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Logistics Intelligence Brief
Thursday, October 20, 2022

Trucking

Yellow plans to combine New Penn, Holland networks

Freight Waves Mark Solomon October 19, 2022

Under the plan, Yellow will create 998 “utility” driver positions that will support the new velocity center operations. The drivers will travel about 175 miles to and from the new distribution centers, Yellow said. This will allow drivers to return home after each tour of duty, Yellow said. Utility drivers will be allowed to work across the three operating companies, Yellow said.
The long-planned announcement is the second phase of Yellow’s three-phase strategy to establish a super-regional carrier operating under the Yellow brand. The carrier plans to go to market with a streamlined model that eliminates duplicative operations while offering an expedited LTL pickup and delivery service.

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Truck Freight Rebounded Slightly in 2021 According to New Report

American Trucking Associations October 19, 2022

Among the findings in trends, in 2021:
• Trucks moved 10.93 billion tons of freight – up from 10.23 billion tons the previous year.
• The industry collected 80.8% of the nation's freight bill, up slightly from the previous year, while generating $875.5 billion.
• Trucking employed 7.99 million people in industry-related jobs, up 340,000 from the previous year, including 3.49 million professional truck drivers.
• Women made up 7.9% of the nation's drivers – an all-time high – and minorities account for 46.1% of truck drivers.
• Trucking remains a small business industry: 95.7% of fleets operate ten or fewer trucks, and 99.7% operate less than 100.
• Trucks moved 66.1% of the value of surface trade between the U.S. and Canada and 82.7% of cross-border trade with Mexico, for a total of $828 billion worth of goods.

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DAT.com Dry Van Update

DAT.com Christina Ellington October 19, 2022

Load-to-Truck Ratio (LTR)
After exceeding one million load posts for the prior four weeks, volumes dropped below that level decreasing by 9% last week, and are now 35% below the previous year. Equipment posts increased by 6% last week as spot market capacity continues to loosen and now exceed 2019 levels by 6%. As a result of fewer load posts and more equipment posts last week, the dry van load-to-truck ratio (LTR) decreased by 14% from 3.51 to 3.03.
Linehaul Spot Rates
Following the third biggest weekly increase in diesel prices in the Department of Energy EIA retail average price history, dry van spot rates dropped by just over $0.07.mile last week to $1.81/mile. We saw something similar in 2018 when Hurricane Michael made landfall as a Category 5 hurricane along the Florida panhandle in early October – diesel jumped $0.072/gal, pushing up dry van rates by $0.10/mile the same week. Compared to the top 50 dry van lanes, which averaged $2.15/mile the previous week, the national average was $0.34/mile lower.

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J.B. Hunt says US supply chain remains slow, but worst could be over

The Journal Of Commerce Ari Ashe October 19, 2022

Subscription-Based

Service between US railroads and shippers remained slow in the third quarter, but conditions are beginning to improve, which may lead to the intermodal network becoming more fluid in the coming quarters, according to J.B. Hunt Transport Services.
If that happens, J.B. Hunt believes shippers will be able to save money on intermodal after steep rate hikes in 2021 and 2022 contracts.
“The pricing activity of these last one and a half years is because all of our costs are up so much: J.B. Hunt's cost, our rail providers' cost ... drayage activity ... equipment costs ...,” Darren Field, president of J.B. Hunt’s intermodal division, said on a third-quarter earnings call Tuesday. “We continue to dialogue with our customers about ways that we can take cost out of our system together. And as we have that dialogue, we fully anticipate the customer to get a benefit.”

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Industry

External pressures drag out typical cycle for trailer orders

Freight Waves Alan Adler October 19, 2022

It may or may not be a fundamental change, but the fall order season for trailer orders isn’t playing out like anything resembling the traditional opening of orderbooks.
Even the data analysts who track the industry landed miles apart on bookings in September.
ACT Research said its preliminary reporting showed net trailer orders were 25,700 units, up about 45% from August but around 10% lower than the same month last year.
FTR Transportation Intelligence pegged September bookings at 12,500, down 25% month over month and 56% year over year. On a rolling 12-month basis, new trailer orders amount to 271,000.
The two firms typically report monthly counts within a few hundred units of one another.

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Port Leaders Optimistic Over Funding, Supply Chain

Transport Topics Dan Ronan October 19, 2022

“I was impressed by and proud of the way we stepped up to the historic buying surge triggered by the pandemic,” Connor said. “I visited the ports around the country and throughout the hemisphere. Those workers rolled up their collective sleeves and found ways to push upward of 20% more cargo through gateways at work.”
But Connor and others said help is on the way. The biggest chunk of money is coming from the federal government, with more than $17.2 billion designated for dredging shipping channels, purchasing more cranes, improving highway and road access for truck drivers, and expanding intermodal rail. Billions more are expected to be available from states and private sector investment.

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Amazon extends UPS as option for seller-fulfilled returns

Supply Chain Dive Max Garland October 19, 2022

• Amazon has extended the use of UPS as a customer option for seller-fulfilled returns, according to a company announcement last week. Originally running from Sept. 5 to Oct. 2, the choice is now available until Nov. 1.
• When it announced the “short-term experiment” in August, Amazon told sellers that providing customers with the convenience to drop off their return at a UPS store would encourage them to buy more. Customers could already send seller-fulfilled returns through the U.S. Postal Service.
• Amazon said last week it will automatically reimburse the cost difference between UPS and USPS shipping labels. Some sellers had complained that customers returning shipments via UPS would cost more.

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Ocean capacity could see 15 percent cut by 2024: analyst

The Journal Of Commerce Teri Griffis October 19, 2022

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New global fuel efficiency rules, combined with slow-steaming and scrapping, will reduce effective ocean carrier capacity by up to 15 percent between 2023 and 2024 even though the amount of new ship tonnage being delivered will steadily rise, according to container shipping analyst Lars Jensen.
Total container shipping capacity will expand 8 to 9 percent in the next two years while container volume growth will fall into the negative, keeping demand growth at a third of the pace of new fleet tonnage.

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Ocean carriers readying more capacity cuts for Q4: analysts

The Journal of Commerce Michael Angell October 19, 2022

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Maersk and Wan Hai Lines are culling and consolidating various Asia services to the Pacific Northwest and California over the fourth quarter in a further pullback from 2021 expansions. The upcoming service changes come amid plummeting spot rates and point to trans-Pacific container capacity dropping even further through the fourth quarter, analysts say.
Sea-Intelligence said that ocean carriers have already cut 24 percent of trans-Pacific capacity through October, totaling 670,376 TEU, leaving 2.1 million TEU in capacity on the water. That is approximately the same amount of capacity as seen a year earlier, Sea-Intelligence said, as import volumes fall in the period surrounding China’s Golden Week celebrations.

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Logistics real estate market moderating but rents going higher

Freight Waves Todd Maiden October 19, 2022

“Rents are still going up. I mean we started 2022 thinking rents are going to be up 11%; they’re up 28%,” Moghadam said. “If a normal range of market outcomes is kind of 0 to 10, we were operating in an environment that was maybe a 12 for the last 18 months and that’s coming down to sort of a 9, 9.5 today. By any measure, other than the last 18 months, I would say we’re in very strong market conditions.”
Management sees supply potentially outpacing demand by 100 million square feet next year. However, it believes the incremental capacity will not push vacancies above 4%.

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Air cargo carriers battle worsening supply-demand imbalance

The Journal Of Commerce Greg Knowler October 19, 2022

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Airlines are injecting significant below-deck capacity into Asian markets to handle steadily increasing long-haul passenger numbers, but the space is proving hard to fill as freight demand slows in the major markets of Europe and North America.
The supply-demand imbalance is reflected in air cargo spot rates out of China that have fallen sharply through the third quarter and into October as renewed COVID-19 outbreaks and resulting lockdowns in several provinces affect manufacturing.
Franz van Hessen, managing partner at air cargo consultancy Energy in Process, said “immense overcapacity” has developed in the market in the last couple of months as demand has slowed.

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Government/Safety/Sustainability

Automatic emergency braking proposal slated for early 2023

Land Line October 19, 2022

Pertaining to automatic emergency braking systems, the law:
• Requires an update to the minimum periodic inspection standards under 49 CFR 396, subchapter B, appendix G and other regulations in 49 CFR part 396 following NHTSA’s requirements under this section.
• Requires the secretary, not later than two years after enactment, to prescribe a motor vehicle safety standard and accompanying performance requirements for automatic emergency braking systems for heavy-duty commercial motor vehicles, and to require that systems installed in such vehicles be in use during operation.
• Directs the secretary to study equipping other commercial motor vehicles with an automated emergency braking system and, if warranted, develop performance standards for such systems.
• Requires the secretary to conduct a review of automatic emergency braking systems used in commercial vehicles and address any identified deficiencies in the rulemaking.
Link: Department Of Transportation September 2022 Significant Rulemaking Report

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Business

Make Leader Character Your Competitive Edge

MIT Sloan Management Review Mary Crossan et al. October 19, 2022

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Although there is a sweeping strategic agenda for leader character work, there are practical points of application. First, start with yourself. Consider whether what could be potential virtues are operating like vices, and where you need to strengthen dimensions of character. Consider who you are becoming while you are busy doing — how is character showing up for you, and how is it affecting others? One executive we know sets his watch to remind himself several times a day to check on how he is activating his character to influence his judgment and the judgment of those with whom he is interacting. A gut-check on character has pivoted many conversations that are going sideways when individuals ask themselves, “What dimension of character do I need to activate in this moment?”

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