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Monday, July 13, 2020
Logistics Intelligence Brief
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Trucking

Fragmented demand portends rambling US freight recovery

The Journal of Commerce William B. Cassidy July 10, 2020

Surging COVID-19 infection rates and state and local belt tightening threaten to undermine an early rebound, according to IHS Markit, the parent company of JOC.com. In a July 6 report, IHS Markit Economics and Country Risk projected US real gross domestic product would grow 3.7 percent in 2021, compared with an earlier forecast of 5.2 percent GDP growth. With truck capacity still abundant, shippers aren’t panicking, despite warnings that capacity may tighten this fall. But they’re also watching rising spot truckload pricing and looking back to mid-2017, when the US freight market suddenly went from cold to hot, pressured by faster economic growth and the impact of back-to-back hurricanes in Texas and Florida.

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Volumes fall post-July Fourth (as expected) but remain strong

Freight Waves Seth Holm July 11, 2020

Tender rejections remain elevated despite post holiday lull, now at 15% The outbound tender reject index (OTRI) is exhibiting some stickiness at a high level. OTRI has declined only a matter of basis points since its latest peak just before July 4 and remains quite high at 15.90%. The supply-demand dynamic of May, June and July has been much different than March and April. During March we saw volumes and rejections rise in stepwise fashion to all-time highs in a matter of weeks. This time around it has taken much longer for freight volumes to fill markets, and it has taken even longer for carriers to gain the confidence to reject contracted loads in favor of spot market options. Another difference in this tightening environment is that volumes will likely remain elevated for some time unlike in April when volumes plummeted to holiday levels due to nationwide lockdowns. We should expect to see tender rejections in the double-digit range as long as volumes remain elevated – should the status quo prevail.

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Industry

JLL sees e-commerce grow from 35% to 50% of its total industrial leasing activity

DC Velocity July 9, 2020

E-commerce growth has been vastly accelerated by the coronavirus pandemic and its associated shelter-in-place and work from home policies, driving firecracker demand for U.S. warehouse space that would call for an additional 1 billion square feet of space by 2025, according to the industrial real estate firm Jones Lang LaSalle IP Inc. (JLL). Prior to the pandemic, JLL attributed as much as 35% of its industrial leasing to e-commerce, but now, with expectations for e-commerce to grow 20% in 2020 alone, JLL reports as much as 50% of its leasing activity already attributed to related operations this year, the company said today. Much of that growth has been driven by the enormous popularity of online grocery, which has exploded during the pandemic with many households experimenting with digital ordering for the first time. Surveys suggest the trend will continue post pandemic, creating demand for 100 million square feet of new cold storage facilities to meet demand, JLL projects. Related:  Logistics Management JLL research points to further COVID-19-industrial real estate gains

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Port of Long Beach reports disappointing container throughput numbers

Logistics Management July 10, 2020

The COVID-19 pandemic continued to drive down demand for goods in the second quarter of 2020, leading to an increase in canceled sailings and a decline in cargo containers shipped through the Port of Long Beach in June. Dockworkers and terminal operators moved 602,180 twenty-foot equivalent units (TEUs) last month, an 11.1% decline compared to June 2019. Imports shrank 9.3% to 300,714 TEUs and exports dropped 12.2% to 117,538 TEUs. Empty containers shipped overseas to Asia were down 13.1% to 183,928 TEUs. As LM noted this week, Port of Oakland loaded import volume grew 1.9 percent last month from June 2019. In Long Beach, however, port spokesmen said that economic uncertainty brought by decreased consumer spending and ongoing health concerns amid COVID-19 epidemic contributed to a drop during the first half of 2020, with cargo shipments at 3,433,035 TEUs, 6.9% less than the same period last year.

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Daimler Trucks recalling nearly 183,000 Freightliner Cascadias

Freight Waves Alan Adler July 11, 2020

Daimler Trucks North America (DTNA) is recalling about 183,000 Freightliner Cascadia tractors from 2017-2021 in the United States and Canada. Corrosion of an antilock brake component can cause the truck to pull to one side. That could result in a sudden change in vehicle direction due to uneven braking on the front axle, increasing the possibility of a crash.

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U.S. rail carload and intermodal volumes are mixed for the week ending July 4, reports AAR

Logistics Management July 10, 2020

Intermodal containers and trailers, for the week ending July 4, at 245,222, saw a 7.7.% annual gain, trailing the weeks ending June 27 and June 20, at 257,947 and 255,455, respectively.

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Government/Safety

Hair Testing Could Take Nearly 300,000 Truck Drivers Off the Road

Truckinginfo.com Deborah Lockridge July 10, 2020

The report cites several studies and articles that “highlight the possibility that current federally accepted urinalysis is insufficient to deter and catch drivers who may abuse substances that degrade their driving performance.” Because of problems with drivers being able to cheat urine testing, some motor carriers, including Schneider, Knight-Swift Transportation, J.B. Hunt Transport, Werner Enterprises and Maverick, use more stringent hair drug tests, the Trucking Alliance last year conducted a study comparing pass/fail rates for urine and hair drug screens. Using 151,662 paired pre-employment urine and hair drug test results from 15 different trucking companies, their results indicated that 949 (0.6%) applicants failed the urine test while 12,824 (8.5%) failed or refused the hair test The Alliance extrapolated their results over a population of 3.5 million U.S . truck drivers and claimed that, if their results were generalized across the U.S. driver population, almost 300,000 current drivers would not be on the road if forced to pass a hair test. However, no evidence was presented to justify whether their sample was, in fact, generalizable.

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Survey: 50% Support Mileage Fees, 75% Support Gas Tax Increase

Truckinginfo.com July 9, 2020

“Roughly half of American adults support some form of a mileage fee,” says Dr. Asha Weinstein Agrawal, one of the study’s authors and director of the Mineta Transportation Institute’s National Transportation Finance Center. “For example, 49% supported replacing the gas tax with a ‘green’ mileage fee that charges an average rate of a penny per mile, with lower rates for less polluting vehicles and higher rates for more polluting vehicles.”

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Economy

Economy Week Ahead: Industrial Production, GDP and Retail Sales

The Wall Street Journal July 12, 2020

Wednesday U.S. industrial production likely continued to rebound in June, led by the auto industry and other manufacturers that ramped up output as coronavirus-related restrictions eased and demand perked up.

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