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Tuesday, May 19, 2020
Logistics Intelligence Brief
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Freight markets slowly coming back to life

DAT.com Matt Sullivan May 18, 2020

Freight markets have been slowly rebounding in May, with the normal seasonal uptick providing some relief for transportation companies that have suffered during the COVID-19 crisis. With businesses slowly starting to reopen and the country looking for its economic footing, demand for truckload shipments is picking up. As a result, load-to-truck ratios on DAT Load Boards have steadily increased in recent weeks. That signals tighter capacity, which has pushed truckload rates higher, especially in produce regions where harvests are hitting supply chains. But even with these improvements, the national average van rate for May is still below the April average. The pace of these improvements hasn’t matched the pace at which freight markets tanked in April, so many carriers are still struggling in the current business climate.

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Uber’s Re-Evaluation of Freight Follows Steep Losses

The Wall Street Journal Jennifer Smith May 18, 2020

The freight operation, like the main passenger business of its parent, has had a significant impact on its market but has been hard-pressed to turn its gains into profits. Uber Freight lost $64 million in the first quarter despite a 57% jump in revenue, to $199 million, from the same period in 2019. The freight unit, which uses technology to match truckers with shippers who need to move cargo, accounted for about 5.7% of Uber’s $3.5 billion in quarterly revenue.

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Uber ‘re-evaluating’ non-core units like freight, WSJ reports

FreightWaves John Paul Hampstead May 18, 2020

Uber Freight, Uber’s digital freight brokerage business, had already adjusted its growth strategy and the way it priced freight to customers as part of Uber’s new emphasis on driving toward profitability. As late as February 2020, Khosrowshahi said that Uber would be EBITDA-profitable by the end of 2020, but the coronavirus pandemic pushed that date back to 2021.

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Q&A: Larry Gross discusses the impact of COVID-19 on intermodal

Logistics Management Jeff Berman May 18, 2020

Larry Gross: Intermodal has been severely affected by the pandemic. We are in what I will call chapter two of the story. Intermodal really got affected even before all of the shutdowns began, because of the heavy import/export orientation for intermodal, which accounts for, perhaps, 60% of total intermodal activity, when you include trans loading, as well as the movement of ISO [international] containers. And that was affected even back in March pretty dramatically by the disruptions that were occurring due to the virus in China. We had an extended Lunar New Year holiday shutdown in China, as China was dealing with the initial outbreak of the virus in Wuhan, and that dramatically affected the international cargo that was arriving here. So, now we are into chapter two, in which China has begun to recover, and its production has come back, but it is running smack into a weak demand situation here in the U.S. because of the pandemic. March was, I guess, “the door opener,” in terms of the downturn.

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Diesel Prices Continue to Slide Even as Oil Inches Up

Transport Topics Dan Ronan May 18, 2020

The average price of diesel fuel nationally dropped eight-tenths of a cent last week to $2.386 a gallon from $2.394, according to the Energy Information Administration’s May 18 report. The price of trucking’s main fuel is now 77.7 cents a gallon less than it was a year ago. Meanwhile, the national average price of gasoline continued going in the other direction, rising 2.7 cents per gallon to hit $1.878. That's still 97.4 cents per gallon cheaper than a year ago. Diesel dropped in all 10 regions the EIA surveys in its report.

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US Trailer Orders Hit 30-Year Low in April

Transport Topics Roger Gilroy May 18, 2020

“The short- to medium-term outlook will be entirely dependent upon the return of business to some level of normality and stability, which will drive freight demand for both manufacturing and consumer spending,” Frank Maly, ACT’s director of commercial vehicle transportation analysis, said in a release.

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COVID-19 taking bite out of the driver pool

Freight Waves John Gallagher May 18, 2020

Trucking companies are realigning hiring practices to focus on experienced drivers as the supply of student drivers falls dramatically because of COVID-19. The shift is a direct result of driving schools that have closed and state driver licensing agencies (SDLAs) that have either cut back hours or shut down entirely during the pandemic. This is constricting the pipeline of entry-level drivers that many carriers rely on for more than half of their driver positions. “A lot of the driving schools have been deemed non-essential and have shut down, so that pipeline of new people has been compressed,” U.S. Xpress President [NYSE: USX] and CEO Eric Fuller told FreightWaves. Truckload carrier Werner Enterprises [NASDAQ: WERN] operates 14 driver schools around the country, and so far only one of them has had to shut down. However, entry-level driver throughput through those schools – what Werner refers to as “placement drivers” – is down 40% to 50% due to social distancing and other COVID-19 effects, said Werner President and CEO Derek Leathers.

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