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Thursday, July 9, 2020
Logistics Intelligence Brief
Brought to you by the YRCW Family of Companies


YRC Lenders Agree to Extend Trucker’s Debt Terms

The Wall Street Journal Jennifer Smith July 8, 2020

The trucker plans to use a $300 million tranche of the government loan to pay off health, pension and other obligations, and for working capital, Mr. Pierson said. Another $400 million will go toward buying new trucks and trailers for YRC’s aging fleet, according to the filing. That loan will mature on Sept. 30, 2024. YRC doesn’t plan to pay the debt down during the life of the loan, intending instead to either pay it off or refinance at maturity, Mr. Pierson said. “We are going to take every penny we can and invest it back into this company, and invest in the fleet and the rolling stock,” he said, which will reduce the company’s operating costs. Buying new trucks will save YRC between $10,000 and $12,000 per tractor “on maintenance alone,” he said. It is “not only refreshing the fleet, but it’s also additional liquidity to operate the business.”

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New COVID-19 outbreaks add volatility to truckload markets

DAT.com Dean Croke July 8, 2020

June provided some much-needed recovery for truckload markets, but as COVID-19 outbreaks grow exponentially in major freight markets, including California, Texas, Arizona and Florida, the potential for volatility cannot be underestimated. As the Market Conditions Index shows (below), freight markets that have been the most aggressive with their economic reopening schedules continue to show elevated levels of activity. Importers also boosted demand for dry vans, with retail freight staged in warehouse markets in readiness for what’s expected to be an $80 billion back-to-school shopping season, according to the National Retail Federation, which runs through the end of August. On the domestic front, the majority of southern freight markets saw tighter capacity, which put upward pressure on spot rates. Markets in red in the Southeast, Southwest and West Coast indicate capacity was tight before the July 4 break. Last week also included a higher level of activity along the U.S.-Mexico border, with Geotab reporting a 2% increase in daily bidirectional trips across the border compared to pre-COVID-19 levels.

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US retailers upgrade import forecast, but maintain caution

The Journal of Commerce Bill Mongelluzzo July 8, 2020

US retailers on Wednesday slightly upgraded their expectations for imports for the six-month period from May through October on the belief consumers will step up purchases, albeit slowly. The Global Port Tracker, published monthly by the National Retail Federation with Hackett Associates, projects total imports for the period will be 9.94 million TEU; that’s 0.7 percent higher than in its June forecast. However, despite a slightly improved forecast for US imports due to the phased reopening of parts of the economy following store closures linked to coronavirus disease 2019 (COVID-19), retailers are being conservative in their purchase orders with Asian factories, pointing to a dismal peak shipping season compared to recent years.

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What a Shift Away From China Means for Trucking

Transport Topics July 8, 2020

“The localization of goods from China to, let’s say, the U.S. and Mexico is one scenario,” Glenn Koepke, vice president of network enablement at FourKites, told Transport Topics. “The second scenario is out of China and into other lower-cost countries, which specifically would be Southeast Asia.” “The question for trucking is, does that move out of China shift out of the continent, or does it shift within Asia,” added Paul Bingham, director of transportation consulting at IHS Markit Economics. “If it’s a shift into Vietnam, Bangladesh or even to India in some respects — it’s not going to necessarily affect U.S. trucking very much.”

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Oil Went Below $0. Some Think It Will Rebound to $150 One Day.

The Wall Street Journal Joe Wallace July 9, 2020

Oil markets began the 2020s by nosediving below $0 a barrel for the first time. Investors and analysts are now trying to work out what the rest of the decade holds in store. Some think the bust will set in motion a boom, predicting that investment in oil-and-gas production will dry up and propel crude prices back above $100 a barrel. “That funding pressure is going to be massive. It’s going to be really difficult for some of the producers to produce,” said Trevor Woods, chief investment officer of Ohio-based hedge fund Northern Trace Capital. “We could hit $150 pretty easily by 2025.” Others say the pandemic will sap fuel demand after the threat of contracting coronavirus has faded, cementing an era of cheap oil.

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U.S. import numbers show improvement but remain below 2019 levels

Logistics Management Jeff Berman July 8, 2020

Keeping in line with its previous edition, the new edition of the Port Tracker report, which was issued today by the National Retail Federation (NRF) and maritime consultancy Hackett Associates, is calling for United States retail container import volumes to remain at reduced levels, due largely to the ongoing impact of the COVID-19 pandemic.

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CVSA Schedules Brake Safety Week for Late August

Truckinginfo.com July 8, 2020

During this annual event, enforcement officials inspect commercial motor vehicles for critical out-of-service brake violations, as well as other critical vehicle out-of-service violations, and will restrict them from use until the violations have been corrected. Vehicles that pass eligible inspections receive a passed-inspection CVSA decal.

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With driver drug testing facilities struggling to stay afloat, DOT considers enforcement leniency

CCJ James Jaillet July 8, 2020

For carriers having trouble keeping up with truck driver drug screenings amid the COVID-19 pandemic, the Federal Motor Carrier Safety Administration Tuesday said it will attempt to use discretion in enforcing the 2020 requirement that fleets issue random drug tests for 50% of their drivers. The move, the latest from the agency in granting some leniency to carriers regarding driver drug testing due to the COVID-19 outbreak, highlights an ongoing challenge facing fleets on the drug testing front: Because of the global health and economic crises that have stymied many pre-employment drug tests and impeded random testing, drug screening providers are struggling to stay afloat financially. That has crimped carriers’ ability to test drivers, whether for pre-employment, random or post-accident, and their ability to maintain compliance with drug testing regulations.

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Surging jury awards and 3rd-party litigation hike insurance premiums, hit trucking profits

Transport Dive Jim Stinson July 8, 2020

Insurance costs and large jury awards have been dogging carriers for years, and part of the blame falls on the trial attorneys, according to the American Trucking Associations (ATA). The ATA has announced it will push for tort reform in all the states and Congress. But the AM Best report indicates there is plenty of blame to go around. The report says commercial drivers sometimes commit distracted driving, and some fleets are taking "inadequate safety precautions." Commercial fleets have also been slow to adapt to current technology and innovations used by auto drivers, the report states.

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Drivers in J.B. Hunt California settlement to get about $20k each

Freight Waves John Kingston July 8, 2020

A group of more than 300 independent contractors for J.B. Hunt and the company itself are seeking court approval of a $6.5 million settlement to end an employee classification lawsuit that began in 2019. In a filing earlier this week in the U.S. Federal District Court for the Central District of California, attorneys for the two initial plaintiffs and other potential members of the class action against Hunt said they had reached agreement with Hunt’s attorneys on the action. The settlement would give each of 312 class members approximately $20,000 per person to settle what is familiar legal ground – whether a driver working for a company as an independent contractor should be considered an employee.

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Transportation Funding Bill Would Increase FMCSA Budget

Transport Topics Eugene Mulero July 8, 2020

A federal trucking regulator would receive $881 million for operations during the next fiscal year under legislation a House panel approved July 8. House Democrats’ proposed allocation for the Federal Motor Carrier Safety Administration would be a $202 million increase from the fiscal 2020 enacted level. The proposed funding would amount to $179 million more than the president’s current request, which was a nearly 4% increase from the previous year.

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