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Logistics Intelligence Brief
Wednesday, May 17, 2023


US Freight Cycle Near Bottom as Capacity Begins to Tighten

ACT Research May 16, 2023

The freight cycle remains clearly weak, according to the latest release of the ACT freight & transportation forecast report, but there are rays of light at the end of the tunnel. ACT sees the tightly intertwined supply and demand dynamics in the freight market beginning to recover with demand fundamentals improving and capacity starting to tighten.
“With produce season arriving late this year and the freight market likely passing the peak of the destock, freight demand is near the bottom,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “With inflation easing, improving real income trends will allow for a bit more holiday spending this year, when even less destocking will mean more freight volume

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Dry Van Update: Southwest reports solid gains in the first quarter

DAT Freight And Analytics Dean Croke May 16, 2023

The U.S. Bank Freight Payments Index is based on more than $46 billion in freight payments annually and provides a quarterly look at the domestic truckload and less-than-truckload freight market. There were some mixed signals in the recently published first-quarter report for 2023. Even though the volume of shipments decreased by just over 6% compared to the first quarter of 2022, the rate of decrease was much lower than the 7.1% y/y drop in the last quarter of last year. According to the report, not all regions fell in unison, “some regions exhibited strength during the quarter, suggesting capacity has loosened overall, but there are still regions where capacity appears tighter.”
For at least the last 12 months, DAT Freight & Analytics has been observing a much stronger spot market in the Southwest, driven mainly by the shift in containerized and breakbulk imports into Gulf Coast ports. Texas has been a standout state where outbound flatbed spot rates have been consistently higher, and rates are slightly higher than in 2018, a standout year for open deck carriers.
Link: DAT Trendlines Weekly Volumes/Spot Rates Chart May 8-14
Related: Supply Chain Now Analysis of the U.S. Bank 2023 Q1 Freight Payment Index(Podcast 49m)

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Retail Sales Rise 0.4% in April

Transport Topics/Associated Press Anne D'Innocenzio May 16, 2023


Retail sales data from the U.S. is not adjusted for inflation unlike many other government reports, so the headline increase only matched the monthly rise of 0.4% in the government’s consumer price index for April. That indicates that shoppers are struggling to keep up with inflation.
Sales at car and auto parts dealers rose 0.4%. Business at gas stations fell 0.8% despite an uptick in prices at the pump, suggesting Americans cut back on holiday and spring break travel.
“The April retail sales report shows consumers remain inclined to spend, though they are becoming more selective in their purchases,” said Oren Klachkin, lead U.S. economist at Oxford Economics. “However, with storm clouds gathering on the horizon, we think consumer spending will soon run out of steam.”
Americans have remained resilient in their spending even with signs of weakness elsewhere in the economy. A solid job market has contributed to that.
Related: National Retail Federation Retail Sales Rose in April as Consumers ‘Remained Engaged’

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After last year’s inventory tidal wave, where do retailers go from here?

Supply Chain Dive Ben Unglesbee May 16, 2023

Nothing for retail inventory planners has been easy over the past three years. After the shortages of 2020 and 2021, the industry spent the past year trying to unload products as consumers cut their spending in the face of steep inflation.
Although down from their peak, many inventory positions remain elevated for current sales levels.
“I’ve worked at multiple apparel retailers recently that have more inventory than I’ve ever seen,” said Matt Garfield, managing director with FTI Consulting. “It looks like you’re walking into a peak season distribution center and we were in the middle of February, March.”

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BNSF to launch new Houston intermodal service in June

The Journal of Commerce Michael Angell May 16, 2023


BNSF Railway next month will begin regular intermodal service from the Port of Houston to Dallas and Denver, just over one year after it began testing market demand for rail service from the fast-growing Gulf Coast port.
In a service advisory Monday, BNSF said it will offer service from Houston’s Barbours Cut container terminal to its Alliance facility in Dallas and to its Denver intermodal facility beginning June 2.

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AI isn’t new to the supply chain, but ChatGPT is expanding its role

Freight Waves John Kingston May 16, 2023

One of the more heavily attended events was a presentation by Rob Cushman, senior partner, worldwide leader – supply chain transformation at IBM, who demonstrated the company’s still-fledgling — and mostly internal — generative AI capabilities that are targeted to its supply chain business.
Cushman demonstrated a test case in which IBM’s generative AI capabilities were asked to track parts shortages in a supply chain. IBM has had AI capabilities through its Watson natural language processing service for more than 10 years.
His demonstration asked Watson to track the availability of one particular part, and through a series of clicks and written questions, AI would bring up further details on the availability of that part. “What is the stock?” Cushman said, reviewing some of the questions that might be asked. “What’s on order? Do I see gaps in my supply perspective?” The generative AI capabilities in the supply chain provide “an integrated view of what I as a person who owns this part needs to be focused on today as I come online and sit down at my desk.”

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Start-up funding in logistics: Adjusting to a new reality

McKinsey Sandy Gosling et al. May 16, 2023

The funding pullback was most pronounced in three subsectors: distribution and fulfillment start-ups focused on warehouse picking and packing and orchestration of deliveries (down 90 percent), first- and middle-mile brokers focused on truck brokerage (down 70 percent), and digital last-mile platforms (down 65 percent). Meanwhile, segments with smaller overall funding levels—such as warehouse management systems and digital freight forwarders—increased overall funding year over year, in large part due to a few singularly large individual funding rounds (including Flexport’s) toward the beginning of the year.

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Upcoming NOx Regulations Present Challenges for OEMs

Transport Topics Gary Frantz May 16, 2023

Schaeffer believes the segment facing the toughest challenges will be those fleets with 20 trucks or fewer, which comprise 90% of industry capacity. “What they think and how they make decisions is going to be different than what the top 100 carriers think about,” he explained. With California initially implementing tighter NOx rules in 2024, the industry will have a few pre-2027 years of learning, “a canary in the coal mine experience to see what these low-NOx trucks look like and how they perform,” he said.

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Short-line operator: California’s new locomotive emissions rule could ‘kill’ industry

Freight Waves Joanna Marsh May 16, 2023

Kennan H. Beard III doesn’t think it’s an exaggeration that the new California Air Resources Board rule on locomotive emissions will wipe out many short-line railroad operations in the state.
Not only would costs be too high to replace a fleet of locomotives in order to meet compliance, but the high costs would prevent short lines from being able to invest in their companies between now and 2030, which is when the regulation would kick in. Furthermore, if short lines go under as a result of the new rule, it could result in shifting track to trucks — which, although facing their own emissions regulations, could result in increased congestion on the highways, says Beard, who is president of the California Short Line Railroad Association as well as president and CEO of the Sierra Northern Railway. Sierra Northern ships agricultural products, lumber and chemicals, among other commodities.

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2023 Best Fleets to Drive For: key findings in human resources

CCJ Mark Murrell May 17, 2023

Retention efforts
Beyond mentorship programs, most Best Fleets participants have established driver committees or informal or ad-hoc advisory boards that help drivers advocate and work with other company management teams to create better workplace environments and operating practices. These committees provide a voice to the company’s management team of what’s working well and what isn’t. The feedback from drivers can help management revise driver-related programs to better accommodate drivers’ needs with the end goal of improving retention numbers. And it works.
Related: Heavy Duty Trucking Driver Retention Lessons from the new Best Fleets to Drive For Hall of Famers

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