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Logistics Intelligence Brief
Tuesday, May 16, 2023


Cass Transportation Index Report April 2023

Cass Information Systems May 15, 2023

When conditions will improve is a topic largely reserved for ACT Freight Forecast subscribers. But after a long soft patch, we see the U.S. freight transportation industry on the verge of a new cycle as we begin to transition from the bottoming phase into the early phase of the freight cycle in the months to come.
Of course, demand recovery is an important part of the outlook, but supply trends are shifting as well. Although new equipment production is elevated, we estimate DOT operating authorities have been declining for about seven months now, and employment is broadly following suit.
Related: Freight Waves Shipments, costs decline further in April but inflection coming, Cass says

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Exodus of fleets reaches historic levels in Q1, U.S. data shows

Fleet Owner Scott Achelpohl May 15, 2023

Avery Vise, VP of trucking at industry data aggregator FTR Transportation Intelligence, is a leading authority on these trends in trucking, the comings and goings of freight-haulers, and what causes their businesses to flourish or flounder. The data and analysis Vise recently provided FleetOwner reveals more about the current freight landscape.
Of the more than 31,000 fleets that surrendered their operating authorities between January and April this year, 24,806 were one-truck outfits, according to Vise. That means 79% of these losses were borne by owner-operators, who entered in large numbers during better times two years ago but are fleeing now. Spot rates are down about 70 cents per mile from a year ago in trucking segments dry van, refrigerated (reefer), and flatbed. The good times, Vise remarked, "probably lasted longer than any of them anticipated—spot rates at the time seemed so attractive."

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Cargo fraud, theft surging in ‘wild west’ US truck market

The Journal Of Commerce William B. Cassidy May 15, 2023


The number of cargo crimes and the value of stolen goods increased by double-digit percentages in 2022, according to theft prevention and recovery service CargoNet. And both metrics are still climbing in 2023.
“Incidents” from crimes of opportunity to the premeditated theft and laundering of cargo by organized crime rose 15% year over year in 2022, while the value of stolen goods rose 16.3% to $107 million, CargoNet said.
Almost five months into 2023, “we’ve already exceeded all the fraud incidents reported to us last year,” Keith Lewis, vice president of operations at CargoNet, said at the Transportation & Logistics Council (T&LC) conference in San Diego in early May. CargoNet tracked 142 incidents of pre-meditated “strategic” theft in the US, the type involving significant planning and organization, in all of 2022. So far this year, it has recorded 143.

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Thinking beyond markdowns to tackle retail’s inventory glut

McKinsey Colleen Baum et al. May 8, 2023

Over the past 18 months, retail supply chains have experienced unprecedented demand and supply shifts. Pandemic-related disruptions from the end of 2021 to the start of 2022 led to goods arriving late—or, in some cases, after the season. As retailers sought to overbuy inventory to mitigate potential shortages, softening demand and a sudden shift in consumer spending in the middle of last year left them with an inventory glut needing to be marked down or warehoused.
How much unsold stock are we talking about? In the United States, total retailer inventories rose by $78 billion to around $740 billion over the course of 2022—an increase of about 12 percent.1 The stock prices of some mass retailers declined during the same period as they reported overstocks and forecast reductions, while suboptimal-assortment issues also hit the market value of some apparel companies.

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Boeing supplier works to up 737 production after fuselage issue

Supply Chain Dive Kelly Stroh May 15 2023

• Spirit AeroSystems is increasing support throughout its supply base as the manufacturer aims to ramp up production rates across multiple programs, according to a May 3 earnings call.
• “We probably got 75 or 80 people out in the field every day working with our most distressed suppliers, helping them fix their plan, helping them buy material or in some cases offloading some work ...,” President and Chief Executive Officer Tom Gentile said on the call.
• In Q2, the Boeing supplier aims to stabilize and complete the rework of the 737 production line to help increase deliveries in the second half of the year, Senior Vice President and Chief Financial Officer Mark Suchinski said.

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Amazon Overhauls Delivery Network to Dispatch Packages Faster, More Cheaply

The Wall Street Journal Sebastian Herrera May 13, 2023


Amazon.com has upended its vast logistics network to reduce how far packages travel across the U.S. in an effort to get products to customers faster and improve profitability.
The company’s overhaul has cut delivery times, transformed inventory management and altered the search results customers see on its flagship e-commerce website, according to executives, analysts and sellers who list their items on Amazon. The move also appears to be improving the company’s bottom line.
The changes that have been rolled out in recent months represent one of the biggest shifts to Amazon’s system of shipping goods around the world.

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Schneider Electric Expands North American Manufacturing

The Wall Street Journal Liz Young May 15, 2023


Schneider Electric, one of the world’s largest makers of electrical and automation products, is shifting some manufacturing closer to the U.S. from factories in Asia and Europe as it pushes ahead with a regional manufacturing strategy.
The moves are meant to position the France-based company, which makes goods such as light switches, electric-vehicle chargers, home-automation systems and data-center equipment, to meet growing demand in North America and to compete for federal subsidies aimed at expanding manufacturing in the U.S.
Schneider is opening factories in El Paso, Texas, and Monterrey, Mexico, that will make items such as circuit breakers and electrical panel boards, adding to its 35 factories and distribution centers in North America. It also plans to expand its Tlaxcala, Mexico, plant.

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Top US Shippers: Recession fears pulling at the seams of growing clothing imports

The Journal Of Commerce Ari Ashe May 15, 2023


Many retailers have large stocks of the wrong products sitting in warehouses — too many T-shirts and sweatpants and not enough button-down shirts, slacks and dress shoes, for example.
This year, AAFA members are waiting as long as possible to bring in inventory through US ports to get a better idea of how much consumers will spend during the holiday season, Herman said. They also hope to see a quick and peaceful resolution to contract negotiations between the International Longshore and Warehouse Union and their employers.
“Many of our members expect that we’re going to have a very late peak season this year, going well into the fall,” Herman told the Journal of Commerce.

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Diesel benchmark price falls again but may resist further declines

Freight Waves John Kingston May 15, 2023

Diesel markets beyond the pump price are beginning to reflect inventory levels that in the U.S. at least are starting to head into territory last seen during the price spikes of the spring and fall of 2022.
The Department of Energy/Energy Information Administration weekly average retail diesel price fell 2.5 cents a gallon to $3.897 Monday. It’s the 14th time in the past 15 weeks that the price used for most fuel surcharges has declined. Since that streak began, the price is down 72.5 cents a gallon from the $4.622-a-gallon level posted by DOE/EIA on Jan. 30.
But there are signs in the futures and physical markets that tight diesel inventories being reported each week by the EIA are starting to impact spot prices in key markets.
According to data supplied by DTN, physical ultra low sulfur diesel (ULSD) differentials have been moving up sharply in the U.S. Midwest, though that strength has not yet shown itself in more widely traded markets such as the U.S. Gulf Coast and New York Harbor.
Link: Energy Information Administration Gasoline and Diesel Fuel Update

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Flexport report looks at how Laredo could be poised for increased nearshoring activity

Logistics Management Jeff Berman May 15, 2023

This “port,” Flexport observed, is the third-busiest in the U.S., following Long Beach and Newark, and is located more than 100 miles from the ocean, with most of its shipments passed through on trucks and trains without being offloaded, “as it is Laredo, Texas, or Nuevo Laredo, Tamaulipas, depending on which side of the border you sit on,” it said, while serving as what it called a major indicator that suggest a potential shift in trade flows.
The report observed that, for the month of March, container throughput at the Laredo port came in at a new monthly high, increasing by more than 30,000 TEU (Twenty-Foot Equivalent Units), to almost 235,000 TEU. What’s more, through the 12-month period, including March, Flexport noted that Laredo’s inbound volumes have “remained well-above that average for the past twelve months, culminating in the March spike…By contrast, total seaborne TEU into the U.S. were only up 6.6% month-on-month.”
Link: Flexport Neither Ship nor Shore – The Rise of Landlocked Laredo

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FLOW gains momentum with ‘give-to-get’ data-sharing model

The Journal Of Commerce Eric Johnson May 15, 2023


But a number of stakeholders in the project who spoke to the Journal of Commerce in recent weeks say that FLOW is making progress in getting shippers, container lines and other cargo interests to share data by using a voluntary “give-to-get” model.
At a high level, FLOW is a fairly straightforward idea. Participants provide aggregated and anonymized freight volume and capacity information to a platform that, collectively, provides a macro-level indicator of supply and demand at US ports a few weeks out. The idea is to allow private sector companies to better utilize existing logistics infrastructure by knowing ahead of time when bottlenecks or asset shortages are likely.

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Walmart ‘betting big’ on Cummins new X15N natural gas engine

CCJ Tom Quimby May 14, 2023

“We have customers today that are doing long haul with our 12-liter natural gas engine,” said Tom Swenson, Cummins manager of global regulatory affairs. “We’ve got some customers that do the back of cab unit (CNG tanks) and they do side saddle (tanks along the rail) and get upwards of 1,200 to 1,300 miles.”
Walmart, which recently began piloting the X15N in a Freightliner day cab, plans on using the engine in long haul.
“We want people to adopt today and we want people to adopt zero solutions like Accelera offers but that’s not always feasible,” Davis said. “And so Cummins is also innovating in spaces to deliver lower emissions in traditional engines that can be cheaper and easier to deploy and they take carbon out immediately. So we’re offering the broadest selection of solutions to help our customers decarbonize now and meet stakeholders’ expectations.”

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Driver pay is moderating, Werner says

Transport Dive David Taube May 15, 2023

• Driver pay, which made significant increases in recent years, showed signs of moderating, Werner Enterprises CEO, Chairman and President Derek Leathers said on a Q1 earnings call this month.
• Driver pay per mile was up 6% for the quarter, according to the company, a subdued increase compared to the wage spikes made during the COVID-19 pandemic. In Q4 2021, the metric had a 22% increase YoY for its Truckload Transportation Services segment.
• “The experienced driver market showed signs of improvement in a historically low unemployment market, enabling us to be more selective, as we hire and retain drivers,” Leathers said.

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