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Logistics Intelligence Brief
Thursday, January 12, 2023

Industry

State of Freight What the latest warehouse data is signaling about inflation and the economy

CNBC Lori Ann LaRocco January 12, 2023

“Rates remain at these levels as a result of warehouse inventories not coming down significantly in November and December,” said Jordan Brunk, chief marketing officer of WarehouseQuote.
Warehouse pricing and inventory data are indicators of consumer strength. Even as supply chain inflation slows, warehouse rates are high because there is a lot of inventory, which leaves less available space. The price for that space is sold at a premium. When the consumer is buying, there is more demand, and retailers take out more inventory from warehouses, with extra space putting pressure on warehouse rates.

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Chicago industrial real estate powers through Fed rate hikes

Freight Waves Mark Solomon January 11, 2023

The Chicago industrial real estate market, surpassed in importance only by the Southern California region, is demonstrating great resilience heading into 2023 with leasing demand remaining strong, according to research published Wednesday by real estate services firm Colliers International Group Inc.
That’s the good news. The not-so-good news is that “taking rents” — rents that tenants accept after a landlord’s initial proposal and follow-up negotiations — will remain elevated following a 14% year-on-year increase, Colliers (NASDAQ: CIGI) said. In some of Chicagoland’s 22 submarkets, asking rents have jumped 20% year over year, according to the data.
Continued solid demand for e-commerce space has played a role. But the main culprit is the interest rate turmoil that has curtailed investment and loan activity, and has left tenants with a challenge finding new space to accommodate their growth, Colliers said.

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Shippers/3PLs

Amazon Expands Prime Service to More Stores

Bloomberg/Transport Topics Spencer Soper January 10, 2023

In interviews, merchants said “Buy With Prime” boosts sales because shoppers are confident their products will be delivered quickly and because they don’t have to provide their personal information to an unfamiliar website. In another potential boon for independent web proprietors, Amazon will now let them post product reviews that currently run on its own site.
Amazon, suffering slowing sales as the pandemic-era boom cools, is looking for new ways to leverage its sprawling logistics operation. The company has long known that many Prime subscribers shop on other websites. Extending Prime perks to those online stores lets Amazon collect more shipping fees. The service also gives Amazon a weapon in its fight with Canadian rival Shopify Inc., which provides e-commerce software to millions of web stores and has been trying, with mixed success, to muscle into the logistics business.

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Freight Forwarder Flexport Is Laying Off 20% of Its Workforce

The Wall Street Journal Liz Young January 11, 2023

Subscription-Based

“We are overall in a good position, but are not immune to the macroeconomic downturn that has impacted businesses around the world,” the executives wrote. “Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company.”
Founded in 2013, Flexport is among an array of startups aiming to use technology to scrub inefficiencies from the logistics industry. It reported gross revenue of $3.3 billion in 2021, the company has said. Mr. Petersen in June had estimated gross revenue of nearly $5 billion in 2022.

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Government/Safety/Sustainability

New, pending, and possible rules and regulations facing fleets in 2023

Fleet Owner Josh Fisher January 11, 2023

Late last year, the Environmental Protection Agency finalized its latest heavy-duty engine rule, which goes into effect for model year 2027 commercial vehicles. This is going to impose manufacturer requirements that could increase the cost of diesel trucks by $42,000, Schweitzer said.
The final rule would lead to lower emissions of NOx and other air pollutants, according to EPA. This reduction increases over time as more new, cleaner vehicles enter the market.
New IRS guidelines tied to 2022’s Inflation Reduction Act would give carriers up to $40,000 in tax credits for non-diesel or -gasoline commercial vehicles.
“So, on the one hand, you've got a $40,000 subsidy to purchase electric vehicles. On the other hand, you've got a $42,000 penalty for purchasing a diesel vehicle,” Schweitzer said. “It's pretty clear that the administration is trying to force the market to electrification. This is just one of many, many examples of how this is working right now.”

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DOT Leaders Provide Update on Safety System

Transport Topics Eric Miller January 10, 2023

“We are in a crisis, particularly that after decades of improvements, we’ve seen these changes more recently as the numbers are moving in the wrong direction,” Emily Schweninger, DOT’s senior policy adviser for transportation health and safety, said Jan. 6 at the annual event that brings together thousands of transportation professionals, researchers and academics. “It’s been made very clear by the secretary that the crisis is very urgent, that it’s unacceptable, but that we have an opportunity to make a change.”

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Fuel groups argue Biden decarbonization Blueprint undoes trucking’s emission reduction efforts

CCJ Jason Cannon January 11, 2023

The development and deployment of sustainable fuels, to the chagrin of NATSO, representing America's travel centers and truck stops, and SIGMA: America's Leading Fuel Marketers, was reserved for the aviation industry. NATSO and SIGMA collectively represent more than 80% of fuel retailers in the United States.
"We appreciate that the Biden Administration is prioritizing alternative fueling strategies to reduce carbon emissions and advance the adoption of emerging fuel technologies, but we are disappointed that the Administration ignored the harmful effects that come with incentivizing sustainable aviation fuel above over-the-road fuels that can be produced at less cost and have a more favorable environmental impact," the agencies said in a joint statement. "The nation's fuel retailers are eager to continue investing in alternative fuels, including electric vehicle charging, natural gas and hydrogen and to offer consumers new fueling options alongside renewable diesel and biodiesel, which have been reducing carbon emissions for decades."

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Connecticut trucking group considers legal action over state’s highway use tax

Land Line Ryan Witkowski January 11, 2023

A Connecticut trucking association is weighing its legal options when it comes to the state’s highway use tax.
The tax, which went into effect at the start of the new year, applies to commercial vehicles that carry a classification of Class 8 through Class 13. Fees are calculated based on the vehicle’s weight and number of miles driven in the state and range from 2.5 cents per mile for vehicles weighing 26,000 to 28,000 pounds to 17.5 cents per mile for trucks weighing more than 80,000 pounds.
The Motor Transport Association of Connecticut has been vocal regarding its opposition to the new tax, repeatedly calling upon state lawmakers to repeal the law.

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Truck Freight Routes Could Be Hydrogen Fueling Station Backbone

Transport Topics Noel Fletcher January 11, 2023

California fuel cell advocates are urging a national strategy to replace diesel-powered heavy trucks at major U.S. ports and link future regional hydrogen hubs to create a fueling infrastructure.
That scenario was revealed by Bill Elrick, executive director of the California-government-backed Hydrogen Fuel Cell Partnership, who led a session called “Heavy-Duty Implementation for Electric and Hydrogen Fuel Cell Vehicles” at the Transportation Research Board Annual Meeting on Jan. 9.
“We can’t stop at the border of California,” Elrick said, noting that the truck market needs a national hydrogen mobility strategy and an interconnected U.S. infrastructure that links hydrogen refueling stations.

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Estimate: 400,000 hydrogen internal combustion engines in use by 2040

Fleet Owner January 11, 2023

New research from Interact Analysis predicts that the use of hydrogen-powered internal combustion engines (ICE) will take off within the next five years, and grow exponentially over the next 17.
“The number of registered H2 ICE vehicles is forecast to grow to 58,000 in 2030,” said Jamie Fox, principal analyst at Interact Analysis. “Covering all on road and off-road vehicles (including trains, agricultural equipment, trucks and passenger cars), this figure is set to see significant growth post 2030, with uptake of H2 ICE technology projected to soar to more than 400,000 shipments by 2040.”

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