewpoint: Trucking’s welcome message to teens

Freight Waves David Heller January 18, 2022

The apprenticeship pilot program will allow 18-20-year-olds who have already obtained their commercial driver’s license to enter a narrowly tailored apprenticeship program which will provide them with additional training on how to safely operate a CMV. Drivers will need to complete both a 120-hour and 280-hour probationary period during which they will only drive vehicles with an active braking collision mitigation system and a governed speed of 65 miles per hour at the pedal and under adaptive cruise control, among other technologies. They will be accompanied during their probationary periods by older, more experienced drivers, who must themselves be highly qualified for the role.

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Facing a Shortage of Truck Drivers, Pilot Program Turns to Teenagers

The New York Times Christine Chung January 19, 2022

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During the pilot program, which can last up to three years, as many as 3,000 young truckers at a time will be required to complete 400 hours of cumulative probationary time with an experienced driver in the passenger seat. After that, until they turn 21, they will be able to drive solo but under continuous monitoring by trucking companies.
The legal age for truckers who drive across state lines is currently 21, but those 18 and over can drive commercial trucks within state lines everywhere in the country except Hawaii.

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