Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Vertical farms in Texas are designed to disrupt fresh produce supply chains; Mexico imposes a 50% tariff on white corn exports from the U.S.; Quality Custom Distribution is opening a new facility in Texas; and CBP officers seized nearly 900,000 fentanyl pills in California.

Texas vertical farms designed to disrupt fresh produce supply chains

Eden Green Technology aims to revolutionize the fresh produce supply chain using indoor vertical farming.

The farming technology company is based in Cleburne, Texas, just outside the Dallas-Fort Worth metroplex. Eden Green Technology operates a vertical greenhouse near a large Walmart distribution center that supplies more than 400 stores in Texas and Oklahoma. 

“What we do is we combine the best of both worlds in terms of controlled environment agriculture (CEA). We combine the density of a vertical farm but we’re in a greenhouse; 80% to 90% of our plants’ needs in terms of light come through the sun,” Eddy Badrina, CEO of Eden Green Technology, told FreightWaves.

Badrina said about 90% of the country’s lettuce comes from California’s Salinas and Imperial valleys and Yuma, Arizona — meaning that almost all of the lettuce eaten by consumers on the East Coast has traveled more than 3,000 miles.

Eden Green’s facility is capable of growing 2 million pounds of lettuce per year. The company also grows an array of other fresh produce and herbs, including cilantro, mint, peppers, peas, tomatoes and cucumbers.

Robinson Fresh, a nationwide provider of fresh produce and supply chain services, is the distributor of Eden Green’s produce. As part of its offerings, Eden Green is supplying romaine and butterhead lettuce under the Robinson Fresh brand to some of the largest retailers in the U.S.

“We’re able to do greenhouse farming very efficiently and also able to provide it very affordably to the average consumer,” Badrina said. “From a distribution standpoint, an aspect of our affordability is the fact that we can place our greenhouses right next to distribution centers, virtually eliminating the supply chain costs.”

Eden Green Technology currently has two vertical greenhouses totaling more than 100,000 square feet of grow space. The company is also in the process of building two additional facilities to double its capacity by the end of the year.

Eden Green Technology is not the only CEA company making big moves in the Lone Star State. In May, Revol Greens opened what company officials said is the world’s single-largest CEA lettuce facility ever built. The facility is located in Temple, Texas, about 70 miles north of Austin.

The Temple facility is expected to significantly expand Revol Green’s distribution in Texas as well as the central and southern United States, according to a news release.

“We are on a mission to provide fresh, affordable lettuce to consumers across the country,” Michael Wainscott, CEO of Revol Greens, said in a statement. “The addition of the Temple facility opens new markets, allowing for further reduction of food miles typically traveled within the U.S. salad market.”

Minnesota-based Revol Greens also has existing greenhouse operations in Owatonna, Minnesota; Athens, Georgia; and Tehachapi, California. The company has distribution partnerships with H-E-B, Sprouts, Costco, Walmart, Kroger, Target, United Supermarket and Amazon Fresh. 

Officials for Revol Greens did not respond to a request for comment from FreightWaves.

Compared to traditional farms, Badrina said Eden Green can grow produce faster and more efficiently. For a head of lettuce, the company can grow it from a seed and have it harvested within 24 to 28 days.

“In Salinas Valley, if you were to grow a head of lettuce, it would take 65 to 90 days, maybe more. It would involve a lot of pesticides, herbicides, fungicides and then in the amount of 30 gallons of water per head of lettuce,” Badrina said. “In contrast, we’ll go from seed to harvest in 28 days, and we’re bumping that actually down to 24 as we speak. It will go from seed to packaging in literally 1,500 feet and then from pack into cold storage in 20 minutes, all the while only using two and a half gallons of water as opposed to 30 gallons.”

The founders of Eden Green are South African brothers Eugene and Jacques van Buuren. The van Buuren brothers were already living in the Dallas area when they founded the company in 2017.

Badrina said the van Buuren brothers chose the site in Cleburne because of its proximity to the Walmart distribution center.

“They established it there because they knew in their minds a retailer like Walmart is someone they would want to pursue as a customer,” Badrino said. “As we expand our decentralized network, we do want to be within striking distance or even adjacent to distribution centers — because we need labor, we need access to trucking lanes and we need efficiency in terms of land. That’s why we chose Cleburne and why our future plans dictate that we will be in and around distribution centers across the United States.”

Mexico announces 50% tariff on white corn exports from US

Amid a growing trade dispute, Mexico began imposing a 50% tariff on white corn exports entering the country from the United States on June 24.

The tariffs will be in place until the end of the year and are part of an ongoing trade spat between Mexico and the U.S. over genetically modified (GM) corn.

Mexico wants to restrict imports of genetically modified corn from the U.S., aiming to eliminate the use of the herbicide glyphosate and GM corn in the country. 

U.S. Trade Representative Katherine Tai initiated a dispute consultation request with Mexico over the corn ban on June 2 using the United States-Mexico-Canada Agreement. The consultations will last 75 days. If no resolution is reached, officials can call for a third-party dispute panel.

Quality Custom Distribution to open new facility in Texas 

Frisco, Texas-based Quality Custom Distribution (QCD) announced it is opening a new distribution center in San Antonio. 

The facility in San Antonio will be 116,000 square feet and support more than 250 customer stores in Texas. The distribution center is scheduled to open in August

With the expansion, QCD will have 25 distribution centers across the country, making up to 35,000 last-mile deliveries weekly to four quick-service restaurant brands, according to a news release. 

QCD is a division of Irvine, California-based Golden State Foods, one of the largest suppliers to the food service and retail industries.

CBP officers seize nearly 900,000 fentanyl pills in California

U.S. Customs and Border Protection officers at the Otay Mesa port of entry near San Diego recently intercepted 189 pounds of fentanyl pills from a cross-border shipment.

The incident occurred last Monday, when a 45-year-old Mexican national applied for entry into the U.S. through the Otay Mesa cargo facility while driving a Ford cargo van. The driver presented a shipping manifest for two porcelain sinks. 

While searching the van, CBP officers reportedly found 12 packages containing 858,000 fentanyl pills, with an estimated street value of $2.6 million.

The case was turned over to Homeland Security Investigations.

Watch: Dealing with the challenges of delivering refrigerated produce.

Click for more FreightWaves articles by Noi Mahoney.

More articles by Noi Mahoney

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Chart of the Week: National Truckload Index Linehaul Only, Outbound Tender Rejection Index – USA SONAR: NTIL12.USA, VCRPM1.USA

The relationship between dry van truckload contract (VCRPM1) and spot (NTIL12) rates remains nearly unchanged compared to last June, as both have fallen at nearly the same pace over the past 12 months. 

Spot rates appear to have hit a floor this summer, suggesting carriers have hit their park or drive threshold on the transactional market for now with contract rates continuing to drop. If the spread between these two figures narrows — even as demand falls — capacity will become increasingly inconsistent to secure. 

The domestic truckload market has been in freefall since last March with spot rates reacting first and the slower contracts — typically negotiated on three- to 12-month terms — starting a slow slide in late summer. The reason is simple: Demand fell off a cliff after shippers stopped their “just-in-case” over-ordering strategy brought on by an unreliable supply chain environment during the pandemic.   

The end result is after nearly two years of overheated and unsustainable demand growth, capacity has also increased significantly. The problem now is that demand has retreated almost entirely to where it was in 2019, leaving many trucks with nothing to move and a spot market full of desperation. 

It’s a buyer’s market

In June of 2019 the spot rate excluding fuel costs above $1.20 per gallon — comparable to a contract rate less a standard fuel surcharge — was offering about an 8% discount. The 2019 market was also fairly loose with abundant capacity. Currently the spot market is moving at a ~23% discount. 

The national Outbound Tender Reject Index (OTRI) measures the rate that carriers reject contract load coverage requests from their customers. The pandemic years of 2020-21 averaged above 20% — 1 in 5 loads rejected — while 2019 averaged around 6% — 1 in ~16. The average OTRI value so far in 2023 is 3.5% — 1 in 28.

With spot rates moving at such a strong historical discount, carriers are incented to cover everything they can under the more lucrative contract rates — keeping OTRI low. An OTRI value below 5% is indicative of a market in which carriers are in strong competition for business, pushing contract rates lower.

Combine the low rejection rate with the spot market discount and this means contract rates still have a long way to fall unless capacity exits the market significantly or demand spikes. 

How fast will rates fall?

For this forecasting exercise let’s assume spot rates will not fall significantly over the next six months, but they will likely spike around Christmas as they did this past year, despite the soft environment. 

Contract rates have fallen in nearly a perfect linear regression over the past year, so applying the same trend is not a risky assumption. There is an argument to be made that some acceleration in decline is due, thanks to the fact that many shippers’ transportation budgets will take a hit in the next year and many of the current rates were put in place before anyone realized the market had turned. 

Assuming a flat spot rate trend and continuing the current rate of decline for contracts, the spread will drop below 10% around the holiday season. This could make for a rude awakening for many shippers that have had an extended period of easy sourcing.

As carriers see spot load offerings improve in relation to their contract freight, they will be tempted to divert capacity to cover potentially more lucrative offerings, especially considering many of them have been struggling for over a year. 

Spot rates tend to jump around Thanksgiving and Christmas as retailers recognize what goods are most in demand. Companies are willing to spend more on transportation to ensure sales are not hindered by lack of inventory. The smaller window of opportunity also means increased service expectations — another inflationary force.

While this is not expected to be anywhere near the disruption in 2020-21, it could catch a few companies off guard during a critical period of time in a slowing goods economy. Many retail companies were able to mask the supply chain issues during the pandemic due to sales growth. With demand in decline, inventory shortfalls will possibly hurt more in 2023 than they did then.   

About the Chart of the Week

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Less-than-truckload carrier ABF Freight announced late Friday its Teamster employees ratified a five-year collective bargaining agreement. The two parties previously came to terms on wages and other items two weeks ago.  

The new deal raises hourly wages by a total of $6.50 and benefits contributions by $4.46 per hour. Two additional paid sick days and one additional paid holiday were added. The company’s more than 8,600 Teamster employees “overwhelmingly” agreed to the deal, a news release said.

All but two of 27 supplemental agreements were approved. However, the union and ABF reached tentative agreements on the remaining two supplements, which will be voted on by members next week.

“It remains business as usual at ABF as the negotiating teams work through the final two remaining supplements,” ABF’s statement read. “ABF employees will continue to work under terms of the current contract during this process.”

The Teamsters are also negotiating labor contracts with UPS (NYSE: UPS), Yellow Corp. (NASDAQ: YELL) and TForce Freight (NYSE: TFII).

“This national agreement will serve as the model for the rest of the freight industry,” said Sean O’Brien, Teamsters general president, in a separate statement. “It will set the tone for national freight contracts moving forward.”

ABF Freight System is a subsidiary of transportation and logistics provider ArcBest (NASDAQ: ARCB).

More FreightWaves articles by Todd Maiden

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The post Teamsters at ABF Freight ratify new labor deal appeared first on FreightWaves.

If railway police officers investigating an incident encounter evidence that could be damning to a rail company, do they see their primary duty as seeking all the facts or protecting the company’s name?

For some families of loved ones who died in railway accidents, that question is not merely academic.

Since October, FreightWaves has conducted a series of interviews on the issue, including the question of whether a governmental or other third-party entity should be responsible for ensuring that policing functions are performed ethically and lawfully.

Responses to this question are limited in part by the fact that no single body, particularly in the U.S., represents the railway police force as a whole. Rather, it is often up to individual railroads that employ their own police forces to explain how railway police function within the companies.  

The Railway Association of Canada, the Teamsters Canada Rail Conference (TCRC) and the four U.S. Class I railroads either did not return requests for comment or declined to comment, although TCRC has backed efforts at the federal level supporting families whose loved ones died in railway accidents. The Association of American Railroads does not have a policing committee, while railway police are outside the jurisdiction of the Transportation Trades Department of the AFL-CIO.

Responses were generally more attainable from sources in Canada because of efforts by some there to create regulations that would hold railway police accountable if they are involved in a criminal investigation.

What railway police do

Each Class I railroad has railway police, whose function is to protect the infrastructure, assets and people working for the railroad. Their jurisdiction is generally limited to railroad property. Railway police officers might also be known as special agents, and they might have the authority to make arrests. Railway police may also work with area first responders and local police departments.

Union Pacific (NYSE: UNP) says on its website that its railway police “are certified state law enforcement officers with investigative and arrest powers both on and off railroad property in most states. They also have interstate law enforcement authority pursuant to federal law.”

In Canada, railway police have authority under the Railway Safety Act to enforce the Canada Transportation Act as well as all Canadian and provincial laws within 500 meters of railway property.

Canadian railway CN told FreightWaves in May that the “primary focus” of its police force is “to prevent rail incidents related to illegal and unsafe behaviors at rail crossings and due to trespassing on CN’s right of way. In doing so, we protect the communities in which CN operates through enforcement, education, engineering and engagement activities. We believe strongly that rail safety is a shared responsibility and so we work closely with all communities and stakeholder groups to keep everyone safe around CN’s network.”

The websites of the Class I railroads, such as those of UP, CSX (NASDAQ: CSX) and Norfolk Southern (NYSE: NSC), vary in their descriptions of what railway police do. 

One rail worker’s experience

While rail employees might sometimes be wary of running into railway police, they may prefer to deal with railway officers in sensitive situations than with other police because railway police understand operating nuances. This is especially true in situations that involve deaths or injuries to trespassers.

“Railroaders have this complicated relationship with the railroad police, which is that even though they generally distrust police officers in general, because of fear of the possibility of being held liable for something that they didn’t do — just like everybody in the rest of society — they particularly have a concern about when civil police come on railroad property and try to do this or that or the other,” a train engineer told FreightWaves.

“One of the things that every engineer fears is that when there’s a fatality on the railroad — a trespasser gets out on the track and they get struck by a train — and the civil police come out and arrest the engineer and cart them off to the headquarters and put them under the spotlight because that’s what they think they’re supposed to do … . And in that respect, most railroaders are l,kind of like, well, we’d rather deal with a cop who actually knows how things work on the railroad.”

However, rail workers have concerns about railway police as well, in part because of the opaque nature of how railway police have traditionally operated, according to the source.

One is whether railway police have access to information that could be used for unethical purposes, including information on critics and opponents of the railroads. Railway police are perceived as having access to sensitive information collected by governmental agencies. 

The second issue is the view that the heads of railway police departments — even if they are commissioned police officers — might be under pressure to ultimately represent the interests of the company because they are company employees. There might also be questions about the railway police’s ability to control any ongoing investigation.

“The private companies that do things that are quite dangerous and quite important — most of them don’t have their own private police force that gives them access to things that help advance the corporate interest and also prevent liability,” the source said.

Attempts in Canada to hold railway police accountable 

The issue of conflicting interests has gathered steam in some circles in Canada because of incidents over the past decade that involved workers for Canadian Pacific and CN.

Regina, Saskatchewan-based attorney Tavengwa Runyowa is among those seeking to address the perceived conflict of interest. Runyowa became involved in the issue when he took on a case in 2014 on behalf of the families of Andrew Dockrell and Dylan Paradis, both of whom died in a February 2019 accident involving a CP train in British Columbia.

Runyowa also came to represent the family of Kevin Timmerman, who died in an incident involving a CN train while he was working for the company.

Runyowa and his clients are in active litigation against both railway companies over concerns that the railways have withheld or destroyed evidence that could shed more light on the causes of the incidents that killed their family members. Runyowa’s clients have also sought to file shareholder proposals regarding the use of railway police forces. 

“CP Railway’s management wants to churn so much litigation that if [my client] loses, it would cost her a tremendous amount in legal fees to CP Railway,” Runyowa said. “We regard this as an act of intimidation and a gross abuse of power. CP Railway appears intent on bullying my client into silence to prevent CP Railway’s other shareholders from learning the ugly truth about the company’s cross-border policing activities in Canada and the United States.”

In response to the ongoing situation, CP told FreightWaves: “There is certainly no ‘evidence’ suggesting that the operations of CP or CPKC’s police service have violated any applicable law governing the operation of railroad policing in the United States or Canada. Any allegation to the contrary is baseless,” CP told FreightWaves. “It is unfortunate that such misleading statements and allegations continue to be made by a plaintiff’s attorney; however, given the ongoing civil litigation, CP has no additional comment at this time.”

Runyowa and his clients have also asked the Canadian government to step in, but he said the government is not taking enough action. 

Runyowa and his clients want CP — now Canadian Pacific Kansas City or CPKC — and CN to decommission their police forces and hand over policing activities to public forces that have independent civilian oversight. This would also prevent large investors from being able to “buy large chunks of federal, cross-border police forces on the open market,” he said.

Runyowa’s clients have submitted petitions, here and here, asking the government to take measures to ensure railway police are accountable in situations that might involve criminal investigations.

Parliament member Taylor Bachrach of British Columbia presented both petitions to Parliament in October.

“We believe that these private corporate police should be replaced by a public rail police body that would be funded by the rail corporations and accountable to an independent civilian oversight body,” Bachrach said at a press conference announcing the petitions. “This is similar to the situation in the U.K. and would allow for impartial investigations that are so important to ensure that family members get the justice that they deserve.” 

In December, Minister of Transport Omar Alghabra tabled the petitions, saying that other police forces, such as the Royal Canadian Mounted Police and provincial police, operate alongside railway police, and those forces have the discretion and independence to determine when an investigation is warranted.

The transport minister also noted that a government committee has recommended amending Railway Safety Act code to remove the conflict of interest that could arise when private railway police take part in investigations involving their companies.

“I’ve spoken to the minister of transport about this issue. He has acknowledged the concerns. And he claims that the Department of Transport or that Transport Canada is currently working on a review of rail policing,” Bachrach told FreightWaves. “And so the hope is that that review will lead to substantive reforms that will give rail workers and their families the peace of mind of knowing that if their loved ones are involved in a rail accident, they will have access to an impartial investigation.”

While the Transportation Safety Board of Canada, a federal agency akin to the National Transportation Safety Board in the U.S., does have a role in investigating incidents, it is unable to assign criminal responsibility or negligence, Bachrach said.

Although the minister of transport tabled the petitions, Runyowa and his clients still see relevance in the issue because of the merger between CP and U.S.-based Kansas City Southern, particularly since the merger involves railway police operating in three countries: the U.S., Canada and Mexico. 

In light of the merger between CP and KCS, Runyowa said he has sought inquiries or filed whistleblower complaints with numerous state and local agencies and politicians, including the U.S. Department of Transportation’s Office of Inspector General, the Federal Trade Commission, the U.S. Department of Justice, Senate Judiciary Committee Chairman and Illinois Democratic Sen. Dick Durbin, the Illinois Law Enforcement Training and Standards Board, the commissioner of the Maine Public Safety Department, and the attorney general of Maine.

When it comes to cross-border movements, the U.S. and Canadian governments should coordinate with each other to ensure that the public, cross-border railway policing structures are regulated under treaties that would prevent the uncontrolled flow of policing and national security information to private corporations, Runyowa said.

Runyowa defended himself against criticisms suggesting that he is pursuing the litigation out of financial self-interest.

“There are far easier ways to make money than by representing regular citizens against billion-dollar corporations with endless litigation budgets, connected lobbyists and politicians who are Olympians at avoiding their responsibilities. I did not seek out this cause; it found me. After the first client approached me about the railway issue, I was alarmed by the ugliness and unfairness of a system that most would associate with undemocratic countries,” Runyowa said. 

He continued, “Even if I was doing this for ‘personal gain,’ Americans and Canadians should ask themselves a simple question. If a ‘self-interested’ lawyer spends time exposing a broken system and gross misconduct by large corporations that have caused numerous deaths and injuries, is that really a bad thing? These railway companies move toxic substances, bombs, weapons and other products that could cause serious infrastructural and environmental damage in the communities they pass. Many of these trains travel near schools and densely populated places. Many workers have died and been injured at these companies. Therefore, if ‘personal gain’ could inspire more people to advocate for public safety, their country’s sovereignty, civil rights, civil liberties, and other interests that these company’s private police forces undermine, the world would be a much better place.”

CP and CN defend their police forces

Runyowa believes that CP and CN’s civilian corporate leaders, who have been based in Canada, have been exercising operational command over police officers and law enforcement operations in the U.S.

“No country that takes pride in its sovereignty would allow private persons abroad, who are not police officers in the country, to exercise such extraordinary control over a federal police force,” he said.

But the railways say there is no conflict, in part because railway police officers are commissioned and vetted in Canada and the U.S., and as such are already held accountable by public entities.

CN told FreightWaves that its police service is appointed by the superior courts of the provinces per the Railway Safety Act.

Policing operations use a traditional policing model, in which day-to-day operations are overseen by a local inspector at the provincial and state level, CN said. There is also a chief of police who provides strategic oversight and direction for the entire service, and all police officers operate under a code of ethics.

CN said its police service “has a strict policy and practice whereby we do not conduct investigations into employee injuries or deaths on CN property. Such investigations are conducted by the local police of jurisdiction (where a criminal element may exist as determined by them) and by the coroner and government authorities (such as Transport Canada) who have jurisdiction over such matters. The role of [CN’s police] in these investigations is to protect the evidence until appropriate authorities take over and to provide assistance as requested.”

CPKC told FreightWaves in May that CPKC police service members are appointed by a judge of the superior court of Canada for enforcement of the Canada Transportation Act and provincial laws. CP also noted that although its police force is responsible for the protection of CP property, the police force’s jurisdiction doesn’t replace or supersede the jurisdiction of public agencies, including the Royal Canadian Mounted Police.

Meanwhile, in the U.S., CPKC police members are fully commissioned police officers within the states in which they operate and are empowered by that state to enforce the law.

What’s the future of railway police?

Since federal investigations are still ongoing for the February 2019 incident in Field, British Columbia, in which three employees were killed while operating a CP train, there could be further momentum in support of the victims’ families depending on the results of the investigation.

For now, as Runyowa noted, questions about whether railway police should be held accountable to outside regulation or an outside body have lingered for years, with numerous petitions filed in the U.S. and Canada.

Sources attributed the inertia on regulatory action to several factors. For starters, the topic of police in general can be a political hot potato and may discourage politicians from addressing the issue in depth.

Another is the view that the drive to regulate railway police is hampered by regulatory capture, according to Bruce Campbell, an adjunct professor of environmental and urban change at York University in Toronto, Ontario. 

“There is the revolving door feature where people from the industry go [work for] the regulator and don’t take off the railway hats. … Basically, it’s a way of changing the relationship [between corporations and government] into a kind of a partnership. But it offloads responsibility for following what the safety management requires as doing the proper oversight,” Campbell told FreightWaves. Campbell wrote an essay last September calling for reform at the federal level in support of the families of workers who have died in railway incidents. He has also written a book on what went wrong with investigations in the July 2013 Lac-Megantic incident in Quebec, in which an unmanned Montreal, Maine and Atlantic Railway train carrying crude oil derailed downtown, causing a massive fire and killing over 40 people.

Whatever might happen with the families’ petitions in Canada and Runyowa’s inquiries in the U.S. and Canada, the issue of holding railway police accountable could eventually get swept up into broader trends facing policing, according to Robert McCrie, professor and deputy chair of the Department of Security, Fire and Emergency Management at the John Jay College of Criminal Justice in New York City.

These broader trends include dissolving private police departments in favor of regular law enforcement, mainly because of the technologies and resources that law enforcement has access to nowadays, McCrie told FreightWaves. For instance, towns in the western U.S. that have been created and owned by corporations historically would have been overseen by company police.

Auxiliary police services, such as those used in metropolitan transit systems, may remain because they can maintain order and do some of the things “that police just don’t want to do,” McCrie said. These forces may be trained to collect evidence to eventually turn over to local law enforcement. 

“If the [police of] private organizations can facilitate local issues, such as the processing of lost and found, that’s fine.The police don’t want [to deal with] that. But when it comes to investigations, that’s maybe where the line should be drawn because there is a possibility of conflict of interest,” McCrie said.

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Click here for more FreightWaves articles by Joanna Marsh.

Related links:

• Whistleblower questions CP police force powers in US after KCS merger

• CP refutes faulty brakes as cause of fatal train derailment

• Cargo theft up as thieves take advantage of increased traffic, idled shipments

The post Critics challenge the independence of railroad-employed police appeared first on FreightWaves.

Hundreds of social media posts in recent days have called for truck drivers to boycott picking up and delivering freight in Florida on Saturday — the date the state’s new law targeting undocumented immigrants takes effect. 

Florida Gov. Ron DeSantis signed SB 1719 into law in May, which targets undocumented immigrants by requiring employers to check that workers are authorized to work in the U.S. The new immigration law expands requirements for businesses with more than 25 employees to use E-Verify, a federal system that determines if employees can legally work in the U.S. 

With the law set to go into effect this weekend, some truckers have called for a one-day statewide boycott. 

It’s unclear how many truckers plan to participate in the boycott, but seasoned industry veterans say, regardless, the protesters’ efforts will likely fail.

In today’s rocky economic climate — and if shippers are forced to raise their rates in order to get their freight moved — there’s always going to be an owner-operator or company driver, who has little say in where they are being dispatched, that will break ranks with a convoy or boycott “if the price is right.” 

“I sympathize with those calling for a boycott in Florida, but our industry is in survival mode right now and I have a family to feed,” an owner-operator, who didn’t want to be named for fear of retaliation, told FreightWaves on Friday. “If the rates are there and I can make money on the load, you bet my truck will be fueled up and ready to roll.”

Will Florida truckers be impacted by new law?

Joe Rajkovacz, who is the director of governmental affairs and communications for the Western States Trucking Association, told FreightWaves he started receiving media calls in mid-May seeking comments about how truck drivers will be affected by Florida’s new law, which invalidates out-of-state driver’s licenses held by people living in the country illegally.

However, Rajkovacz said the law wouldn’t impact Florida truck drivers with valid CDLs because, under federal law, states can’t issue a CDL to a truck driver who doesn’t have a green card, which authorizes them to live and work in the U.S. on a permanent basis or isn’t a U.S. citizen.

“When it comes to operating a big truck, the Department of Homeland has always recognized that a truck could be used as a major weapon to attack civilians and infrastructure,” Rajkovacz wrote in a recent article in his association’s magazine. 

He said that what happened on 9/11 is why the industry has seen an uptick in “credentialing requirements for truckers, from the TWIC card to expanded vetting just to be issued a hazmat endorsement on a CDL.” 

Rajkovacz, who hauled produce for nearly 30 years, said Florida farmers, which rely heavily on migrants to work the fields in the state, will be hit the hardest by the new law.

Prior to Saturday’s planned boycott, some truckers on TikTok have been spreading misinformation about the impact the state’s immigration law is already having on the trucking industry in Florida, posting FreightWaves’ articles from March, including one about a Miami-based trucking company and freight brokerage that filed for bankruptcy protection and another article about Medley, Florida-based Flagship Transport Logistics and its affiliates, which abruptly ceased operations leaving 455 truck drivers unpaid, as occurring in late June.

Alix Miller, president and CEO of the Florida State Trucking Association, said she’s “aware of the reports [of a boycott] but am not aware of any issues.” 

One truck driver, who lives in Georgia, said if spot rates don’t spike dramatically in Florida, he plans to stay home, barbecue and enjoy the July Fourth holiday.

“I will be checking spot rates throughout the night,” he said. “If I see something good, I’ll head out because if I don’t, someone else will take it — that’s just how this industry works.”

Noi Mahoney and Joe Antoshak contributed to this report.

Do you have a news tip to share? Send me an email or message me @cage_writer on Twitter. Your name will not be used without your permission.

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UPS Inc. has made a contract offer to the Teamsters union that the union said Friday represents “significant movement” on wages, benefits and worker classification language.

The company has also pledged to have a deal done by Wednesday to cover 340,000 Teamster employees, the union said.

Despite the progress, it isn’t enough, the union said in a statement. After UPS executives left the negotiating room, Teamster national committee members caucused and agreed to continue to put pressure on the company. “One of two things is going to happen next-UPS will come to terms on a deal we can confidently recommend to our members, or UPS will fail and the company will put itself on the street,” said Fred Zuckerman, the Teamsters general secretary-treasurer.

“At every step, we are forcing (UPS) to do what they don’t want to do, which is to give our members more money and better protections at work,” said Teamsters General President Sean O’Brien. “UPS didn’t want to make progress on economics, but they conceded today that they will reach a deal by July 5 because they have no choice.”

The news comes two days after the Teamsters demanded that UPS present its “last, best and final offer” on the economic language of the contract. Such a demand is not binding on either side or on the bargaining process. Typically, it is a negotiating tactic used by one side to exercise leverage over the other.

The current contract expires at 11:59 p.m. ET on July 31. The Teamsters have warned repeatedly that they will strike Aug. 1 without a contract in place.

“We are encouraged the Teamsters are ready to continue negotiations and discuss our most recent proposal,” UPS said in a statement. “Productive discussions are critical at this stage of the process. We look forward to the union’s input so we can reach a timely agreement and provide certainty for our employees, our customers and the U.S. economy.”

The Teamsters will hold a press conference Saturday at noon ET outside Teamsters headquarters.

The post UPS, Teamsters make ‘significant movement’ on economic terms in contract appeared first on FreightWaves.

The pandemic bubble was wonderful while it lasted for all manner of goods companies but they’re seeing the other side of it now and it doesn’t look so appealing to investors. 

This week brought earnings reports from three branded packaged food and beverage companies, and volume/demand pressures took center stage. That’s no surprise: Americans have burned through their pandemic-era “excess” savings; their real (inflation-adjusted) average weekly earnings have been falling for two years running; and their credit card debt is at an all-time high at elevated interest rates.

Among the prominent themes in the Q1 retailer earnings season was consumers increasingly shunning discretionary, big-ticket items in favor of consumables out of necessity, and the earnings reports this week were along similar lines.

General Mills was the first of the CPG companies to report this week. It experienced a substantial 6% organic volume decline in its North America retail segment (and in total) in its quarter ending May following flat volume in that segment last quarter. The company noted that U.S. retailers have been destocking/reducing their inventories in six of the past eight quarters in their attempt to manage working capital. “As you look at the last two weeks, it’s pretty clear that [demand] elasticity has increased,” General Mills said, noting that it experienced an “unexpected inventory build as we went into the last two weeks of the year” owing to demand weakness.

The company’s operating cash flow fell by 16% ($537.5 million) in its fiscal year 2023, partly the result of a $319 million inventory drag. General Mills’ stock price fell several percentage points on the day of earnings, as did those of other branded packaged foods companies in sympathy.

As can be seen in the chart below, General Mills’ North American retail business is essentially back to pre-pandemic volume levels, and when asked about its company wide volume expectations for its just beginning fiscal year 2024, the company’s response gave one reason to think that volumes will be down again. (Its FY24 organic sales growth guidance is 3-4%, and it expects cost inflation of 5%, such that if its price increases are in line with inflation and its mix is neutral, volumes will be down.) 

General Mills expects that among the most important factors affecting its financial performance in FY24 will be consumers’ financial health; given the issues we referenced in the opening paragraph, we think that’s a major risk.

The spice maker McCormick had a bit of a different story. Even though the company raised its 2023 profit guidance, its shares nonetheless fell several percentage points as volume/demand concerns were evident. McCormick’s volume/mix was down 0.9% in the quarter, with its Americas consumer segment volume/mix down 3.5%.

The company acknowledged that U.S. consumers are under some degree of pressure and that they’ve been trading down to cheaper private-label brands as a consequence, especially more recently.

And Constellation Brands — the maker of Mexican beer Modelo Especial, which recently became the top-selling U.S. beer brand thanks to Bud Light’s well-publicized problems — reported slightly below-consensus beer depletions growth of 5.5% (depletions are shipments from distributors to retailers), which was the lowest level of quarterly growth in several years.

We expect many more indications of weak consumer demand in the upcoming Q2 earnings season and that companies will hazard few if any guesses as to when the weakness will abate.

The post Consumer staples earnings reports bring yet more evidence of demand weakness appeared first on FreightWaves.

Widespread adoption of the ZIP code can largely be attributed to a cartoon letter carrier. 

The U.S. Postal Service introduced the Zone Improvement Plan as a means to more efficiently sort and route mail. According to the U.S. Postal Service Office of Inspector General, the five-digit code system was launched in 1963 but was based off of a system proposed in 1943. It divided up big cities into postal zones, which consisted of only two digits and were called “local zone numbers.” 

Postal inspector Robert Moon submitted a proposal a year later in 1944 to create a national three-digit code system for each area to be assigned to a specific processing hub represented by sectional center codes. He believed that it was “necessary for the post office to keep up with the mail volume after WWII.” Moon consistently submitted proposals to management until finally Postmaster General Edward Day learned of it and became interested in the idea. 

According to the Office of Inspector General, Day combined Moon’s idea for the three-digit processing code with the existing two-digit local zones, creating the five-digit ZIP code we know today. But this didn’t come to fruition until 1962, after a thorough introductory campaign to get the public onboard with the new concept. 

In October 1962, Day introduced the ZIP code with a cartoon to convey “speedy delivery.” Mr. ZIP was an illustrated mail carrier, drawn in a body position to show that he was delivering mail fast. 

The cartoon introduced the coding system by boasting its ability to increase accuracy and speed for mail delivery, which would allow for limited need to increase rates. The Office of Inspector General said the campaign can be credited with much of the ZIP code’s success. Mr. ZIP’s campaign was widespread, featured in promotional materials in post offices throughout the U.S., decals on Postal Service vehicles, bags and buttons and even in jingles. 

The Postal Service even introduced a public service announcement video with a famous singing group at the time, The Swingin’ Six. 

Mr. ZIP did his job well, and the Postal Service achieved nearly 100% compliance with ZIP codes. The cartoon was retired in 1983. According to Britannica, that same year the nine-digit ZIP code, named ZIP+4, was introduced.

The ZIP+4 code included four extra digits after a hyphen to speed up automated sorting operations, now that new technology had entered the scene. The first two numbers of the new code specify a specific sector like a group of streets or group of large buildings. The last two numbers denote a small area within that group, known as a segment. This could mean one side of a city block or a single floor in a large building. 

Since its inception, the ZIP code has gone beyond its aim of optimizing sorting processes and is now a part of the culture for Americans. The benefits of the code in the digital age today significantly help to streamline mailing efforts in the age of round-the-clock parcel deliveries. 

FreightWaves Classics articles look at various aspects of the transportation industry’s history. Click here to subscribe to our newsletter!

Have a topic you want me to cover? Email me at bjaekel@freightwaves.com or follow me on Twitter.

The post Where did the ZIP code come from? appeared first on FreightWaves.

This week’s FreightWaves Supply Chain Pricing Power Index: 25 (Shippers)

Last week’s FreightWaves Supply Chain Pricing Power Index: 25 (Shippers)

Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 30 (Shippers)

The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

This week’s Pricing Power Index is based on the following indicators:

Weak peak for ocean shipping

Maritime’s peak season — which typically ramps up in August and lasts throughout October — is expected by retailers and supply chain professionals to be weaker than it has been in previous years. While this tidbit is not necessarily surprising, it bodes poorly for truckload volumes headed into the fall. 

The week before Independence Day is historically the last in which one could see elevated activity from shippers. Van volumes especially tend to be weaker during July, only rallying once the back-to-school season starts in mid-to-late August. But this year, the second quarter ended not with a bang but a whimper.

This week, the Outbound Tender Volume Index (OTVI), which measures national freight demand by shippers’ requests for capacity, rose 1.54% on a week-over-week (w/w) basis. On a year-over-year (y/y) basis, OTVI is down 16.38%, though such y/y comparisons can be colored by significant shifts in tender rejections. OTVI, which includes both accepted and rejected tenders, can be inflated by an uptick in the Outbound Tender Reject Index (OTRI).

Contract Load Accepted Volume (CLAV) is an index that measures accepted load volumes moving under contracted agreements. In short, it is similar to OTVI but without the rejected tenders. Looking at accepted tender volumes, we see a gain of 1.32% w/w as well as a fall of 12.75% y/y. This y/y difference confirms that actual cracks in freight demand — and not merely OTRI’s y/y decline — are driving OTVI lower.

Consumer spending during the summer is normally focused on bulky durable goods such as patio furniture, lawn equipment and outdoor grills. Increasingly, these goods have become affordable only through credit plans, especially the six-month “buy now, pay later” (BNPL) plan that has seen widespread growth. Yet consumer credit is already in a precarious state, even before factoring in October’s planned resumption of student loan repayments. Consequently, several BNPL firms — which had made their payment plans broadly available to grow market share — are now tightening their credit standards, fearing a potential wave of defaults.

Of course, consumer demand is not only falling in America but also on a global scale. This lack of demand has severely limited China’s post-COVID recovery, which was heavily staked on manufacturing and exports. But China’s manufacturing sector contracted for the third consecutive month in June, with the downturn driven by a lack of new orders and falling demand from abroad. In order to boost their flagging industrial economy, China’s central bank is among the few that has cut interest rates in the past month. Yet, at the time of writing, it is doubtful that China’s government will inject large amounts of credit into their economy, given that consumers and firms alike are more interested in paying down existing debt rather than making new investments.

Of the 135 total markets, 79 reported weekly increases in tender volumes, though some key markets — like Atlanta — are falling behind.

Memphis, Tennessee, is a market that has risen to special prominence over the past month: Memphis is now the 12th-largest market by outbound tender volume, behind Detroit and Indianapolis but ahead of Columbus, Ohio, and Chicago. The market not only houses major logistics companies like FedEx but is also host to manufacturers of pulp and paper products, including the largest such firm in the world. This steady stream of volume, plus its relative proximity to other heavyweight markets like Dallas  and Atlanta, has made Memphis one of the most attractive markets for carriers as of late.

By mode: Reefer volumes were something of a damp squib near the end of produce season, though Texas and especially Florida did end up with respectable outputs over the past couple of months. California, on the other hand, vastly underperformed in reefer volumes against the past three years. Given the late-winter flooding that swept the state, and that California law prohibits harvesting flooded farmland for fear of bacterial contaminants, such a weak performance was to be expected. So it is little surprise that the Reefer Outbound Tender Volume Index (ROTVI) is up only 1.3% w/w, slightly below the overall OTVI.

Van volumes, meanwhile, had a much more mediocre performance this week. The Van Outbound Tender Volume Index (VOTVI) was up a mere 0.34% w/w, with the lack of both imports and consumer demand for durable goods hurting van volumes. With the U.S. Supreme Court’s decision Friday to strike down the Biden administration’s student loan forgiveness proposal, consumer demand is likely to suffer this fall and during the winter holiday season.

Drivers take a break

Tender rejections have seen quite a rally over the past two weeks, though the gains are only significant relative to OTRI’s recent lows. On a market-level basis, tender rejections are still noticeably below a healthy average (5% to 7%). Some tightening is to be expected as drivers prepare for summer vacations around the Fourth of July, while others might conclude that they can save more money by parking their trucks than they would make — after operational expenses — by running loads. Inflation reports from the past few months have shown a devastating rise in costs for auto parts and maintenance, not to mention motor vehicle insurance.

Over the past week, OTRI, which measures relative capacity in the market, rose to 3.82%, a change of 20 basis points (bps) from the week prior. OTRI is now 427 bps below year-ago levels, with y/y comparisons becoming only more favorable as the year progresses.

The map above shows the Weighted Rejection Index (WRI), the product of the Outbound Tender Reject Index — Weekly Change and Outbound Tender Market Share, as a way to prioritize rejection rate changes. As capacity is generally finding freight this week, no regions posted blue markets, which are usually the ones to focus on.

Of the 135 markets, 73 reported higher rejection rates over the past week, though 45 of those saw increases of only 100 or fewer bps.

By mode: While its readings have resembled a roller-coaster track since the start of the year, the Flatbed Outbound Tender Reject Index (FOTRI) is finally evening out. FOTRI is useful as a proxy for the domestic industrial and construction sectors given its close relationship with the two. Unfortunately, June looks to be a middling month in both sectors, despite May’s surge in homebuilding activity. FOTRI is now at 11.2%, having fallen 65 bps w/w. 

Reefer rejection rates have nearly doubled since May’s all-time low readings, but the Reefer Outbound Tender Reject Index (ROTRI) has come down off of its most recent highs. Despite a slight gain in reefer volumes, ROTRI slid 15 bps w/w to 4.99%. Van rejection rates, however, have been on a consistently upward trend since mid June, with the Van Outbound Tender Reject Index (VOTRI) having gained 27 bps w/w to reach 3.71%.

See spot (rates) sit

Spot rates, which had been one of the earliest warning signs of market deterioration back in 2022, are the greatest source of optimism that this cycle’s worst is behind us. That said, should carriers be celebrating spot rates’ performance right now? No, since they are stagnating far below inflation-adjusted rates from the previous downturn in 2019. Yet, if OTRI should maintain any momentum that it’s currently gathering, those gains will be a boon to carrier leverage in naming spot rates in the near future.

This week, the National Truckload Index (NTI) — which includes fuel surcharges and other accessorials — rose 3 cents per mile to $2.25. Rising linehaul rates were the sole culprit behind this week’s gain, as the linehaul variant of the NTI (NTIL) — which excludes fuel surcharges and other accessorials — rose 3 cents per mile w/w to $1.65.

Contract rates have been on a downward trend since early April, albeit one that has had its brief reversals. By and large, contract rates are finally falling closer to a level that is to be expected after the significant depreciation of freight demand. I have, in previous columns, praised the foresight of shippers for not negotiating rates too low too quickly, as they would otherwise run much of their carrier base into bankruptcy — eventually sending rates much higher.

While no carrier is pleased with this present downturn, I would argue that contract rates are still coming down gently: The spread below between contract rates and linehaul spot rates is strong evidence of this slow comedown. So while contract rates — which exclude fuel surcharges and other accessorials like the NTIL, and which are reported on a two-week delay — have fallen 2 cents per mile w/w to $2.39, they could be much worse.

The chart above shows the spread between the NTIL and dry van contract rates, revealing the index has fallen to all-time lows in the data set, which dates to early 2019. Throughout that year, contract rates exceeded spot rates, leading to a record number of bankruptcies in the space. Once COVID-19 spread, spot rates reacted quickly, rising to record highs seemingly weekly, while contract rates slowly crept higher throughout 2021.

Despite this spread narrowing significantly early in the year, tightening by 20 cents per mile in January, it has since widened again. Since linehaul spot rates remain 76 cents below contract rates, there is still plenty of room for contract rates to decline — or for spot rates to rise — in the rest of the year.

The FreightWaves Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas, arguably one of the densest freight lanes in the country, continues to distance itself from April’s floor. Over the past week, the TRAC rate rose 3 cents per mile to $2.11 — still a distance from its year-to-date high of $2.39. The NTID, which has stabilized around $2.31, is handily outpacing rates from Los Angeles to Dallas.

On the East Coast, especially out of Atlanta, rates continue to rally, outpacing the NTID. The FreightWaves TRAC rate from Atlanta to Philadelphia rose 2 cents per mile w/w to $2.67. After a bull run that started at the end of April, these rates have been plateauing above the national average, which is making north-to-south lanes in the East far more attractive than West Coast alternatives.

For more information on FreightWaves’ research, please contact Michael Rudolph at mrudolph@freightwaves.com or Tony Mulvey at tmulvey@freightwaves.com.

The post No freight market fireworks in 2023 appeared first on FreightWaves.

On today’s episode of WHAT THE TRUCK?!? Dooner is ringing in the Fourth with the next generation of freight masterminds: his boys.  

WARP’s Daniel Sokolovsky is making a bet on its FreightTech with Delivery Optimization Experience. It will be offering LTL shippers just a $1 per pallet fee if its technology isn’t able to optimize a shipper’s load based on cost, speed or efficiency. 

Drivers hate check calls, but TextLocate’s Ryan Rogers thinks he has a solution. We’ll find out why a text is almost always better than a phone call when talking to truckers.

Carpenter Compliance’s Rob Carpenter knows a thing or two about great strap work. He’ll get our loads secured as we dive into proper load safety.

Fleetworthy Solutions’ Michael Precia shares the importance of proper driver qualification management.

Plus, convertible semi-trucks; the greatest American heroes; the inferno in Iowa; and how not to set off fireworks

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The post Antidote for check calls; a big bet on FreightTech; and strap work – WTT appeared first on FreightWaves.

In the last decade, shippers have gained access to a range of solutions aimed at increasing real-time visibility into shipment status and location, including ELDs, supply chain visibility platforms, and carrier-specific GPS tracking systems. 

Despite these real-time visibility advances, shippers often lack insights into long-term performance trends and hidden inefficiencies across their facilities. These inefficiencies lead to increased operating costs in the form of higher accessorial fees and truck rates. 

In addition to driving up transportation costs, shippers that fail to identify and correct operational issues within their facilities compromise their reputations with carriers, which can have a negative long-term impact on their access to quality capacity at competitive rates. Carriers rely heavily on facility reviews to guide their business decisions—recent research by Convoy revealed that 84% of carriers often or always read facility reviews before deciding on whether to bid on shipments. Even when carriers choose to bid, negative facility ratings can drive them to increase their rate per mile in an attempt to recoup potential lost earnings from longer wait times and other inefficiencies.

What Constitutes an “Average” Facility?

One of the initial challenges shippers face in identifying operational issues is a misunderstanding about what constitutes an “average” facility. Transportation teams often operate under the assumption their facility ratings aren’t cause for concern, while carriers actually see their facilities as subpar. This is based on the distribution of facility ratings, which in Convoy’s network have historically “skewed left”—in other words, carriers tend to give facilities higher ratings in general, which skews what constitutes an average facility rating. 

For example, on a five-point scale, it would be natural for shippers to assume that a three-point rating implies average or acceptable performance. Convoy’s research, however, revealed that the average facility rating came in at 4.3, and a score of four or lower would actually place in the bottom 20% of all facilities. To break into the top 15% of facilities, a shipper needs to be rated at least 4.7 out of five.

Data from Convoy’s network indicates that the average facility rating is 4.3 on a five-point scale, and that any score below 4.0 ranks facilities in the bottom 20%.

To improve facility ratings and become a shipper of choice, transportation teams need to understand the underlying causes of low ratings. In Convoy’s research, shippers tend to be downrated for many of the same reasons, with long wait times, poor communication, and subpar facilities leading to lower facility scores. 

Reducing dwell time is the single most important thing shippers can do in order to improve their facility ratings. Convoy found that 84% of five-star ratings cite short dwell as the top reason for the positive rating, while 82% of lower ratings cite long dwell as the top reason for the negative rating. In fact, every additional hour of dwell time, on average, decreases facility scores by 0.2 points on the five-point scale. 

Good communication — specifically, clear instructions and respectful interactions — is cited as the second-largest factor for driving facility ratings. Facility condition came in third place.

To get a better understanding of the factors affecting their scores, shippers can access detailed facility trend data that’s automatically generated by digital carriers like Convoy. That data — combined with custom analyses and conversations with carriers — can then be used to address the root causes of facility inefficiencies.

With data from at least 80 loads per facility per year, shippers can get a statistically significant view of individual facility performance and also benchmark their facilities against each other to see which are their top and bottom performers. Additionally, they can see how their facilities stack up against other shippers in their industry or geographic region.

Collaborating to Understand Low Ratings

Convoy recently worked with a Fortune 500 manufacturer to pinpoint problems and optimize operations at one of its largest facilities. The company was experiencing high detention costs due to long dwell times on their drop-and-hook loads. 

At the time, carriers rated this facility 3.5, landing it in the bottom 5% across Convoy’s network. Their reviews hinted at broader scheduling and operational issues.

When Convoy’s shipper insights team compared drivers’ actual transit times to their appointment times, they quickly uncovered the problem: Drivers were arriving so early for their appointment times that they were waiting hours to unload. 

“For instance, a driver would pick up a shipment at 9 a.m. and arrive at the manufacturer’s facility around 12:30 p.m. — but the delivery appointment time wasn’t until 6 p.m. The driver held onto the trailer for close to six hours longer than necessary,” according to a recent Convoy case study. “In these cases, drivers don’t get the most out of their full 11 hours of service, which hurts their productivity and reduces their earnings. The result: negative facility ratings and reviews, higher truck costs and higher accessorial costs.” 

Convoy provided lane-by-lane transit recommendations that the manufacturer’s 3PL now executes, leading to significant improvements across the company’s operations. The manufacturer saw a 53% reduction in excess transit time, a 60% reduction in pickup dwell time, a 22% reduction in truck costs and a shocking 70% reduction in detention costs. 

These operational improvements also drove the facility rating up from 3.5 to 4.4, taking it from one of the lowest rated facilities to above average. 

Better Data Benefits Both Shippers and Carriers

As digital carriers continue to gather shipment data at an accelerating rate, shippers stand to benefit from the ability to identify performance trends and anomalies. By systematically addressing inefficiencies at the facility level using a combination of self-service tools and in partnership with digital carriers, shippers can improve their team’s productivity, increase operational performance, and ultimately drive down their transportation costs.

As facility performance improves, carriers benefit as well, creating a virtuous cycle. Positive carrier experience increases the likelihood of carriers returning to a given facility. Repeat carriers drive higher quality, more consistent performance. And higher performance results in positive ratings and reviews, increasing shippers’ access to capacity.

Click here to learn more about partnering with Convoy.

This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.

The post Improving operations and reducing costs through better facility data appeared first on FreightWaves.

Hello, and welcome to the coolest community in freight! Here you’ll find the latest information on warehouse news, tech developments and all things reefer madness-related. I’m your controller of the thermostat, Mary O’Connell. Thanks for having me!

All thawed out

Lately it seems every grocery run is followed a few days later by a call to check your groceries for a possible recall. In the last month alone there have been recalls for frozen beef pies from Marie Callender’s; frozen berries from a variety of brands; Tostitos avocado salsa; and a few lesser known products. According to Food Safety News, “the total number of ‘units’ recalled under the authority of the FDA increased by 700 percent in 2022 compared to 2021.” Forty-three percent of all food recalls have been undeclared allergens over the last five years. 

The good news is that since most of these recalls are voluntary and not linked to any illness, there isn’t actually an increase in foodborne illnesses. Centers for Disease Control and Prevention data suggests that rates of foodborne illnesses have remained relatively stable in recent years, affecting about 48 million Americans annually.

Through the advancement of technology, the CDC has been able to detect strains of bacteria that contain the potential for foodborne illnesses earlier. The CDC said this has enabled it to detect possible outbreaks with more precision; investigate and solve outbreaks while they are still small; and link ill patients to likely sources of infection.

Temperature checks

Square cheese pizza day in lunchrooms across the country is about to get a lot cooler. Polar King International released an industry report highlighting trends and innovations for cold storage in the educational setting. As parents continue to push for healthier options in schools and Oscar Meyer inks a deal to have Lunchables in K-12 schools across the country, demand in that walk-in is going to hit new heights. 

The walk-in cold storage industry already has seen significant growth, especially in the educational setting. Polar King found in its report that the balance between energy efficiency and staying within the size parameters of the school cafeteria can result in some custom modifications that don’t blow a district’s budget. The report said: “Looking to the future, the walk-in cold storage industry is poised for ongoing evolution to meet the increasing demands of educational settings. Anticipated trends include advancements in temperature monitoring and automation technologies, further integration of energy-efficient solutions, expanded customization options tailored to specific educational requirements, and an ongoing emphasis on safety and compliance standards.”

Food and drugs

Guess what’s back? Thanks to millennials and Gen Z, cottage cheese has seen a resurgence as a trendy protein additive as one serving contains 12 grams of protein. There are recipes for adding cottage cheese to ice cream and other dishes taking over the internet. This recent demand spike has caught the attention of the U.S. Department of Agriculture cold storage report. According to market analyst Robin Schmahl, “American cheese increased 10.6 million lbs., Swiss cheese was up 2 million lbs., the other cheese category was up 9.4 million lbs. and total cheese was up 21.9 million lbs. So that aspect of the cold storage report was friendly to the market.”

Cottage cheese sales are up 16% year over year and given the trend of blending it into recipes for a boost of protein, it doesn’t look like sales slowing down anytime soon. 

Cold chain lanes

Outbound tender lead times for reefer shipments are averaging about 4.5 days, meaning loads booked in the back half of the week will likely not get picked up until late next week, especially with the Fourth of July falling on a Tuesday. There are a lot of markets where we are seeing rejection rates increase. Carriers should try to drive some of those spot market rates up, especially for month end. Shippers and brokers should try to hold the line when it comes to rate increases. 

June marks the end of the second quarter for many shippers. As typical with quarter ends, there will be a spike in rates as shippers and brokers are more aggressive about moving freight. 

Is SONAR for you? Check it out with a demo!

Shelf life

Weis Markets touts sustainability certification for all stores

Helping Vertical Farmers Enter the Grocery Space

ONE to enhance refrigerated container fleet via Carrier Transicold’s Lynx Fleet solution

Mars sets sights on $1 billion in frozen treat sales

Cleveland Cold Storage slated to open in October, among first new businesses on Opportunity Corridor

Wanna chat in the cooler? Shoot me an email with comments, questions or story ideas at moconnell@freightwaves.com.

See you on the internet.

Mary

If this newsletter was forwarded to you, you must be pretty chill. Join the coolest community in freight and subscribe for more at freightwaves.com/subscribe.

The post Running on Ice: Why are there so many food recalls? appeared first on FreightWaves.

As we approach the end of the first half of 2023, trans-Pacific eastbound spot rates are nearing their year-to-date lows, marking a critical level for ocean carriers.

In conjunction with various factors such as the “bullwhip effect” impacting inventories at major U.S. importers, and a shift in consumer spending patterns, U.S. importers are expected to exercise extreme caution in bringing in new volumes during the second half. This cautious approach, coupled with a weakening global macroeconomic backdrop, intensifies the risks of declining containerized import volumes.

This weakening demand coupled with an excess of vessel capacity is likely to exacerbate the downward pressure on spot rates for this key bellwether trade lane, making a “new” bottom very possible in the second half of 2023 very possible.

As we covered at the beginning of June in the article US import demand positioned to find a new bottom in 2023, ocean container bookings during the first half of 2023 have consistently followed the trajectory of 2019 levels. This trend is projected to persist until early Q3, after which we are likely to see a departure from 2019 levels as import volumes seek a “new” bottom. This shift in volumes to the downside could result in a substantial decline, with import twenty-foot equivalent units possibly experiencing a drop of 10% to 20% below the levels observed in the second half of 2019. The chart above illustrates the estimated monthly decrease in loaded import TEUs, ranging from 10% (depicted in orange) to 20% (depicted in red) across the top 10 U.S. ports.

Given our pessimistic outlook for U.S. containerized import volumes, it is highly probable that ocean container spot prices will also experience a “new” bottom. To gain insights into the potential behavior of container spot rates for the remainder of 2023, we can refer to the 2019 container volumes from China to the U.S. as a proxy. As we can see in the chart below, throughout 2019, container volumes between China and the U.S. remained relatively stable, with no significant increase during peak season. As a result, the ocean container spot rates between China/East Asia and the U.S. West Coast ranged from $1,250 to $1,500, while rates from China/East Asia to the U.S. East Coast fluctuated between $2,500 and $3,000 for the entire year, following initial declines in Q1. These figures are based on the Freightos Baltic Index.

Should our projections for the second half of 2023 materialize and result in declining volumes, the possibility of ocean container spot rates reaching new lows becomes plausible. As demonstrated in the chart below, the April 15 general rate increase (GRI) for 2023 has established a pricing range for ocean container spot rates. Presently, rates fluctuate between $1,000 and $1,700 for shipments from China/East Asia to the U.S. West Coast, while rates from China/East Asia to the U.S. East Coast hover between $2,000 and $2,700, based on data from the Freightos Baltic Daily Index. 

If volumes were to remain relatively stagnant for the remainder of the year, it is reasonable to expect that ocean container spot rates may mimic their behavior from the latter half of 2019 and stay within this range. However, given our projected volume declines, unless ocean carriers effectively manage supply-side capacity, the downward pressure on spot rates will be significant. Consequently, the likelihood of discovering a new pricing floor for ocean container spot rates is increasingly high.

As we explained in detail in a previous article, Bullwhip effect cracking US imports’ peak season (again), softening consumer demand and shifts in consumer spending patterns are expected to have a detrimental impact on ocean container volumes and U.S. import demand during the second half of 2023. Retailers across various sectors have been highlighting the changes in consumer spending behavior, coupled with prevailing macroeconomic headwinds. Moreover, the TEU volume index is likely to have already reached its peak after the dragon boat festival, indicating a potential decline ahead. 

While the bookings index in the chart above is displaying warning signs of the potential start of the decline in future TEU volumes, TEU rejection percentages (in the chart below) remain relatively steady, meaning that capacity is loose and having no trouble accommodating current levels of TEU volumes. This combination is a recipe for significant downward pressure on spot rates, which will likely (and swiftly) erode any GRIs implemented moving forward.

The supply side of the equation is also poised to intensify this downward pressure on spot rates on the trans-Pacific. As we can see in the chart below from SONAR’s Container Atlas, vessel capacity from China to the U.S. is experiencing an upward trend. This highlights the obvious disparity, and steadily increasing imbalance, between supply and demand. With new capacity being introduced throughout the remainder of 2023, while U.S. containerized import volumes continue to decrease, the problem is further exacerbated for ocean carriers and their spot rates on the trans-Pacific eastbound. 

Altogether, this scenario heading into the second half of 2023 has the potential to trigger a price war among ocean carriers as they strive to gain market share during this downcycle. Consequently, it may lead to heightened tensions within existing ocean carrier alliances, resulting in significant disruptions and reorganization within the industry. The disruption of the current alliance structure could erode any stabilizing influence they may have had on spot rates, leading to a decline in their ability to maintain GRIs effectively.

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United Road, a major carrier of new and used automobiles, has an unidentified new group of owners. 

The fact that the company is no longer fully owned by The Carlyle Group (NASDAQ: CG) was revealed earlier this month through actions taken by S&P Global Ratings (NYSE: SPGI) and Moody’s (NYSE: MCO). 

The two agencies changed the company’s debt rating to a type of default and withdrew their rating on a first-term lien that was restructured. In the restructuring, the outstanding debt was converted into equity in United Road. 

The new, unidentified United Road owners are the earlier holders of the term loan. In its statement, Moody’s said the restructuring covered $335 million in first lien debt that was converted to equity, resulting in the new ownership.  

“Carlyle is no longer the equity owner of United Road,” the company said in a statement released to FreightWaves. “We have new private owners who are enthusiastically supporting the company.” 

The identities of the private owners were not revealed. 

“The message is simple: we have zero outstanding long-term debt obligations, new private owners, a sizeable equity infusion, and a strong balance sheet,” the company said in the statement. “We continue to thrive as the industry leader.”

The Carlyle Group had acquired United Road in 2017. 

The restructuring resulted in less than full payment of the principal. Companies that perform restructurings in which less than 100% of a debt’s principal is repaid are generally hit with a form of default rating from the ratings agencies. 

In the case of S&P Global Ratings, it is referred to as “selective default.” That is the rating on URS Holdco, the legal name of United Road, while the rating on the term loan that was restructured was reduced to D, the lowest grade in the S&P Ratings schedule. The rating on the loan was then withdrawn.

At Moody’s, the company’s Caa1-PD probability of default was appended by a designation of /LD, for “limited default.” Like S&P, given that the term loan was restructured and converted to equity in United Road, the rating was then withdrawn. 

In its announcement of the action, S&P Global said United Road generated about 55% of its revenues in 2021 from moving new vehicles, with the balance moving used vehicles.

In a statement submitted to FreightWaves, United Road Chairman and CEO Mark Anderson said it supported the withdrawal of the ratings by the agencies. “The reason for this is the fact that United Road has zero debt!” 

Both agencies did note that United Road continues to have an asset-backed line of credit.  United Road’s statement that it has zero debt would suggest it has not drawn on that line. 

“We have the strongest balance sheet in our history and supportive, enthusiastic investors supercharging the purchase of new trucks to support our growth, and we will continue to invest in innovative and industry-leading technology solutions,” Anderson said. 

Anderson’s statement did not make reference to the new ownership structure.

Anderson was named chairman in April to go along with his CEO position. The announcement of that promotion was in a letter sent by the outgoing chair, Kathleen McCann, who had led the board since 2013. 

Although a downgrade in United Road’s outlook last fall suggested difficulties at the company, the announcement in 2020 of McCann joining a private equity firm called Nonantum said under her leadership, United Road had gone through “a period of rapid growth beginning in 2011, nearly tripling in size to become the largest provider of vehicle transportation services in North America in 2017.”

In October, S&P Global had affirmed a CCC+ rating for United Road even as it was reducing the company’s outlook to negative. A CCC+ rating put the company about halfway in the sweep of non-investment grade ratings. 

“We expect further delays in the U.S. domestic light vehicle production recovery to contribute to ongoing weak performance for URS,” the S&P Global report from October said. “URS’ financial performance is likely to remain weak over the next 12 months amid subdued new vehicle sales in the U.S.”

More articles by John Kingston

RXO outlook cut to negative but important debt rating not reduced

C.H. Robinson hangs on to S&P debt rating but outlook now negative

Pay protection aids Heartland’s driver retention, execs say

The post United Road under new ownership in swap of debt for equity appeared first on FreightWaves.

Ameritrans Express LLC, a contract delivery service for the U.S. Postal Service, has filed for Chapter 11 bankruptcy amid claims by some of its contractors that they have not been paid since March.

Ameritrans Express LLC, headquartered in Dumfries, Virginia, filed its petition in the U.S. Bankruptcy Court for the Eastern District of Virginia on Wednesday. The company was founded by Frederick Amankwaa in 2013. 

Members of a Facebook group, which was set up by Ameritrans contractors in March, claim they haven’t been paid since then. One member of the group alleges she hasn’t been able to access the money she contributed to her 401(k) account. 

As of publication, Ameritrans’ attorney, Jonathan B. Vivona, had not responded to FreightWaves’ request seeking comment.

According to Ameritrans’ website, the company has mail delivery contractors in more than 30 states and posted job openings earlier this week.  

Mail contractors in several states have filed claims with the U.S. Department of Labor.

“Wage and Hour Division records show an open investigation with the mentioned employer but it cannot discuss additional details until the investigation is concluded,” a DOL spokesperson told FreightWaves in an email on Friday. 

The filing lists Ameritrans’ assets as between $10 million and $50 million and its liabilities as between $1 million and $10 million. Ameritrans stated that it has up to 999 creditors and maintained that funds will be available for distribution to unsecured creditors once it pays administrative fees.

Ameritrans’ largest secured creditors include 13 factoring companies that are owed nearly $3.2 million. 

This is a developing story.

Do you have a news tip to share? Send me an email or message me @cage_writer on Twitter. Your name will not be used without your permission.

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Traffic fatalities appear to be on the rise among large trucks — at least compared to pre-pandemic numbers.

According to the Federal Motor Carrier Safety Administration’s Crash Statistics Summary, which reflects data from the Motor Carrier Management Information System, during calendar year 2019, the last year pre-pandemic, there were 5,082 fatalities as a result of crashes across the country involving large trucks. That number dropped slightly in 2020 to 4,988 then concerningly spiked in 2021 to 5,701 fatal crashes.

In 2022, the number dropped back to 5,230 fatalities. But this still means there were 148 more deaths, or a 3% increase, from 2019’s pre-pandemic numbers.

Brian Runnels, VP of safety at Reliance Partners, a trucking insurance brokerage providing safety consulting, joined Dooner during Monday’s episode of WHAT THE TRUCK?!? to discuss factors that could be contributing to the prevalence of crashes that result in fatalities.

“We’re seeing a lot more aggressive driving out on the road,” Runnels said. “That stemmed a few years when COVID was starting to wind down and people were starting to get more active. We saw a huge increase in vehicle traffic.”

According to a projection by the National Highway Traffic Safety Administration (NHTSA) that encompasses all traffic on the road, in 2022, fatalities among all vehicle categories ticked up in 23 states while they decreased in 27 states as well as the District of Columbia and Puerto Rico per 100 million vehicle miles traveled.

Traffic fatalities totaled 42,795 across the U.S. last year, just under the 42,939 total in 2021 but still well above the numbers from 2020 (38,824) and 2019 (36,355), according to NHTSA.

Runnels believes the operational shift in where freight volumes are centralized could prove to be a contributing factor to the elevated fatalities. The American Transportation Research Institute (ATRI) observed a trend over the past decade of operations shifting toward shorter trips, also noted in its 2022 report.

“There are more trucks now in congested areas operating more miles in those areas than ever before,” Runnels said. “You see distribution centers and manufacturing facilities going up all over the place around major cities. I think when you take that much equipment off of long haul-type freight and make it more regional, we’re seeing drivers having to make a change in operation. They’re hitting docks more to get unloaded and reloaded, so there’s more pressure for them to get miles. I think that’s all playing into the reason we’re seeing an uptick in crashes and fatalities.”

Runnels believes pay structure could be contributing to potentially unsafe driving behavior in some circumstances. Many truck drivers are paid on a per-mile basis, but recent reports show a drop in the average number of miles per truck. According to ATRI, the average number of miles per truck declined from 91,506 in 2019 to 79,808 in 2021 and sank again to 78,863 in 2022.

“It’s getting harder to get miles. When your pay is mileage-based, that could be a factor that’s causing drivers to push, companies to push, dispatchers to push, and trying to make revenue on those trucks. There is a certain amount of work that a truck has to do to pay for itself,” Runnels said.

The top things that carriers can do, Runnels advised, is train and guide drivers. Defensive driving techniques that are widely available to the trucking community can help prevent crashes, and ensuring drivers understand the safety technology on the truck is paramount.

Finally, Runnels said, drivers should always take a step back from a difficult situation on the road and do what’s right.

“Training and guiding the drivers is number one priority, defensive driving techniques and programs will work. It’s so important to utilize and train on the safety technologies that you have on your truck. If the driver doesn’t understand what they have and how to use it, it’s not effective,” he said.

To learn more about Reliance Partners, click here.

The post Why are truck crash fatalities elevated? appeared first on FreightWaves.

Over the past 20 and even 10 years, there has been a massive shift in the way the transportation industry has utilized technology both in and out of the truck.

For evidence, one doesn’t need to look too much further than CJ Karman’s story. Karman is the founder and CEO of Ezlogz, but he put in years behind the wheel during a time when technology was used very differently than in 2023.

“When I started in the industry as a driver in 2007, we didn’t use navigation systems like today. We had bills of lading that had directions on them, atlases and pay phones,” Karman said.

Observing that the logistics industry was 25 years behind in software development, Karman decided to do something about it. He traded his time in the truck to work in an office as a broker, and then he became an entrepreneur. 

In 2014, Karman began working on a side project that would launch as an app called Ezlogz two years later. Originally, Ezlogz wasn’t an ELD. It was a digital logbook that drivers could use instead of paper logs, equipped with a filing system for bills of lading and international fuel tax agreement reporting features.

As the industry shifted to require ELDs in all trucks, in 2019 Ezlogz, too, transitioned to full-fledged ELD.

Today, Ezlogz is something more. Providing both hardware and software as a solution, Ezlogz is an all-in-one fleet management system, ELD and asset-tracking solution. It also offers dashcams with real-time monitoring alerts of risky events and driver behaviors and even a load board that also allows companies to reliably and securely access volume.

“Things have drastically changed, and you have to stay on top of where things are headed by constantly adapting,” Karman said.

Now, Ezlogz has taken another step, becoming the first company to integrate EzChatAI machine learning into an ELD.

AI leading the next wave of innovation

Meet Stacy, your new co-pilot.

Stacy speaks every language, reminds you of your appointments, tells you the best routes as well as the weather, and can answer any one of your questions about hours of service, regulations and company policies. And — watch out — she can issue warnings when you break the rules. 

Stacy is the name of EzChatAI’s artificial intelligence solution. EzChatAI, also founded by Karman, has the potential to integrate with all ELDs, but Ezlogz is the first. Karman also said it could integrate with TMSs, opening the door for AI dispatching.

“Through the type of data coming in, the system will understand driver behavior and even emotions,” Karman said. “It takes in parameters like how the driver reacts, what time of the day and how the driver communicates with the system. The system will be able to learn the driver’s pattern of behavior.”

Stacy acts like a safety assistant and can offer different interactions based on the experience of the driver. These levels include:

• Basic: This is suitable for driver trainees who do not know about hours of service. The system helps drivers every step of the way and teaches based on data collected from the engine control module and dashcam. It provides recommendations, for example, where to stop for an upcoming rest break and explains why the driver needs to take the rest break.
• Intermediate: This level of interaction is suitable for an individual who understands hours of service and has a better grasp of how to use an ELD. The AI assistant offers recommendations, tips and troubleshooting assistance.
• Advanced: The advanced setting allows drivers to ask the system higher-level questions related to hours of service, safety compliance, pre- and post-trip inspections, and more.

As AI continues to advance each day, Karman sees it becoming increasingly relevant in logistics and transportation. He believes embracing it, just as it has adopted technology innovations in recent years, will help businesses continue to optimize and remain resilient amid the rapidly changing pace of technology. 

“I believe AI will be bigger than dot-com and the logistics industry will change drastically in the next 12 months,” Karman said. “People that are integrating with AI will be able to significantly save money and move ahead of others that are not looking at AI as a promising tool for the industry.”

To learn more about Ezlogz, click here. 

Explore the possibilities of AI integration with ELDs on EzChatAI’s website.

The post Next wave of ELD innovation is here — and it’s artificial intelligence appeared first on FreightWaves.

RXO has hung on to its BB+ rating from S&P Global, but the outlook on the company has been dropped down one level.

RXO, spun off from XPO (NYSE: XPO) last fall, was given a BB+ rating by S&P Global Ratings at the time the brokerage company became a separate entity. At the same time, RXO was also given a “positive” outlook by S&P, which suggested that credit and market conditions for the company were strong enough so that an increase in the rating was possible in the coming 12 months.

That move from BB+ to BBB- is one of the most significant upgrades that can occur to a debt rating at S&P Global, because it takes a company from the top level of the non-investment grade category to the lowest level of investment grade. But even the top level of non-investment grade carries the colloquial description of “junk.” The lowest level of investment grade does not.

The S&P definition of a “positive” outlook is that a rating may be increased, with the outlook going out two years for investment-grade companies and up to one year for speculative-grade companies. The stable outlook means a rating is not likely to change.

Outside of costs connected to the spinoff of RXO (NYSE: RXO) from XPO, there is nothing else in the S&P Ratings report on the company that suggests concern about its financial practices. Rather, the summary of the move from an outlook of “positive” to one of “stable” is completely connected to the state of the freight market. 

“We no longer expect RXO’s credit metrics will support an upgrade in 2023,” S&P Global said in its report, issued Wednesday. “RXO, like other truck brokers, faces a weaker freight transportation environment in 2023 following an extended period of strong pricing and demand.”

S&P also said RXO is suffering from excess trucking capacity, which has not been “meaningfully” reduced. “This dynamic has contributed to spot market pricing falling approximately 40% in recent weeks from its peak in early 2022.” 

But S&P does not just cite the status of the truckload market. Its last-mile delivery operations “face shifting consumer spending patterns, and its ocean and air freight forwarding segment is subject to weaker market conditions on key import routes.”

The “base scenario” that S&P Ratings is using in its review is that freight pricing will rise in 2024 “as some carriers exit the market.”

In the immediate term, that isn’t good news for brokers like RXO. “Typically, profitability for truck brokers is counter-cyclical,” S&P Ratings said. “Brokers generally purchase capacity on the spot market and bill customers under contracted rates on a portion of loads. Thus, margins tend to decline when spot market prices increase since brokers must purchase capacity above contracted prices.”

But even with those trends that would not be positive for RXO, S&P Ratings said its primary reason why it believes the company’s earnings before interest, taxes, depreciation and amortization will decline to 5% this year from 6.1% last year are costs associated with the XPO spinoff. EBITDA should jump back to a 6% to 7% range next year once those costs are completed.  

RXO’s first-quarter earnings were significantly stronger than peers such as C.H. Robinson (NASDAQ: CHRW), where the adjusted earnings per share was down more than 50% year on year, and Landstar (NASDAQ: LSTR), which is a less-than-perfect comparison to a more pure-play 3PL like RXO but also saw an EPS decline of more than 50%. Adjusted net income at RXO was down a little less than 40% and other measurements were seen as surprisingly strong as well. 

RXO and C.H. Robinson have both now suffered the same fate at the hands of S&P Global in recent weeks: a lowering of the outlook for the companies without a change in their debt ratings. Earlier this month, C.H. Robinson’s outlook was reduced to negative from stable but it held on to its BBB+ rating. That is three notches above the now-affirmed rating for RXO, but the C.H. Robinson debt rating is investment grade.

RXO’s first-quarter performance compared to other companies is implicitly acknowledged by S&P Ratings in its report. 

“We believe RXO will continue to outperform its peers and increase brokerage volumes,” it said. “Despite unfavorable market conditions in the first quarter, RXO reported a 6% volume increase in truck brokerage from the same period the previous year while maintaining a gross margin above its peers.”

A key reason for that outperformance, according to S&P, is that RXO “proprietary” technology “allows it to procure capacity more efficiently and improves the experience of its carriers and customers. We also believe this should support the company’s operating performance when freight conditions improve.”

S&P’s primary focus will always be on a company’s ability to finance its debt burden. The report said RXO’s credit metrics will improve next year, in part because of the reduction in costs connected to the spinoff. The funds from operations to debt ratio is expected to be about 40% next year, compared to the high 20% range this year. Debt to EBITDA will drop to the high 1x area from the low 2x range this year, S&P said.

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Less-than-truckload carrier Yellow Corp. sent a letter to President Biden on Thursday asking for help negotiating with the Teamsters. The letter said the company is “on the verge of closing its doors due to an ongoing, intractable labor dispute with the International Brotherhood of Teamsters (IBT).”

“Despite support from your Administration, these efforts have proven unsuccessful at getting both sides to the table to discuss a way forward,” the letter pleaded.

Yellow (NASDAQ: YELL) is trying to implement a second phase of operational changes it says are paramount to its survival. The plan includes consolidating its LTL operating companies, closing redundant terminals and redefining work rules for some drivers, among other items. The carrier was successful installing a first phase of changes in the West, however, a second phase covering 70% of its network has been shot down by the union.

Seemingly out of options, the company filed a $137 million breach of contract lawsuit against the IBT on Tuesday.

“As a result of union intransigence, Yellow’s business plan has been frozen,” the letter continued. “The company has lost market share and has been unable to secure additional lending for day-to-day business operations.”

Yellow has $1.5 billion in debt and lease financing obligations, $1.3 million of which comes due next year. Of that, $700 million came from the U.S. Treasury in the form of a controversial COVID-relief loan. In addition to collateral for the loan, the government received a 30% equity stake in Yellow, which the letter warns would be “wiped out” if the company goes under.  

However, a precipitous decline in YELL shares given its inability to reach a deal with Teamsters has made that equity worth less than $11 million, a far cry from the $729 million loan balance it has with the government (loan balance includes capitalized interest).

The letter said 30,000 jobs (22,000 Teamster jobs) are at risk and that its $5.2 billion in annual revenue supports another 57,000 jobs.

The two parties have reached a stalemate in recent weeks. 

Throughout the process, the union has maintained it has given enough. Since 2009, it estimates it has conceded billions in wages, benefits and pension concessions. Most recently, the union said it will honor its current collective-bargaining agreement, which expires March 31.

Yellow asserts the Teamsters don’t have the right to reject the change of operations and says it will be out of money by mid-July if its plan isn’t implemented. The company recently asked health and pension funds to defer contributions for the months of July and August.

“We continue to see less potential for another government bailout, given a recent congressional report saying the Treasury Department erred in giving a loan to YELL as part of a 2020 rescue package,” Deutsche Bank (NYSE: DB) analyst Amit Mehrotra told clients Friday morning.

Analysts have been sizing up the carrier’s failure and the fallout it would have on the industry. Mehrotra said other carrier’s “have the extra capacity to take on additional freight.” He thinks the event will raise LTL rates industrywide.

“Knowing of your strong commitment to union jobs, we are formally requesting your assistance in getting Yellow and the Teamsters to the table,” the letter concluded.

More FreightWaves articles by Todd Maiden

• Analysts contemplate a Yellow bankruptcy
• Yellow running out of options, sues union for $137M
• XPO finishes expansion project in Salt Lake City

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In the trucking industry, one of the most valuable resources is time.

There is a reason for the saying, “If the wheels ain’t turning, you ain’t earning.” Because of the steep operating costs for a single semi-truck, lost hours of productivity greatly impact margins over time.

One way that time is often utilized inefficiently, which is out of the control of a driver or carrier, is long detention times — or when trucks are waiting to be loaded or unloaded at shipping and delivery sites.

According to a Federal Motor Carrier Safety Administration study, drivers experienced excessive detention times beyond the two-hour industry-standard dwell time one of every 10 stops. Those detention times were, on average, 1.4 hours beyond the two-hour standard.

While carriers can charge accessory costs for excessive detention times, in some circumstances brokers or customers have stipulations that require carriers to charge detention fees within specific time frames, even within 24 hours or in real time, said Sean Puleo, director of corporate development at Artur Express.

Like many carriers, Artur Express, a Missouri-based full truckload carrier with over 850+ drivers and 3,500+ dry vans operating across the U.S., also occasionally experiences longer dwell times. But in addition to long wait times, until recently one of its challenges was managing the reimbursement process in the most efficient way possible.

Puleo described pursuing compensation for long dwell time as “labor intensive with a lot of human intervention.”

“We would have someone continuously watch reports that mirror data against our TMS to see if there is any eligible detention on any of our loads or shipments based upon the drivers’ check calls or times that we entered,” Puleo said.

This created a lot of missed opportunities to pursue compensation for detention time because instances of excessive wait times would slip through the cracks or were discovered days too late or already billed. This changed with a new feature in Ditat TMS, a system that helps carriers and brokers automate their processes on a user-friendly but powerful platform.

Ditat’s Detention Dashboard allowed Artur Express to bring its detention identification procedures into real time by removing the most time-consuming manual component. 

Ditat does this by comparing drivers’ in and out times, mostly based on their self-reported check call data, against their scheduled appointments. In doing so, it automatically creates detention IDs for instances of excessive wait times and then blocks those loads from being invoiced until those occurrences have been investigated and managed.

Since implementing the feature, Artur Express has been able to capture 22% more revenue related to detention accessorials thanks to Ditat’s real-time, automated system.

“The ability to capture detention revenue is critical to driver retention, too,” Puleo added. “The more detention time reimbursement we can accrue, the better our retention is going to be and the more it’s going to positively impact our bottom line.”

Through the Detention Plan capability, users are also able to help keep customers or brokers in the loop through custom alerts. This allows carriers to automatically notify recipients when detention is approaching, when check calls have surpassed the appointed time and charges are accruing, and when the detention process has been finalized.

Not only does this help save Artur Express time, but Puleo expects the system will help shippers or receivers identify areas of inefficiencies and help all drivers get in and out quicker at shipping and receiving sites. In the end, that benefits everyone.

To learn more about Ditat, click here.

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MIAMI — Companies that ship oversize or liquid products could be prevented from using air transport if by Oct. 31 they don’t adopt security measures to check for explosives. That’s when  a Transportation Security Administration exemption from 100% cargo screening expires. 

The U.S. two years ago implemented a scan-all requirement for international outbound shipments moving on freighter aircraft, raising the security bar to the same level in place for a decade for cargo carried on passenger aircraft. Airlines, logistics companies and other entities can use X-ray, explosives trace detection machines, canine detectors or physical search to comply. 

The TSA granted a temporary allowance for unique shipments that are difficult to screen, such as drums with chemicals, large machinery and jet engines. Shippers essentially can vouch on paperwork that the goods are secure. 

That allowance sunsets in four months and the TSA is urging shippers to quickly sign up for the Certified Cargo Screening Facility (CCSF) program, which allows non-airline companies that follow TSA-approved criteria to inspect cargo and tender it to the airlines following strict chain-of-custody requirements. The program was created to prevent backlogs at crowded airline warehouses by pushing more security checks upstream.

“We are encouraging industry participants to move into the CCSF program because what we don’t want, come Nov. 1, are problems in the supply chain,” said John Beckius, executive director of the TSA’s air cargo division, at an air cargo conference here in early June.

Manufacturers essentially will need to get facilities certified by the TSA so they can screen themselves themselves at locations where the products are built. The TSA’s proposal is similar to U.N.-recognized “known consignor” programs in many countries, which allow companies that ship goods to demonstrate they have secure facilities and common security protocols to prevent tampering in lieu of physical detection.

Another option is for businesses to use certified forwarders, ground handlers or independent security firms to do the screening, but some could reject unusual shipments because of the difficulty in screening them after they’ve been packed for transport. 

The TSA is appealing to trade associations and companies in the air logistics sector to spread the message about “impossible to screen” cargo because it doesn’t regulate shippers, as it does airlines and forwarders, and can’t reach them directly.

“We’re really trying to get this word out now because of the time that it takes to apply and get approved. And it’s not overnight. We’d like people to just give us three months to approve them,” Beckius told attendees at the Cargo Network Services event. “We really want to get them thinking about it earlier rather than later.” 

The TSA’s air cargo chief hailed the success of the third-party canine screening program, which allows air logistics stakeholders to hire private canine handlers to screen freight.

Sniffer dogs are popular because they are extremely good at detecting explosives and can efficiently check large pallets and products that can’t go through an X-ray machine, often at a lower cost.

When 100% screening expanded two years ago, there were about 200 K-9 teams in operation nationwide. Now there are almost 1,000 teams spread among 10 approved companies, Beckius said.

The TSA two years ago also gave manufacturers, fulfillment centers and other entities with strict security protocols the ability to deem their shipments secure and avoid cargo screening procedures, subject to periodic TSA audits and inspections. The decision was opposed by many freight forwarders, who argued it gave e-commerce retailers and other large companies an advantage.

But no companies signed up to participate because eligible companies perceived the rules as too onerous, Beckius said. The TSA plans to submit a revised proposal this summer, he added. 

Click here for more FreightWaves stories by Eric Kulisch.

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The post TSA security exemption for unwieldy air cargo sunsets Oct. 31 appeared first on FreightWaves.

There is no doubt that UPS Inc.’s labor costs will rise once the Teamsters union ratifies the next five-year contract, which at this writing is still being negotiated. And there is little doubt that UPS will do what it can to recoup what could be a significant increase in its expense tab. 

It already is doing so, according to Steven Bergan, president of GLS, a Western regional carrier that recently expanded to four East Coast and Midwest markets with individual partners. “UPS is out being equally aggressive about using their volume rebate programs to demand volumes and threaten customers with major rate increases despite shippers looking to diversify in the event of a UPS (NYSE: UPS) strike,” Bergan said. Parcel customers typically get rebates based on volume tenders; conversely, they can lose those rebates if they divert certain volume levels elsewhere.

“It’s a bit heavy-handed in my opinion that a shipper’s parcel vendor would have the guts to go in to a customer, threaten major rate increases if volume gets pulled away, even when that same parcel vendor may not show up next week due to a strike, and there’s zero the shipper can recover if and when that happens,” Bergan said. In addition, UPS is “using this positioning to set up for next year’s rate increases and volume commitment demands,” he said.

Taking up rates and other fees in the belief that the marketplace will absorb them is not a wise assumption, said Josh Dunham, co-founder and CEO of the Reveel Group, a consultancy.

“With the slowing economy and the rate increases shippers have sustained over the last few years, shippers are at a crossroads where they are looking to other avenues of saving money. We’ve never experienced a time where shippers have been more open to multisourcing from regional carriers and others,” he said.

One example is SurePost, a product that UPS operates in conjunction with the U.S. Postal Service in which UPS tenders low-weight, nonurgent parcels to the Postal Service for last-mile delivery. Under tentative agreements already reached, the size of UPS SurePost packages eligible for handoff to the Postal Service will be reduced. In addition, UPS agreed that 50% of all SurePost parcels will be redirected to UPS by the end of the next contract, up from 42% currently. Both agreements are likely to push more of those parcels on to UPS package cars.

However, Josh Taylor, senior director of professional services for consultancy Shipware LLC, said that insourcing a higher percentage of SurePost packages will hurt UPS’s SurePost profitability. “They are outsourcing those packages today to the USPS because it is cheaper and more efficient than having the Teamsters deliver them,” Taylor said.

SurePost is often more expensive (and slower) than comparable services at postal expeditors like DHL eCommerce, OSM Worldwide and others. Any extraordinary rate increase UPS tries to pass along will drive more shippers into the arms of their competitors, potentially increasing UPS’s internal costs not just for SurePost, but for all residential deliveries,” Taylor said.

“UPS has been unwilling to sacrifice margins under [CEO] Carol Tomé. She likes to make the point that price is determined by what the customer is willing to pay,” Taylor said. “We should expect UPS to return to the same playbook and attempt to raise SurePost rates to avoid any margin loss, but SurePost service is different than Air/Ground and increasing rates could easily spiral out of control.”

John Haber, chief strategy officer at Transportation Insight Holding Co., said that shippers are extremely cost-sensitive in the current market environment, “and if UPS becomes drastically more expensive than other options, then they will risk losing customers. There is still a lack of full-scale competition in the U.S. small parcel market, and some shippers may not have other options — UPS may be able to raise rates for these customers without impunity. However, I don’t see this across all customers.”

“What could be problematic,” Haber said, “is if other carriers follow suit with UPS and follow their lead on pricing increases. With the soft economy weighing on parcel providers and volume levels, the only way to achieve profitability goals is through either increasing revenue-per-piece yields or via cost-cutting measures.”

Branden Burt, director of parcel operations for TransImpact LLC, said he expects UPS to honor contracts as they are constructed. However, “I’d suspect UPS to pull revenue levers” such as raising delivery and fuel surcharges to existing customers, Burt said. “The revenue levers are more easily passed to the end consumers.”

Dean Maciuba, managing director, U.S. operations for Crossroads Parcel Consulting, listed four reasons why UPS will be constrained in its rate actions. First, demand has largely dried up due to the slowing economy. Second, rival FedEx Corp., (NYSE: FDX) already a lower-cost, largely nonunion carrier, is in the process of taking billions of dollars of costs out of its business. Thus, it can more profitably offer service at lower rates than UPS, making it harder for UPS to raise rates, Maciuba said. Third, the proliferation of smaller but lower-cost options like regional carriers.

Fourth, the continued growth of forward stocking micro-fulfillment distribution solutions will negatively impact parcel carrier volume moving forward. This will impair scale and negatively impact the cost of handling packages. “Historically, UPS has profitably managed and leveraged scale better than any other parcel carrier,” Maciuba said. “UPS may have to lower rates to hold on to the scale necessary to drive margin.”

“Given the demand being soft at present and likely to remain that way for rest of 2023, it will be hard to push higher rates and surcharges to cover the change in labor cost with the new contract,” said Satish Jindel, president of ShipMatrix Inc., a transportation consulting firm.

Instead, Jindel said he expects UPS to increase its penetration of small to midsize business accounts which generally provide a higher yield, make offers that make it attractive for small shippers to drop off packages at UPS locations and don’t require a pickup, and faster rollout of productivity-enhancing technology initiatives. Jindel also would like to see UPS build more density for residential deliveries by promoting one-day-a-week deliveries for multiple items rather than five items ordered on different days of the week to be delivered on five different days.

Given UPS’s history of offsetting bottom-line contract hits, some see little trouble in the company being able to afford wage increases and remain profitable. Amit Mehrotra, analyst at Deutsche Bank, said in a mid-May note that “we see little risk that prospective wage inflation will “derail the profitable growth story” at UPS, and that the company’s shares should outperform strongly if and when a work stoppage is averted, which Mehrotra expected will be the case.

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A new report is highlighting the contributions of seafarers and how these unsung heroes of the sea help boost gross domestic product. 

The study, “The key role of seafarers in national economies in a net-zero world,” was released this week by the Institute of the Americas at the University of California San Diego and it shows that seafarer jobs and their salaries pack an economic punch to a country’s economy. 

Look no further than the Philippines, which is the home of 30% of the world’s seafarer workforce, said Leonardo Beltran, former deputy secretary of energy of Mexico and a fellow at the Institute of the Americas. 

The country’s contributions to the world’s global trade cannot be understated.

The money going back into the Philippines economy accounted for 1.8% of the nation’s GDP in 2022, according to the report, which was commissioned by the International Chamber of Shipping. The report said this cash infusion would add an additional 0.5% of GDP per year to the U.K., U.S. or Philippine economies.

“[It] is a great example of how a country is taking proactive steps in identifying opportunity,” Beltran told American Shipper. “By investing in better data, they can develop resources and make decisions to collaborate in areas of skills training, construction and the development of supportive policies to contribute to the national economy.”

The report added, “This extensive presence is reflected in the composition of international vessel crews, where approximately one in every five crew members is Filipino, seafarers are highly sought after. They work as officers, engineers and ratings (seafarers without a certificate of competence), among other things, on a variety of vessel types. Remittances play a substantial role in the Philippine economy.”

The Russian Federation, Indonesia, China and India round out the top five of the global merchant fleet.

The maritime industry was thrust into the spotlight when consumers around the world were running out of toilet paper. This once taken-for-granted industry and the influence and impact it has on the supply chain is finally garnering the acknowledgement and understanding it deserves. Now seafarers are finally being acknowledged for the powerful impact they have on the global economy.

Expanding to the rest of the world, the maritime sector contributed $432 billion to the United States’ GDP, or around 2% of its GDP, last year. There’s no question seafarers and the maritime industry are critical to global economic growth. We have seen through the decades how trade when introduced to a country sparks the development and sustainment of the middle class. The more middle class we have, the bigger increase we see in the growth of trade. After all, trade takes people.

In anticipation of the growth in trade, Beltran said approximately 1,000 new vessels will be needed to move goods across the ocean highway. That means an additional 30,000 seafarers will be needed to work the vessels. Between the indirect and direct investments, which are estimated to be north of $32 billion, a total of 84,500 indirect jobs will be created, Beltran explained in the report. That’s a lot of money going into the global economy.

Unfortunately, the maritime sector faces similar challenges as other industries: finding talent and the training of talent. According to the report, the Malaysian economy is being damaged due to the lack of skilled workers and shipping companies hiring seafarers from neighboring places like Singapore.

“Thus, the Malaysian government must invest time and capital in human resource development,” the report states. “The development and expansion of the shipping industry depends on it. To produce more seafarers with a valid Certificate of Competency under the [Standards of Training, Certification and Watchkeeping for Seafarers], the government must create economic incentives to lure workers and promote training and education for the maritime sector while taking into consideration the current transition to the use of digital technologies.”

The next hurdle facing the pivotal seafaring community will be the maritime sector’s march toward zero emissions. While there is no near-term solution because of the lack of ocean carrier consensus on vessel power generation, once an agreement is made, this will require seafarers to be specialized and highly trained.

The role of the seafarer cannot be discounted. Now is the time for more investment to be made in strengthening the human capital.

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For many shippers, logistics providers and freight carriers, the request for proposal (RFP) process can be time consuming and stressful.

The constant work of rebidding freight and wrangling over price can cause major business disruptions, as well as build friction between shippers and carriers.

“The reason companies do RFPs is because they want to know they’re not getting screwed by the market,” Craig Fuller, FreightWaves’ founder and CEO, said at the Future of Supply Chain event in Cleveland on June 23. “The problem is that 40% of a carrier’s relationships with shippers are turned over simply because someone has underpriced him or someone has bid below them.”

To help shippers and carriers navigate the marketplace, Fuller said the FreightWaves SONAR platform has launched a solution called Index-Linked Contracts.

“One of the things we’ve been working on at FreightWaves is how do we help empower shippers and carriers to mitigate their exposure to the volatility of the freight market,” Fuller said. “Index-Linked Contracts is essentially using a third-party index to index your prices to the rates. As the market goes up, the shipper pays more, and as the market goes down, the carrier gives up a little bit more.”

Contracts linked to market indexes have been around in other industries for years, such as agriculture, energy and mining. But the trucking industry still mainly relies on RFPs to bid out freight lanes to transportation providers when capacity is needed.

Fuller said constantly having to rebid lanes is bad for both shippers and carriers.

“It creates havoc on the shippers, it creates havoc on the carriers, and it’s time we put a stop to it,” Fuller said. “It’s time we said enough is enough, that this bidding process that we all have built businesses on can be changed.”

The FreightWaves SONAR platform will serve as the basis for Index-Linked Contracts, which will float with the market and make sure that both shippers and carriers are getting a fair price. 

FreightWaves’ Index-Linked Contracts solution can be indexed to spot rates, as well as contract rates, with quarterly or monthly adjustments. 

Using Index-Linked Contracts, different rules can be set for different lanes, with a shipper aiming to award freight on a troublesome lane at the index plus 50 cents per mile, while a lane where capacity is more available could be set at the index plus 10 cents.

Fuller said Index-Linked Contracts can also benefit carriers by helping them retain more truck drivers.

“It’s also better for the drivers. At asset-based trucking companies, driver turnover is a major issue,” Fuller said. “One of the primary reasons that drivers turn over is that they aren’t getting home, and that they’re not getting home as often.”

Trucking companies plan their road network and where they hire and recruit drivers from based on the lanes they are servicing, Fuller said.

“If my network is constantly turning over, from constantly having to take freight from different locations, or being moved to different locations, it’s incredibly disruptive. The only reason that happens often is because somebody else undercut you in the RFP,” Fuller said. 

Zach Strickland, FreightWaves’ head of freight market intelligence, said using Index-Linked Contracts could also help companies operate more efficiently.

“The efficiencies gained in the process of not dealing with an RFP and all the bids, you can spend your time working on things that provide a little bit more return on investment, a little bit more value,” Strickland said. “It’s really a blank slate. Shippers and carriers just agree that we’re going to agree that as the market shifts and moves up or down, we’re just going to let our routing guide pricing also do the same.”

Watch: Tips for recruiting drivers in a tough economy.

Click for more FreightWaves articles by Noi Mahoney.

More articles by Noi Mahoney

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Demand for global supply chain intelligence continues to rise

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WASHINGTON — A federal regulator has declined a request to require automated vehicle (AV) developers and government agencies to submit test and safety data into an AV testing database, asserting that such a change to the current voluntary system would go beyond the program’s scope.

The Owner-Operator Independent Drivers Association sought the change through comments filed with the National Highway Traffic Safety Administration. OOIDA stated that while it supported NHTSA’s Automated Vehicle Transparency and Engagement for Safe Testing (AV TEST) Initiative, the voluntary structure of the program prevents it from providing the public “direct and easy access” to information on AV testing, development and safety.

“The reliance on voluntary safety reporting from AV manufacturers will not effectively build public trust, acceptance, and confidence in the testing and deployment of these vehicles and will make it difficult for the agency to properly modify safety regulations,” OOIDA President and CEO Todd Spencer told the agency.

In a notice scheduled to publish on Friday, NHTSA responded that the objective of the AV TEST Initiative is to provide the public with “a centralized database of high-level information about ADS testing activities and state and local laws, recommendations, and initiatives.

“It is, therefore, outside of the scope of the project to make any reporting mandatory or to expand the collection to include safety information or information that NHTSA would use to evaluate the safety of ADS [automated driving systems] operations.”

NHTSA’s response, however, “is a bit confusing,” said an OOIDA spokesman when asked to comment, pointing out that it is within the agency’s purview to require safety data from AV developers and manufacturers.

He cited NHTSA’s 2021 amended Standing General Order on ADS — requiring manufacturers and operators of ADS vehicles to report crashes to the agency — in which the agency stated that, “Given the rapid evolution of these technologies and testing of new technologies and features on publicly accessible roads, it is critical for NHTSA to exercise its robust oversight over potential safety defects in vehicles operating with ADS and Level 2 ADAS.”

NHTSA’s contention that including safety information is outside the scope of the AV TEST Initiative is also somewhat contrary to how the company described the program when the agency rolled it out in June 2020.

The initiative “will provide an online, public-facing platform for sharing automated driving systems testing activities and other safety-related information with the public,” NHTSA stated in its initial press release.

The agency noted at the time that nine companies and eight states had signed on to participate. That has since grown to 19 states and 38 nonstate participants. NHTSA informed the Office of Management and Budget in the notice scheduled for Friday that it anticipates expanding to include up to 35 state or local government participants and 40 ADS developer, vehicle manufacturer or operator participants per year.

The Alliance for Automotive Innovation, whose members include AV manufacturers and suppliers for the auto industry, pushed NHTSA to make better use of the data it collects from those respondents.

“If leveraged appropriately, the information collected as part of the AV TEST Initiative can play a key role in informing policy decisions to help advance the safe deployment of AVs,” the group stated in recent comments.

Related articles:

• Daimler, Navistar, Volvo ordered to report autonomous truck crashes
• FMCSA proposes new requirements for driverless trucks
• FMCSA, NHTSA set dates for major rulemakings

Click for more FreightWaves articles by John Gallagher.

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Fraud is a hot-button issue across the logistics industry, with various scams costing companies serious time and money every year. Some types of fraud, like double brokering and cargo theft, are often spotlighted. Less discussed types of fraud, like fuel fraud, are just as insidious — and just as prevalent.

Fuel fraud manifests in several ways, including fuel card abuse, fuel pump tampering and falsification of fuel consumption records. All of these scams take a staggering financial toll on both individual fleets and the industry as a whole, amounting to hundreds of millions of lost dollars annually.

“Carriers tell us they’re losing tens of thousands of dollars per month due to fuel fraud resulting from card-skimming incidents,” Spencer Barkoff, co-founder and president of Relay Payments, said. “These incidents create multiple headaches for operations teams. They have to help their driver fuel up when cards are shut off, get new cards issued and dispute fraudulent transactions.”

PURE Freight Lines was one of those affected carriers. In the past, the company has taken several hits from unauthorized transactions and the operational setbacks that accompany investigating those activities. The company’s reputation was also impacted, according to Milo Dubak, CEO of PURE Freight Lines. Frequent incidents of fraud left drivers without fuel cards while waiting to receive replacements, ultimately eroding their trust. 

PURE is working hard to stop these scams in their tracks through a comprehensive plan that includes multiple strategic partnerships. 

“We’ve invested in more robust security measures and technologies, such as the partnerships with Amous and Relay Payments, to guard against fuel card skimming and other fraudulent activities to restore trust with our drivers and protect our operations,” Dubak said. 

Amous is PURE’s new TMS provider. Relay and Amous recently teamed up to tackle fuel fraud head-on through a new integration.

Before partnering with Relay, Amous handled fraud through an integration for activating and deactivating fuel cards. The company realized that this approach was not a sufficient long-term solution. Mark Shevchuk, co-founder and CEO of Amous TMS, noted that the approach helped significantly reduce — but did not eliminate — fuel theft. 

Amous’ ultimate goal was to provide customers with peace of mind by ensuring zero incidents of fuel theft. That is where the company’s partnership with Relay comes into play. By bringing all players together, Amous, Relay and PURE were able to create an integration that wasn’t available on the market.

“Relay’s digital fuel payments represent a revolutionary technology in the logistics industry, addressing the root cause of fuel theft,” Shevchuk said. “This aligns perfectly with what Amous TMS was seeking — a comprehensive solution that goes beyond surface-level fixes to deliver an even more effective outcome for our valued clients.”

Partnering with Relay for digital fuel payments — and utilizing its integration through Amous — has completely eliminated fuel theft for PURE, saving the company an average of $10,000-$15,000 per month.

In addition to enhancing PURE’s security efforts, Dubak noted that utilizing Amous and Relay improves efficiency, transparency, trust and profitability, driving the business toward growth and success.

Amous offers a cloud-based enterprise TMS with over 120 integrations offering solutions to carriers, brokers/3PLs and shippers, creating an ecosystem hub for their clients. The direct API integration with Relay enables PURE to streamline its operations through real-time data exchanges. This allows PURE to monitor its fuel consumption live in the TMS and promptly identify and address any inefficiencies, thereby improving cost management and overall profitability.

Amous has future plans for cross-referencing Relay live transactions and ELD fuel consumption data in the TMS to provide multiple layers of security to further safeguard against fuel fraud.

Relay is accessible at more than 1,500 truck stops nationwide, providing fleets and drivers with plenty of options to fuel up safely. The company recently announced it is now accepted at over 800 Pilot Co. locations. This means that fleets like PURE have nationwide access to fuel up and pay through Relay.

This expanded relationship with Pilot also allows fleets, including PURE, to continue to benefit from the existing pre-negotiated discounts and direct bill arrangements they’ve long relied on.

The benefits of this new partnership for drivers also extend beyond making it easier to pay at the pump. Amous TMS Driver and the Relay mobile app provide a suite of additional services designed to support drivers on the road, improving their overall driving and working experience.

All three companies — Amous, PURE and Relay — are committed to a shared vision of revolutionizing the logistics industry through innovative technology and collaborative partnerships.

“As we navigate the intersection of the transportation world and advanced technology, I am optimistic that this partnership will unveil a host of innovative solutions to tackle the industry’s other big concerns such as double brokering, contributing to the evolution of the trucking world,” Dubak said.

The post Relay Payments, Amous TMS and PURE Freight Lines team up to stop fuel fraud appeared first on FreightWaves.

FreightWaves Classics is sponsored by Old Dominion Freight Line — Helping the World Keep Promises. Learn more here.

On Dec. 5, 1872, an eerie sight emerged on the Atlantic Ocean. The British brigantine Mary Celeste was discovered adrift, deserted by its crew, but undamaged and full of cargo. On this episode of Tracks Through Time, FreightWaves Deputy Editor Brielle Jaekel speaks with the author of “The Ghost of the Mary Celeste” to learn more about the mystery and some of the theories behind the crew’s disappearance.

FreightWaves Classics articles look at various aspects of the transportation industry’s history. Click here to subscribe to our newsletter!

Have a topic you want me to cover? Email me at bjaekel@freightwaves.com or follow me on Twitter.

The post What happened to the Mary Celeste crew? appeared first on FreightWaves.

Container lines are facing a triple whammy: Freight rates are weak — below breakeven in some trades — and show no signs of rising. New ships are flooding the market. And vessel leases that container lines booked at historically high rates during the boom have yet to expire. Some leases run through 2024 or 2025.

What levers can ocean carriers pull to stop the bleeding?

They do not seem to be able to raise freight rates. Demand is too low and carriers are not canceling enough sailings. They want the new ships being delivered (whether they’re owned or leased) because they benefit bottom lines via much higher fuel efficiency. Aristides Pittas, CEO of ship lessor Euroseas (NASDAQ: ESEA), said during the recent Marine Money Week conference that his company’s newbuildings “burn 40% less fuel oil than similar ships built 10 years ago.”

That leaves the long-term leases of older ships. Losses on these contracts can be mitigated.

Reports: Zim seeking early charter terminations

Israel-based Zim (NYSE: ZIM) is the poster child of this trilemma. It’s highly exposed to falling freight rates, particularly in the Asia-U.S. East Coast market. It has a hefty orderbook of newbuildings and those ships have already begun hitting the water. And it is simultaneously highly exposed to charter costs — more so than any other ocean carrier, with over 90% of its fleet chartered versus owned.

Zim is now seeking to reduce its legacy charter liabilities, according to multiple reports.

“Zim has sought the termination of several chartered ships,” said Linerlytica. Tradewinds, citing brokers, said the carrier “is looking to terminate or even to sublet some charters of traditional Panamax container ships.” Alphaliner wrote: “Rumor has it that Zim is making some tonnage available through sublets or earlier-than-expected redeliveries.”

Without naming the carrier or carriers involved, ship brokerage Braemar said that “surplus tonnage is now being marketed, with some vessels becoming available earlier than previous charter commitments would have projected.”  

FreightWaves made multiple requests for comment on these reports to Zim’s media and investor relations teams, which did not respond.

Freight rates falling back again

There was a brief period of optimism on spot freight rates in the second half of April and a perception that they had finally bottomed. Then rates started falling again.

Since the week ending May 4, the Drewry World Container Index (WCI) global spot composite has fallen 15%, to just $1,494 per forty-foot equivalent unit in the week ending Thursday. Since June 8, the WCI Shanghai-Los Angeles spot index has declined 21% to $1,581 per FEU. The WCI Shanghai-New York spot index has fallen 16% over the same period, to $2,508 per FEU.

The Freightos Baltic Daily Index (FBX) global spot composite declined 7% between June 6 and Thursday, to $1,288 per FEU.

The FBX China-West Coast assessment dropped 17% over the same period to $1,190 per FEU, while the FBX China-East Coast spot assessment fell 9%, to $2,226 per FEU.

The trend is likewise negative for contract rates, which are more important to liner revenues than spot rates. Xeneta’s global index measuring contract rates fell 9.4% in June versus May and is down 51.7% year to date. The XSI subindex for U.S. import contract rates fell 11% in June versus May.

“One is left wondering where it will all end,” said Xeneta CEO Patrik Berglund.

Jefferies slashes earnings outlook on Zim

“Liners have limited pricing power and spot rates remain very weak across most routes,” said Jefferies shipping analyst Omar Nokta in a report released Tuesday, in which he slashed his earnings outlook for Zim.

Nokta previously forecast that Zim would post a net loss of $183.7 million for this year and $87.3 million for next year. On Tuesday, his 2023-2024 loss expectations for Zim ballooned by 150%. He now projects a net loss for Zim of $353.7 million this year and $324.7 million next year. Furthermore, he introduced his outlook for 2025, forecasting a further net loss of $150.8 million for the shipping line.

Investors made massive returns on their Zim shares as the COVID-era consumer boom hit new heights, but timing was everything. The stock peaked in mid-March 2022. Since then, it has plunged 87%.

Zim’s shares sank to $11.78 per share at one point on Tuesday, just pennies above the all-time low reached on the first day of trading after the IPO in late January 2021.  

Like all larger ocean carriers, Zim is far from in distress and still has plenty of cash amassed during the boom: $3.5 billion as of the end of the first quarter, pro forma of the dividend payout in April.

However, it’s burning through that cushion. It would make sense to proactively limit losses from high-price legacy charters as freight rates remain below breakeven and Zim’s newbuidlings enter service. 

Nokta estimated that Zim’s current quarterly cash burn is $250 million, or $1 billion per year on an annualized basis. That is “obviously not ideal, but Zim has plenty of liquidity and runway to ride out the current extreme softness in the spot market,” he maintained.

Click for more articles by Greg Miller 

Related articles:

• Shipping faces fallout as China’s post-COVID rebound falls flat
• Container shipping divide: Cargo rates weaken, ship rents ‘robust’
• Shipping line Zim gets hammered by high spot-rate exposure
• Container shipping under pressure as peak season hopes dim
• Shipping boom hangover: When measuring markets gets tricky
• US imports up again in April as market mirrors pre-COVID ‘normal’
• COVID boom not over yet for ‘landlords’ of shipping lines
• Container shipping warning: Green shoots are ‘transitory illusion’
• As Asia-US shipping rates rise, so does skepticism on staying power
• Mixed signals: Container shipping downturn not following the script

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CLEVELAND — In a room full of battered transportation and logistics companies laboring under the continued drag of a historically weak freight market, it would have been easy to declare that the second half of 2023 will be better for carriers and brokers than the first half.

But that was not the message from Craig Fuller, founder and CEO of FreightWaves, appearing at the company’s Future of Supply Chain event. Fuller was interviewed by FreightWaves’ Zach Strickland.

An overall negative outlook came with one caveat: It’s tough to figure out what’s going on. “It’s harder to understand and draw any conclusions about the state of where the markets are headed than at any moment in time since FreightWaves began,” Fuller said. “The markets are as opaque as they’ve ever been.”

Fuller noted that based on the NTIL.USA data series in SONAR, which tracks spot freight rates net of fuel, the current market is right about where it was during the freight bear market of 2019. But the problem, he said, is that costs for things like labor and maintenance are probably about 30 cents per mile higher than in 2019. “On a cash flow basis, the carriers have lost 30 cents per mile in cash,” he said.

Combine that with the fact that the number of carriers is up about 25% since 2019, according to the Federal Motor Carrier Safety Administration.

“So in order to see a reset in the rate environment, you fundamentally have to have one of two things happen,” Fuller said. One would be a loss of capacity. The other would be “you need a surge in freight.”

Demand for goods in recent years was pumped up by federal stimulus tied to the pandemic, Fuller said. “But I have a hard time believing Congress will get anything passed to drive stimulus.” And given that the Federal Reserve policy is to tighten monetary conditions, the landscape for federally driven demand growth is lacking, Fuller said. 

Balancing the market will need a “churn [of] capacity before you see any level of stability,” Fuller said. But one silver lining is that there “is an argument to make that the market cannot go any lower.” Rates are low enough that “carriers won’t take freight here because they lose money and we may very well be near a bottom.” But Fuller added: “I’m not suggesting there’s going to be a sudden surge.”

Spot truckload rates as measured by NTIL.USA opened the year at $2.10 per mile. That sank to as low as $1.49 on May 12 but has since rebounded to $1.62. 

Fuller said a recent study by J.P. Morgan put the average breakeven cost per mile for truckload at a range of $1.56 to $1.90 per mile.

Capacity reductions through bankruptcies are not happening at a level that might be expected, Fuller said: “It just tells me that a lot of these guys who are hanging on probably really built up their balance sheets during the COVID economy, and it may be awhile before we see significant wholesale bankruptcies.”

But blaming the current market on oversupply ignores “the demand situation,” as Fuller called it. SONAR’s Outbound Tender Volume Index is largely flat from where it was at the start of the year. 

But that is data for the truckload business. Adding to the demand argument, Fuller said, is that the numbers published earlier this month by various LTL carriers on their volumes in May, some of them reporting year-on-year double-digit percentage declines, reflect the fact that demand is a problem for the market as well as the supply of carriers.

Capacity in LTL, given its high barriers to entry, doesn’t have the “boom-and-bust cycle” that is prevalent in truckload, Fuller said. “So this is telling me that our problems with the freight market are not strictly related to a problem of overcapacity but rather a problem with demand,” he added.

Looking for a second-half turnaround already is fighting the calendar. June tends to be a strong month, Fuller said, but there haven’t been significant signs of an upturn. “We’re already dipping into July,” he said. “July is actually a really difficult month.”

Some of the arguments in favor of a second-half surge are based on a historical view that freight markets run in a three-year boom-and-bust cycle, Fuller said. With the bust having started more than a year ago, it would be half over — 18 months — in the fall. “But we’re in a different monetary regime,” he said of higher interest rates. The most recent cycle, from the bust of 2019 to the strong pandemic market, “was based on very low interest rates. We are in a different economy now.”

The hourlong fireside chat touched on several other observations about the freight market. 

• A restocking of inventories as a boost to the freight market is unlikely. “If you’re a retailer or a wholesaler and you have access to capacity and you have access to product, you don’t feel a need to have inventory on hand because it’s available,” Fuller said. Additionally, “everyone is worried about their cash positions.” That means that capex expenditures will be trimmed and “that cautious nature is going to start to play out.”
• Shippers are very much in the driver’s seat. Carriers will “want almost every load they can get their hands on,” Fuller said, echoing statements by Heartland Express CEO Mike Gerdin (NASDAQ: HTLD) at an investment conference in New York earlier this month. With that stance in place, shippers “will have an enormous amount of power to drive down rates, and I don’t see that changing because it would take an increase in demand or a drop in capacity.”
• The difference in contract and spot rates, per SONAR data, is at historic levels. But reiterating his points that the gap should return to more historic ratios, which means either a drop in contract rates or an increase in spot rates, Fuller said the former was more likely. Many current contract rates were negotiated when the market was higher, “and as these older rates burn off, and shippers are able to secure capacity, then we will see a continued decrease of contract rates.” But contract rates are “just stubbornly slow coming down in” while spot rates are reacting quickly to market conditions, so the reversion to norm might not be rapid. 

• With the Outbound Tender Reject Index in SONAR below 4% consistently since mid-January, the question of what number signals a rebound or at least some stability came up. Both Fuller and Strickland agreed that a recovery couldn’t be seen on the horizon until the OTRI reached and stuck around 6%. 

More articles by John Kingston

State of Freight for March: Bullish signs amid mostly bearish news

Five takeaways: Fuller and Strickland review state of the freight market

Port of Cleveland attempts to punch above its weight

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As technology evolves and integrations become more readily available, Shippers and 3PLs tend to expect their TMS and ERP solutions to be one-stop shops for all things supply chain management. By utilizing a centralized location to manage their operations, these companies are able to streamline decision making and reduce inaccuracies across their businesses. 

In order to take advantage of the variety of applications and solutions they need, these companies often rely on complicated tech stacks that require API connections to efficiently receive and transmit data. project44 understands this, and has launched two new APIs – Multimodal Rating and Booking – to automate the pre-shipment process of rating and booking shipments.

These APIs offer users a variety of efficiencies, including streamlined rate requests, upstream exception management and an expanded network of carriers

“Whether shippers initiate shipments via their TMS or project44’s Movement platform, the APIs enable them to connect with multiple carriers through a single API integration,” according to a recent p44 blog post. “This unified approach simplifies the rating and booking processes for shippers and 3PLs, enhancing their operational efficiency and improving overall supply chain visibility.”

project44’s Multimodal Rating and Booking APIs are designed to revolutionize the way shippers and 3PLs manage rate requests and share bookings. With these new tools, users can eliminate time-consuming manual labor from the procurement process while simultaneously removing the potential for discrepancies across systems.

These APIs give companies instant access to both spot and contract rates from carrier’s within the p44 network. Users can then send bookings to assigned carriers seamlessly. This level of connectivity was largely regarded as a far-off dream just a few years ago, and it is now poised to change how procurement works across the industry.

“Multimodal Rating and Booking APIs from project44 deliver interoperability between your system of record and the carriers you work with,” according to p44.

By leveraging this API, businesses can:

• Reduce time spent on procurement workflows
  
• Standardize the process of sending bookings to carriers via API
  
• Benchmark contract rates against current spot conditions
  
• Speed up time to value with a one-to-many API integration
  
• Seamlessly transition from the booking phase to shipment tracking

Project44’s Multimodal Rating and Booking APIs currently support full truckload rating and booking, less-than truckload rating and booking and ocean booking. Air rating and booking will be supported in the near future. 

Companies only utilizing the booking API – like those in the ocean space – will be able to post booking requests directly from their systems to be distributed to their selected carriers.

These new API offers from p44 represent the next step in supply chain connectivity, paving the way to a more transparent and collaborative future.

“With streamlined procurement processes, automation, and enhanced visibility, project44 empowers shippers and LSPs to optimize their supply chains, eliminate discrepancies across systems and drive operational efficiency,” according to a recent p44 blog post. 

Click here to learn more about project44’s new Multimodal Rating and Booking APIs.

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Automation, artificial intelligence and machine learning are all hot topics across the logistics industry. Companies dream of running seamless operations, and new technologies often promise to fulfill that dream.

As with all good things, however, sometimes less is more.

“Artificial intelligence is a huge buzzword. At the core of it, there is nothing artificial about our intelligence,” Optym Product Lead Danny Zeenberg said. “What we are really trying to do is make computer-assisted decisions. We’re not trying to tell people what to do.”

Zeenberg emphasized the differences between Optym’s AI-enabled transportation solutions and trending AI tools like ChatGPT. Attention-grabbing technologies like ChatGPT have a significant – and common – drawback: not providing accurate and verifiable information. 

Optym’s solutions, including LoadAI for truckload, sidestep this issue by creating a balance between human input and artificial intelligence, as opposed to going all-in on the latter.

“The way I look at it, it is a harmonization of man and machine,” Optym Chief Strategy Officer Chris Torrence said. “We never want to have this fallacy that the human ability to understand the heavy amount of nuance in this industry is going away.”

While humans are well-equipped to understand the ins and outs of the physical world, machines are better designed to handle complex mathematical problems. Optym’s goal is to utilize both humans and machines to their fullest potential by automating the often tedious tasks that can be handled without emotional or social intelligence. 

LoadAI, for example, creates a pathway for automated dispatching, essentially optimizing driver assignments based on four different data points: hours of service, revenue per mile, driver preferences and weekly targets. 

The Load AI solution is able to instantaneously analyze several different pieces of data to reveal the best driver matches and create more efficient outcomes. Computers are able to do this with a level of speed and accuracy that humans cannot, thereby creating an avenue for better asset utilization and improved profitability.

By using AI to simplify driver assignments, Optym has essentially given carriers the ability to maximize load coverage and improve driver satisfaction. The tool does not, however, aim to replace human dispatchers. 

There are certain nuances that machines cannot understand, like the cascading impacts of a flat tire or driver emergency. People remain invaluable in solving the unanticipated problems that arise in the course of everyday operations. 

“You will never build all the possible scenarios in trucking into these solutions,” Zeenberg said. We approach this from the human-centric side of assisted decision making instead of complete automation and lack of control.”

Click here to learn more about Optym.  

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This week on Taking The Hire Road, Jeremy Reymer, founder and CEO of DriverReach, is joined by Ron Yazzetti, VP of U.S. new business sales and partnerships at Seiza (formerly Work4Labs).

Yazzetti is very familiar with the world of HR. During his work at multiple job boards over the years, he noticed a recurring trend: the demand for truck drivers. 

Around seven years ago, he took it upon himself to learn about the trucking industry, and since then, his immersion in the transportation industry has only deepened. Now in his role at Seiza, a recruitment marketing technology company, he predominantly works with transportation businesses.

Seiza helps companies with one of their biggest challenges: reaching drivers. It does this largely through marketing and advertising but also provides expertise and insight into trends on social media, which is where its audience lives online. During his career, Yazzetti has witnessed the rise of social media.

“What we’re trying to do is leverage those channels to reach audiences of known truck drivers and help them reach qualified applicants they couldn’t reach on their own,” Yazzetti said.

Successful driver recruitment and retention, which are consistently significant concerns for carriers, require understanding the needs of drivers. Seiza surveys drivers yearly to understand the top issues they face. Yazzetti said one of his biggest takeaways from 2023’s Annual Driver Survey Report is the gap between employers and drivers.

“There’s a disconnect between what I think employers think they’re saying to drivers versus what drivers are seeing and feeling,” Yazzetti said. 

The survey uncovered more about the mindset of drivers and what they value. It found pay and home time are predictably important, but so is how much drivers feel like they are part of the organization and not just a number.

Even people not necessarily happy with the compensation might stick around if they felt they were being listened to, Yazzetti said. Listening to drivers costs a company nothing.

Speaking of being heard, Yazzetti challenged listeners to survey their own workforce to see what they want in order to attract new employees. 

“That information and insight are invaluable. They’ll be able to take that information and figure out the best way to advertise,” Yazzetti said.

Although some companies are concerned about what is posted or shared about them online, this feedback serves as an important tool about where the company stands in the public opinion of drivers and how it measures up in regard to pay and benefits.

When it comes to hiring with retention in mind, Yazzetti advised that being truthful and upfront about pay is critical, but companies can present compensation in different ways as long as it’s honest, like by providing averages and ranges. He also said compensation in the form of cents per mile and sign-on bonuses don’t perform well on social media.

Staying on top of drivers’ preferred methods of communication is also important, as it’s constantly changing. Yazetti said in last year’s survey, email messaging was a driver’s most preferred method, whereas this year it was least preferred. SMS is also rising in popularity.

To learn more about Seiza, click here. 

More from Taking The Hire Road:

Redefining the value of trucking’s newcomers

WIT’s barrier-breaking mission continues under new leadership

You’re only as good as your next-level managers — Taking The Hire Road

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Yellow stares down the precipice

Negotiations between the Teamsters union and Yellow Corp. remain ongoing, with the fate of the nation’s third-largest LTL carrier hanging in the balance. Yellow is facing stiff resistance from the Teamsters over proposed operational changes that would consolidate operations between purchased regional carriers New Penn and Holland and integrate them into Yellow’s nationwide network. 

Regarding the impact to the union, FreightWaves’ Todd Maiden wrote: “The union has been adamant that the latest proposal would require too many utility positions, which require drivers to work freight on the docks at various locations. It says its member employees at Yellow have given billions in the form of wage, benefits and pension concessions in the past and that it will not bail out the company again. It plans to honor the current contract in place, which expires next year.”

The situation escalated further on Tuesday when Yellow filed a $137 million lawsuit against the Teamsters alleging that the union is blocking changes the LTL carrier is contractually allowed to implement. If a deal is not reached, the company noted it could run out of cash by the end of July. 

ATRI operating costs for trucking reaches all-time high

Recent data released by the American Transportation Research Institute (ATRI) examining the operational costs of trucking reached above $2 a mile for the first time, with the estimated cost of $2.251 per mile in 2022. Most major categories saw increases compared to previous years including payments for trucks and trailers, insurance, driver wages, tires, repairs and maintenance. The only two categories that saw decreases were tolls and permits. 

Costs were not unified across all modes. Tyson Fisher of Land Line wrote: “Broken down by sector, the average cost of operations for truckload is $2.15. Comparatively, costs for less-than-truckload is $2.34, whereas specialized freight costs $2.44 per mile.” Fisher added that fleet size and access to fuel buying programs had a notable impact, writing, “Fleet size matters. Small carriers (100 or fewer power units) have an average cost of $2.30 per mile. Meanwhile, the cost for large carriers is lower at $2.223. The most significant difference between the two is the cost of fuel. Small fleets pay on average 72.3 cents per mile while large fleets pay only 61.2 cents per mile.”

Market update: ACT Research: May used Class 8 sales down, prices 31% lower y/y

ACT Research on Tuesday released its latest used Class 8 sales data for May that saw used truck prices decline 31% year over year while used truck inventory levels continue to rise. Connor Wolf wrote the average retail price for a used Class 8 fell 30.9% from $99,054 in May 2022 to $68,411 as of May 2023, while prices fell 3.4% month over month compared to $70,811 in April.

New Class 8s remain elusive as OEM order books remain at capacity while larger fleets continue to trade up for newer equipment. Charles Bowles, director of strategic initiatives for Commercial Truck Trader, told Transport Topics: “We’re starting to see some growth in the number of used units listed on the site, and the preponderance of units on the sites for heavy-duty Class 8 are used. Very few are new because, as you know, they’re sold before they even hit dealer lots now.”

For smaller fleets and owner-operators, a slightly less used truck will suffice until a newer one can be ordered. Trey Golden, VP of used truck sales at Rush Enterprises, told Transport Topics: “You got trade-ins or just people getting rid of their older trucks as they’re getting their new truck. But the other part of it is, in the supply chain-constraint world, we were selling a lot of our used trucks to the people that would traditionally be new truck buyers.”

FreightWaves SONAR spotlight: DOE/EIA diesel prices fall despite geopolitical events

Summary: The DOE/EIA average price for diesel fuel at the pump nationwide fell 1.4 cents per gallon to $3.801 as recent Russian geopolitical turmoil caused a muted boost to oil futures markets. The Monday reading is the 19th time in the last 21 weeks that diesel prices declined. FreightWaves’ John Kingston wrote that some of the price declines can be attributed to gains in Russian refinery output, with a Bloomberg report stating Russian refineries processed 5.6 million barrels a day of crude and crude throughput reached its highest levels in 10 weeks. 

The increases in output may be temporary as Kingston wrote: “The Bloomberg report also said Russia is considering reducing subsidies it pays out to its refining sector, as spending is refocused on the war in Ukraine. Facing the loss of those subsidies, the Bloomberg report said, some refineries are cranking up operating rates as high as they can now as they face the prospect of reduced subsidies, possibly as early as September.”

On a FreightWaves Drive Time SiriusXM radio interview with Kingston, a caller asked why crude prices continue to outperform diesel, with gasoline prices at the pump showing greater savings. Kingston said that IMO 2020, which implemented a rule limiting sulfur emissions in maritime fuel sources, created a situation in which ultra low sulfur diesel (ULSD), used in commercial diesel fuel, is now competing for crude refining space with very low sulfur fuel oil (VLSFO). This competition for barrel space is one contributor to the persistently higher diesel prices compared to years past.

The Routing Guide: Links from around the web

Mexico-based mega carrier acquires US logistics firm for $10M (FreightWaves)

Investors continue to pump funding into FreightTech (FreightWaves)

Teamsters demand UPS present last, best, final offer by Friday (FreightWaves)

May US trucking gains a blip – no indicator of a clearer road ahead (The Loadstar)

Trucking, Transportation Sector Sees Substantial Number of Women in Leadership Roles: Study (Supply & Demand Chain Executive)

Yellow is a zombie company — it’s time to let it go (FreightWaves)

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At a time when the trucking industry faces unprecedented challenges, fleet owners find themselves grappling with a scarcity of available loads like never before. 

However, amid this shifting landscape, there is a beacon of hope for trucking companies seeking to bolster their revenue and regain their competitive edge. By embracing and implementing cutting-edge technologies, these companies can unlock a multitude of benefits that extend beyond mere survival.

This is why Mansfield, Texas-based BCB Transport announced it has partnered with artificial decision intelligence provider Optimal Dynamics to leverage its technology to automate back-office tasks including load acceptance and dispatching. 

Once Optimal Dynamics technology was fully implemented within the company, BCB Transport saw a 19.6% increase in revenue per truck, according to a study on the partnership.

“This is an astounding story of a customer surpassing operational targets amid a severe freight recession. Such quantifiable impacts are unprecedented in trucking. BCB’s commitment to transformation, combined with both of our teams’ extraordinary capabilities, a robust organizational process and a truly differentiated technology enabled this remarkable transformation,” said Daniel Powell, Optimal Dynamics’ chief executive officer.

Change management is key

Rick Larkin, BCB Transport’s chief information officer, has been with the company for more than a decade and in current market conditions, with the available staff on hand, executing everyday decisions while continuing to scale the company had become difficult.

“We move 150 loads per day and dispatch 130 drivers. … To hit the goals we wanted to achieve, manually executing load planning and dispatching decisions was proving to be an uphill battle,” he said in a report on the partnership.

While Optimal Dynamics believed it could improve operations for Larkin, the CIO was hesitant and anxious about the change management.

Powell told FreightWaves that this exact problem is where FreightTech wins or loses. 

Implementing AI-driven decision-making into a company’s everyday operations can and should be a difficult adjustment yet one that proves itself in the end. This is why Powell has found, and learned through the work with BCB, that working very closely with your customer to customize the technology and prove the technology’s value can lead to a positive change management experience, and more notably, a return on investment.

“After we worked through some iterations with the [Optimal Dynamics] team we started to realize what a vastly more efficient system it could be,” said Larkin. “After our team built trust in the decisions, our dispatchers are planning 60% more freight in the same amount of time, while even more importantly exceeding our operational efficiency goals.”

After implementing Optimal Dynamics Plan technology — CORE.ai — the BCB team not only saw the gain in revenue per truck but increased mileage per truck by 13% and saw an 83% reduction in driver turnover.

To a greater extent, using the new solution, BCB was able to uncover a chance to eliminate 16% of its tractors while maintaining operational efficiency and revenue gained.

While Larkin was “seriously impressed” with what Optimal Dynamics had helped him uncover, the trucking company is looking forward to implementing the decision software in its bidding operations next.

The Optimal Dynamics team told FreightWaves they learned from the experience as well.

“The No. 1 focus for us is how do you actually implement these technologies from a change management perspective to drive that adoption? The tech is there, the tech is ready and it’s in their systems ready to go. Now let’s work together through these change management issues so that you are really leaning into the change and getting the benefits out of it,” said Scott Kenerly, Optimal Dynamics’ chief operating officer and chief financial officer.

Watch now: FW @ HOME: Optimal Dynamics Demo

Read more

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The post BCB Transport gains revenue per truck through Optimal Dynamics partnership appeared first on FreightWaves.

Container flow in May decreased at Port Houston, while New Orleans got a boost from plastic resins and Corpus Christi, Texas, saw increases in crude oil and petroleum exports.

Port Houston posts mixed results for May

Container volumes at Port Houston softened for the third consecutive month.

In May, the port handled 300,482 twenty-foot equivalent units, a 10% year-over-year (y/y) decrease compared to 2022.

Total import tonnage was 2.6 million tons in May, a 6% y/y decrease. Total export tonnage was 2.3 million tons, a 5% y/y increase. 

Imports of steel decreased 54% y/y in May to 295,296 tons. Imports of general cargo increased 52% to 932,146 tons.

Loaded imports declined 12% y/y in May to 139,745 TEUs, while loaded exports increased 3% y/y to 109,220 TEUs.

During May, ship calls increased 1% y/y to 713 vessels, while barges calling at the port fell 37% to 274.

Despite the dip in import volumes, port officials said they expect stronger export flows going forward due to continued global demand for resins. 

Union Pacific Railroad recently began intermodal container services at Port Houston, with on-dock rail service kicking off on June 1 to markets in Denver, Salt Lake City, Oakland, Los Angeles and El Paso, Texas.

On June 2, BNSF Railway began freight rail service from Port Houston to Dallas-Fort Worth and Denver.

“The addition of rail service offers an exciting intermodal option to our customers,” Roger Guenther, the port’s executive director, said in a news release. “These rail options help ensure efficient movement of goods and open up new markets.”

Port of New Orleans sees increase in containers, drop in breakbulk cargo

The Port of New Orleans saw its container volume increase 2% y/y in May to 36,315 TEUs. 

The port’s top containerized cargo for the month included plastic resins, chemicals and coffee, according to officials. 

The port recorded a 68% y/y decrease in breakbulk cargo in May to 84,161 tons.

Bagged goods and steel were the top breakbulk goods moving through the port last month. During the same period last year, the port’s monthly breakbulk volumes got a boost from large shipments of steel and plywood.

The port handled 10,816 Class I rail car switches in May, a 7% y/y increase. The port handles switching operations for six Class I railroads, including BNSF Railway, CN, CSX, CPKC, Norfolk Southern and Union Pacific.

Port of Corpus Christi records 9% increase in total cargo tonnage

The Port of Corpus Christi saw a 9% y/y increase in total cargo to 16.4 million tons in May, led by exports of crude oil and petroleum.

The port handled 10.7 million total tons of crude oil during the month, a 23% y/y increase compared to last year. Exports of crude oil for May topped 9.9 million tons, a 24% y/y increase.

Shipments of petroleum totaled 5 million tons during May, a 6% y/y decline. Exports of petroleum fell 9% y/y to 3.9 million tons for the month, while imports increased 10% y/y to 1.1 million tons.

Dry bulk cargo decreased 32% y/y to 456,637 tons in May, while shipments of liquid chemicals declined 1% y/y to 241,709 tons.

The port reported bulk grain export shipments of 66,692 tons but did not record any imports of bulk grain.

Corpus Christi handled 192 ships in May, a 3% y/y decline, while barge calls increased 17% y/y to 510.

Watch: National Truckload Index NTI climbs back up to $2.24.

Click for more FreightWaves articles by Noi Mahoney.

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The battle over the constitutionality of California’s Prop 22 lives on, with the state’s Supreme Court granting review of mixed lower and appellate court rulings on the issue of exempting gig workers from independent contractor law AB5.

The Supreme Court on Wednesday said it would hear the appeal of the case, which was brought by a group of gig worker defendants. A driver named Hector Castellanos is the lead plaintiff. The Service Employees International Union California State Council is also a plaintiff.

The defendants are the state of California and the Uber/Lyft/DoorDash-backed group that got Prop 22 on the ballot, Protect App-Based Drivers and Services. 

At the core of the legal battle is the Prop 22 referendum approved by California voters on Election Day 2020. It protects gig drivers such as those for Uber, Lyft and DoorDash from AB5.

But in August 2021, Judge Frank Roesch of the Superior Court of Alameda County declared Prop 22 unconstitutional. He found that its provisions on the state’s workers’ compensation system were illegal, as were the referendum’s provisions regarding the methods by which the legislature could amend Prop 22 and the question of whether Prop 22 met the test of being about a “single subject,” which is a requirement under California law. 

While the March decision by the Court of Appeals for the 1st Appellate District overturned Roesch’s decision, it did so with an ambiguity that opened the door to an appeal with the state’s highest court, which now has been granted. 

Roesch’s decision was stayed so that AB5 has not been implemented against gig drivers in California.

The ambiguity in the appellate court’s decision is that it overturned the lower court ruling on workers’ compensation but supported the Roesch decision on the amendment process and the question of whether Prop 22 dealt with a single subject.

California is a defendant in the case because it is required to represent the voters who cast ballots in 2020, which puts the state in the position of supporting limits on the scope of AB5. The case ironically forces California to defend limits on AB5’s reach where gig workers are concerned even as the state seeks in two other cases to ensure that the law’s provisions continue to apply to the trucking sector. Those cases are the the one brought by the California Trucking Association (CTA) and the other by Uber and Postmates.

AB5 had been blocked by the CTA case but almost a year ago, on June 30, the U.S. Supreme Court denied review of an appellate court decision that had opened the door to trucking falling under AB5. The independent contractor law continues to be the prevailing regulation in the state’s trucking sector.

AB5 has at its core the ABC test for determining whether a worker is an employee or an independent contractor. The B part of the ABC test holds that a worker can be considered an independent contractor if he or she “performs work that is outside the usual course of the hiring entity’s business.” That can be a difficult burden for a trucking company hiring drivers who are independent and not employees, or a passenger transportation company like Uber hiring gig drivers.

More articles by John Kingston

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Port of Cleveland attempts to punch above its weight

Labor Department’s independent contractor rule not likely anytime soon

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Yellow’s days are numbered. 

As the largest less-than-truckload (LTL) unionized carrier and the second-largest trucking company affiliated with the International Brotherhood of Teamsters (UPS is the largest), Yellow has suffered from financial mediocrity that has led to the inevitable outcome. 

The Teamsters leadership is largely responsible for its own demise, forcing an operational structure that has made it impossible for Yellow to compete against higher-quality operators delivering more consistent and reliable service offerings. A lack of flexibility in staffing levels and operations that would allow unionized carriers to respond to freight market volatility means these carriers are always at a disadvantage to their non-unionized competitors.  

While Yellow’s current executive management is highly competent, the task of turning the largest unionized LTL carrier from the die that was cast decades ago has been a nearly impossible task. Yellow has faced bankruptcy several times over the past two decades because it was saddled with too much debt and operational complexities after an acquisition binge that was instigated in the early 2000s. 

Bill Zollars, the CEO of Yellow from 1999 to 2011, dreamed of creating a unionized LTL super-carrier when he consolidated Yellow with Roadway and USF. These carriers were among the few trucking companies left from the pre-deregulation era, when the Teamsters were the most powerful force in the industry. During the period when trucking was regulated by the federal Interstate Commerce Commission, or ICC, unions prospered along with the trucking companies, in large part because pricing and competition were limited by the ICC. 

Trucking unions and deregulation are not compatible

Transportation and logistics have been instrumental to the economic prosperity of the United States since 1980.

From 1935 until 1980, all interstate transportation service lanes — and the prices trucking companies could charge on those lanes — were regulated by the ICC. If a carrier wanted to change a rate or add a new service lane, it had to seek ICC approval first. This was a slow and cumbersome process that severely impacted economic growth. Prior to deregulation, trucking companies held the economy back with lousy service, lack of flexibility, and high rates. 

Owning a motor carrier under the ICC regime meant high profits and protection from competition. In that era, unions made sense because profit margins for owners were fat, and due to the fixed nature of rates and service, operational flexibility wasn’t required. 

During the Carter administration, the airline, railroad and trucking industries were all deregulated, removing governmental control over the number of carriers, their routes, pricing and other services. 

Over the last 43 years, the trucking industry has transitioned from an antiquated system to a landscape in which any carrier can service any lane or region it wishes to. Rates are no longer under bureaucratic control; instead, market participants — namely shippers, carriers and brokers — call the shots. 

Customers largely benefited with far lower transportation costs and an infinite number of service options. The just-in-time transportation networks that drive much of our modern economy wouldn’t have been possible without transportation deregulation. 

Thousands of new companies entered the trucking industry in the deregulated market, and most of the new trucking companies did not (and do not) have the burden of a union workforce. Non-union trucking companies thrived in the deregulated market, introducing higher quality service offerings, flexibility, and far lower pricing for shippers. 

By contrast, many of the unionized carriers were saddled with a lack of flexibility, high labor costs and abysmal service offerings. This put them at a significant competitive disadvantage. Most failed. 

In 2002, unionized carrier Consolidated Freightways (CF) filed for bankruptcy and shut down. It was the largest trucking bankruptcy in history, costing 15,500 employees their jobs and shuttering a $2 billion LTL operator. 

Yellow becomes a unionized conglomerate through consolidation 

After taking the helm as CEO of Yellow, Zollars believed that the best way for the unionized carriers to compete against their non-union competitors was through economies of scale. Riding the momentum of volume gains from freight that was previously handled by CF, Yellow acquired Roadway in 2003 and USF in 2005. Yellow was renamed “Yellow Roadway Consolidated Worldwide (YRC).”

Under Zollars, Yellow borrowed heavily to acquire Roadway and USF, saddling the carrier with massive amounts of debt. He believed that he could gain greater leverage over labor negotiations with the Teamsters because of the number of unionized employees at the new company. He also believed the Teamsters would support the carrier conglomerate’s goal of achieving operational efficiencies between its various subsidiaries. 

Unfortunately, Zollars’ big bet didn’t work out 

In 2006, a year after the USF acquisition, the freight market went into a recession. 

As the freight market sputtered along, one of the biggest economic downturns in American history occurred: the Great Recession of 2008-09. The economic crisis severely impacted the LTL industry, prompting carriers to engage in pricing wars. LTL carriers saw a significant and simultaneous deterioration in volumes and rates.  

In 2006, YRC’s revenues were $9.9 billion. By 2009, revenues were down a staggering 40% to $5.3 billion. 

Unfortunately, YRC couldn’t react to the market dynamics as quickly as its non-unionized competitors and faced imminent bankruptcy. Drivers for the company made far more than their counterparts at non-union companies and also had a lucrative pension and other benefits — uncommon in the deregulated trucking industry. 

Led by Jimmy Hoffa Jr., the Teamsters understood the incredibly challenging conditions that YRC was in. Hoffa also understood that alternative employment opportunities for Teamsters were few and far between in this midst of the financial crisis. 

Over a period of years, Hoffa and the Teamsters agreed to a number of major concessions that saved YRC. 

For example, in 2009, the Teamsters agreed to wage reductions of 15% and a sharp reduction in the company’s contribution to the pension plan. The Teamsters also agreed to allow Yellow to consolidate operations with Roadway, creating a far more efficient business, with fewer duplicative terminals and equipment. These cost reductions and efficiencies helped the company survive its short-term cash crisis, but it was far from out of the woods. 

The company had to restructure its massive debt, implementing 21 credit amendments between 2009 and 2011. 

In mid-2009, Yellow exchanged pension payments for real estate, avoiding a default. In late 2009, Yellow exchanged $470 million in debt for 94% of the shares in the company. 

Unfortunately, this didn’t work out for the new shareholders, because those shares were diluted once again in 2011. That financial restructuring wiped out nearly all of their equity in the company, leaving them with just a 2.5% stake. 

This massive dilution helped the company avoid bankruptcy once again, but it wasn’t the end of YRC’s woes. 

In 2014, the company faced bankruptcy once again when it attempted to renegotiate $1.4 billion in debt that had matured. YRC was able to secure $300 million, but only on the condition that the Teamsters would accept 15% in wage cuts and other concessions. The union initially rejected the refinancing, but finally accepted it after the company reduced the cuts to union benefits and compensation. 

In 2019, YRC’s new contract with the Teamsters forced the company to increase wages by 18% over five years. YRC lost $104 million that year. 

COVID nearly killed Yellow, but the US Treasury stepped in 

Unfortunately, YRC’s prospects didn’t improve in 2020 when COVID hit, forcing the company to contend with 20%+ volume declines. 

As a unionized carrier, it once again did not enjoy the flexibility that its non-union competitors had in addressing costs. 

On May 11, 2020, YRC stated that there was “substantial doubt” about its ability “to continue as a going concern,” in its first-quarter filing with the U.S. Securities and Exchange Commission. 

This was quickly dealt with, however, in a controversial bailout by the U.S. Treasury Department. The carrier gave 30% ownership of the company to the federal government in return for a $700 million loan. The loans are priced at LIBOR plus 3.5% and mature in September 2024 — now just 15 months away. 

The justification for the loans was that Yellow was a major carrier for the U.S Department of Defense and if the carrier shuttered, it would disrupt transportation services for the military. It was later determined that this was nonsense, as other carriers in the LTL market could easily handle Yellow’s freight volume should it shut down. 

One Yellow

In May 2022, YRC changed its corporate name to Yellow and implemented a strategy known as “One Yellow,” with the goal of consolidating its various subsidiaries into super-regional carriers under the Yellow banner. The goal was to eliminate duplicate linehaul networks and to drive efficiencies through the consolidation of facilities, staff, and equipment under the One Yellow banner. 

The Teamsters initially supported the changes, allowing Yellow to pursue consolidation in its operations in the western U.S. Unfortunately, the cooperation was short-lived. By June 2023, as Yellow pursued more changes, including the shuttering of some terminals, redefining its employee work rules, and expansion of its use of purchased transportation (outside carriers), the union started to aggressively push back. 

According to Yellow management, all of these changes were necessary for company viability. 

Earlier this month, Yellow management notified the Teamsters that the company will be out of money by August.

“Yellow has been unable to effectively manage itself for a long time,” said Sean O’Brien, Teamsters general president, in a video to members. “Now, the company says it’ll be out of money by August. Do not forget: Teamsters have already given back everything they possibly could to keep Yellow afloat.”

Yellow management insists that structural changes to its labor relations and network are necessary for the company to stay afloat, stating that the changes are necessary to avoid “Yellow’s economic ruin.” It is currently suing the Teamsters for $137 million in damages it claims are owed due to the union’s opposition to its attempt to overhaul company operations. 

Yellow management cites a 33% drop in tonnage volume over the past two years as a primary justification for the proposed changes. 

In the lawsuit, Yellow disclosed that it has $168 million in liquidity, having burned through more than $109 million over the past year. The company stated it would run out of cash by mid-August and would be forced into liquidation. 

While a restructuring is always possible, the chances of that are quite small 

Yellow has been a “zombie company” for the past two decades, barely surviving. Its frequent flirtations with bankruptcy — as well as its relationship with the Teamsters — makes it undesirable for investors (even those with appetites for aggressive risk). 

Yellow is largely regarded as a low-priced carrier with inferior service, much of this due to the limitations imposed on the company by its unionized labor. A unionized LTL carrier is a legacy of a bygone era when the government restricted competition, thus protecting labor from the volatility of the freight market and the tight margins in trucking. 

If Yellow does shut down this year, it will become the largest bankruptcy in trucking history, representing 10% of the LTL market at $5.1 billion in revenues. More than 30,000 employees will be out of work, over twice as many as when Consolidated Freightways shut down. 

Such an outcome would also be a significant blow to the Teamsters, which hold a great deal of power over whether Yellow survives or dies. If the Teamsters decide to hold their ground on potential concessions, they will only have themselves to blame when they wipe out 22,000 union jobs. 

Those jobs are likely to never return, as unions are not compatible with modern trucking. 

The post Yellow is a zombie company — it’s time to let it go appeared first on FreightWaves.

The future of procurement is real-time. Historically, the procurement process has involved shippers securing quotes from carriers through the bidding process, with carriers putting forward rates and shippers choosing based on the best provider and price. However, whether bidding is done through RFPs or spot auctions, traditional methods leave money on the table.

In the six years since its inception, Uber Freight has demonstrated that automated, instant load procurement for transportation service providers and shippers is not only possible but, for many,  the most efficient way to move loads quickly at optimized rates.

When contract rates are locked in, shippers gain comfort in knowing what they will spend  over the next 12 months. But when trucking rates plummet, as in today’s soft market, they risk overpaying.

On the other hand, siphoning loads into traditional spot channels results in a time-consuming back-and-forth negotiation and produces biased quotes. This strategy no longer serves as the optimal and most human capital-efficient alternative for matching volume with capacity.

“Bidding is both time-consuming and very inefficient from a pricing technology standpoint,” Raj Subbiah, head of product at Uber Freight, said. “I believe, and I think the industry believes, that there are better ways for both the shippers and the carrier, which is upfront pricing, just like how Uber works.”

Today, shippers have an opportunity to leverage real-time freight pricing with a neutral digital broker to gain greater control over their procurement strategies.

Serving more than 100,000 third-party carrier partners and thousands of shippers from small businesses to enterprise companies, Uber Freight’s marketplace has become an invaluable load-matching tool for both carriers and shippers. Carriers can secure freight where and when they need it, and shippers can source high-quality capacity to move their overflow or urgent shipments — all for rates determined by an optimized third party.

With the introduction of Market Access in 2021, Uber Freight has taken freight matching to the next level for shippers. Market Access is among Uber Freight’s many procurement tools. It serves as an AI-powered, freight-pricing algorithm that allows shippers to tap into Uber Freight’s vast carrier network, secure greater control over their procurement stipulations and receive fair quotes with unparalleled pricing transparency.

Here are five considerations for shippers as they adopt real-time procurement solutions:

1. Quotes are generated based on current market conditions.

No bidding wars or tedious back-and-forth rate negotiations with carriers are necessary with automated load pricing. Uber Freight’s real-time pricing algorithm calculates quotes depending on market conditions like day of the week, time of day, weather and seasonality, instantly generating rates based on current factors and data. 

Uber Freight weighs supply and demand, adjusting rates based on the pace of loads booked over time compared to normal booking rates. This provides shippers an opportunity to capitalize on lower rates when load frequency is high.

2. It provides greater load-level pricing controls and visibility.

Shippers have levers to control their preferred starting price, ideal range and the maximum amount they’re willing to pay for each load, enabling greater flexibility over expenses while still at, or lower than, market price. 

Shippers have full visibility into transaction fees and know exactly what carriers are paid for each load. Also, once a load is booked, the price doesn’t change, so shippers know exactly what they’re spending when they book.

3. Shippers can set priority status to quickly move urgent loads. 

When expedited shipping unexpectedly becomes a necessity, shippers need a way to secure capacity fast. With real-time procurement, shippers control load priority, allowing them to quickly signal the urgency of a shipment to carriers and adjust the pricing accordingly.

4. It’s possible to limit carrier participation.

Whether a shipper requires truckload, less-than-truckload or flatbed capacity, Uber Freight furnishes the flexibility to meet each load’s unique requirements.

Shippers can limit participation to a pool of desired carriers as well to continuously book with their preferred partners.

5. API enables real-time quotes accessible in a shipper’s TMS.

Uber Freight developed its technology with shippers’ current ecosystems in mind, rather than trying to reinvent the wheel. 

“We spend a lot of time with shippers thinking things through the problem space from their vantage point,” Subbiah said.

Through application programming interfaces, shippers can tender loads to Uber Freight in their routing guide or spot action module housed in their TMS. This allows them to embed real-time freight procurement tools into their normal workflows with ease.

Click here to learn more about how shippers are working with Uber Freight to optimize their real-time procurement strategy.

The post 5 things shippers should know about real-time freight procurement appeared first on FreightWaves.

Amerijet International on Wednesday terminated more than a dozen employees because of sharply lower revenues associated with a prolonged slump in global air cargo demand that is beginning to materially hurt more freighter operators. 

The move comes on the heels of the company’s pilots on Friday ratifying a new three-year contract that raises their pay up to 45%, increasing expenses for the Miami-based all-cargo carrier at a time of shrinking sales. 

“Over the past several months, our company, like many others in the air cargo business, has faced several challenges and market shifts that have impacted our financial stability. Despite our best efforts to mitigate these challenges with cost reductions and avoidances across the board, it has become necessary for us to take action to ensure the long-term sustainability of our organization,” said CEO Tim Strauss in a memo to staff announcing the reduction in force that was shared with FreightWaves.

“We have had to make some tough choices to align our resources with our strategic goals and create a leaner, more agile organization for the future. … We all recognize that our economy is severely impaired currently, but when the news hits close to home, it always comes as a shock,” said Strauss, who expressed gratitude for the contributions of those let go.

Amerijet terminated 15 workers at its headquarters, spokeswoman Christine Richard said in an email response. An industry source familiar with the company said the layoffs were in several departments where compensation is significantly less than that for pilots. Workers will receive several weeks’ severance pay, according to the person.

The job eliminations are the latest cost measure at Amerijet. Earlier this year, the airline shut down its small freight forwarding division that employed 27 people, and it outsourced accounting functions to Trinidad and Tobago.

Richard said Amerijet has reduced its flight schedule to Aruba and Brussels because of the downturn in business.

Amerijet has 24 cargo jets, including planes operated for DHL and Maersk Air Cargo, under its operating certificate. One of DHL’s 767-200s has not flown since April 5, according to flight-data provider Flightradar24. 

Tim Millar, the chairman of the Amerijet local division of the Air Line Pilots Association, said the new labor contract was crucial to slow attrition because the pilots “were at the bottom of the scale” compared to competitors.

The company is still actively hiring pilots, with a class of 24 undergoing training now and another class of at least a dozen pilots starting in a couple of weeks, he said.

Amerijet has more than 270 pilots, according to the union.

Airfreight sector feels pressure

The rate of decline in air cargo volumes has slowed since the start of the year, but airlines are coping with 16-consecutive months of negative growth. Volumes are down 1% to 4% year over year, according to various market watchers. Last year cargo traffic shrank 8% from the extraordinary high in 2021, when shippers sought out airlift to get around pandemic-related supply chain disruptions. The downturn in volumes reached about 10% in the December-January period.

Cargo jet utilization fell 5.3% year over year in April and May, according to research from BMO Capital Markets.

The International Air Transport Association (IATA) recently projected air cargo demand will shrink 3.8% for the full year and airline cargo revenues will contract by a third to $142.3 billion year over year as a surge in passenger flights ushers in more belly space and global trade slows. Market dynamics mean yields will come in nearly 30% below last year’s average, the trade association said. 

Cargo volumes are 5.3% below 2019 levels.

The freight recession is forcing cargo airlines of all sizes to downsize their operations. 

FedEx Express last week said it plans to park 29 more aircraft during the fiscal year that runs through May 31, 2024, in response to falling demand and a corporate campaign to take out billions of dollars in structural costs. It is also consolidating maintenance facilities, routes and crew bases. The delivery company’s flight activity fell 12% in the previous quarter.

Western Global Airlines, also based in Florida, is also being pinched by poor sales, high maintenance costs for its aging fleet, pilot attrition and a heavy debt load. The company appears to be winding down flight activity ahead of a possible bankruptcy filing.

Cargojet, a Canadian carrier, recently postponed plans to convert large Boeing 777 passenger jets into freighters and is selling them off instead to focus on debt reduction and improving returns.

Click here for more FreightWaves stories by Eric Kulisch.

RECOMMENDED READING:

Western Global Airlines grounds cargo jets as bankruptcy rumors swirl

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Cargo airline Amerijet pulls plug on freight forwarding unit

FedEx to close pilot bases in Alaska, California and Germany

The post Amerijet lays off workers as freight recession drags on appeared first on FreightWaves.

To view more FreightWaves infographics, click here

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A strong Chinese economy creates a virtuous cycle for ocean shipping. The manufacture of goods fills container ships and car carriers on the way out, and directly or indirectly drives demand for bulk commodities that fill bulkers and tankers on the way in.

Exports became even more important to China’s economy in recent years as COVID curbed domestic consumption and a credit crunch squeezed property development. Now, Western demand for Chinese containerized exports has dropped just as the post-COVID rebound in Chinese domestic spending is faltering.

“People really expected China to come out and really accelerate but the Chinese recovery has been really poor,” said Ole Slorer, head of infrastructure and energy at investment bank BTIG, at the Marine Money Week conference on June 22.

Chinese stimulus is still believed to be coming, but there is growing sentiment that it won’t be big enough — or raw materials-intensive enough — to jump-start bulk commodity shipping rates. “After the global financial crisis, China engaged in a mega-stimulus. We should not expect to see a mega-stimulus this time around,” said Duncan Wringley, chief China economist at Pantheon Macroeconomics, during a presentation on June 20.

As for China’s all-important containerized exports, the spot rates tell the story: The Freightos Baltic Daily Index for the China-North America West Coast lane put spot rates at just $1,190 per forty-foot equivalent unit on Tuesday. That’s down 17% from June 6 and 14% year to date.

Exports playing a bigger role in steel demand

“China drives everything in the dry bulk shipping world and everyone seems to be waiting for this big stimulus, which always seems to be right around the corner,” said Serafino Capoferri, associate director of asset manager Macquarie, at Marine Money Week.

Shipping rate optimism rests on stimulus in the property and infrastructure sectors that would hike demand for steel and thus demand for imported volumes of iron ore and metallurgical coal.

But Capoferri stressed the importance of Chinese exports to steel, and by extension, Chinese dry bulk imports. “One point that is very important to make, especially when you’re thinking in terms of stimulus, is that since the pandemic, the manufacturing sector has played a much bigger role when it comes to overall steel consumption in China.

“Very often in this industry [shipping] we think it’s all about property development, but in reality, manufacturing’s share of total steel demand has grown, really driven by this export boom we’ve seen since 2020. Clearly, China remains the factory of the world, and exported goods contain a lot of commodities and a lot of steel.”

The best example of steel use in exports (albeit noncontainerized) is automobiles. Chinese auto exports have tripled since 2020.

Altogether, Macquarie estimates China indirectly exported 143 million tons of steel via goods exports last year, or 14% of production, not including direct exports of finished steel. The numbers “highlight how important manufacturing has become and how exposed China is to the ex-China cycle,” said Capoferri.

‘Pronounced slowdown’ of exports in 2nd half?

Wringley said, “Demand is slowing down and where’s that demand slowing down? Number one, on the external side of things. Manufacturing is cooling, quite obviously.”

China’s goods exports bounced in March then fell back. “The strongest reason for the bump in March was the catch-up with back orders that built up during the zero-COVID policy and the exit [infection] waves as zero-COVID was dropped,” Wringley said.

“That brief catch-up period has already begun to fade as we go into June and the second half of the year. If you look around the world, global demand is clearly slowing. If you look at other Asian countries like Korea, exports have been falling quite sharply.

“There will be a little bit of a cushioning effect as China has managed to diversify exports to nontraditional markets, like Belt and Road [supply chain partner countries], like — notoriously — Russia, and to some other countries. But I think that can only partly mitigate what is going to be a pronounced slowdown of exports in the second half of the year.”

Data from Descartes shows that U.S. containerized imports from China have followed the same pattern as the broader market, falling back from one-off COVID-era peaks. U.S. imports from China in January to May were down 26% from the same period last year.

‘They don’t want another big debt hangover’

According to Pantheon, manufacturing accounts for 27.5% of production inputs to Chinese GDP, with construction at 53.5%, services at 12.1% and other production at 6.9%.

Dry bulk shipping has historically benefited from Chinese stimulus that spurs construction. But Wringley said there are risks that “are holding back the government from pushing the traditional stimulus pedals in the property sector or really boosting infrastructure.”

“They don’t want another big debt hangover,” he said. In addition, “there are just fewer economically productive opportunities for investment” in property development and infrastructure. “The more you try to accelerate infrastructure, the more local governments reach for those ‘white elephant’ projects.”

Wringley believes there will be stimulus, but “it will be pretty limited stimulus.”

Stimulus upside: ‘Nothing too cray-cray’

According to Capoferri, “There’s no question the government is moving more and more toward supporting the economy, but we don’t think we’re going to see a big push on property this time around. The structure of the Chinese economy has changed. Services are much more important than they used to be, and manufacturing as well.

“The property sector faces a lot of structural challenges. It‘s obviously a saturated market in the sense that urbanization is slowing and demographics are not as favorable, so pushing that sector would bring risks, particularly around financial stability, and we think the Chinese leadership is aware of this.

“That’s why we think these hopes of a big push for property have been consistently disappointed. The market has been waiting for a property stimulus for 12-18 months and it hasn’t happened.

“What we think is more likely is more targeted support measures around other sectors. And within the infrastructure basket, we think it will focus on areas like the power grid and the energy transition — and unfortunately [for commodity shipping], those are not super steel-intensive.”

Pessimism on stimulus upside for dry bulk rates is growing. “New stimulus measures could bring a little boost to the market, but nothing too ‘cray-cray,” said ship brokerage BRS.

Crude imports strong but ‘signs of weakness’ emerge

Amid the daunting outlook for container exports and unexceptional outlook for dry bulk imports, China’s liquid bulk imports have outperformed. Liquefied gas carriers transporting propone from the U.S. to China are in high demand, and Middle East-to-China oil volumes supported a temporary spike in supertanker rates earlier this month.

According to data from price-reporting agency Argus, China’s crude imports averaged 12.1 million barrels per day (b/d) in May and 12.3 million b/d in March. The only two months on record with higher volumes were June and July 2020, when COVID heavily depressed crude prices.

Yet here too, there are bearish signs that Chinese shipping volumes may not grow as much as hoped.

Ship brokerage Braemar said Wednesday the Chinese National Petroleum Co. cut its 2023 forecast for China’s year-on-year oil demand growth to 3.5%, from 5.1%.

Brokerage and consultancy Poten & Partners said Friday that “jet fuel demand growth is lagging … [and] one of the key reasons is China. While domestic flights are booming, international flights are lagging.” Poten said “growth in China’s international flights has been focused on regional flights with destinations in Southeast Asia” — short-haul routes that consume much less fuel than long-haul routes to North America and Europe.

Argus said in mid-June that crude prices had eased “on slower-than-anticipated Chinese demand growth.”

Argus reported Friday that “Chinese crude imports … continue to pile up in storage tanks” while apparent refined products demand — refinery output plus net products trade — dropped by 560,000 b/d in May versus April. “Chinese oil demand remained high in May but emerging signs of weakness suggest a significant pullback is in the cards,” warned Argus.

Related articles:

• Container shipping divide: Cargo rates weaken, ship rents ‘robust’
• Container shipping under pressure as peak season hopes dim
• Giant tankers full of American propane are making waves
• Geopolitics, container shipping rates and an ominous sign from Taiwan
• China-Russia vs. US-EU: How global shipping is slowly splitting in two
• China’s surprise COVID pivot offers new hope to shipping markets

The post Shipping faces fallout as China’s post-COVID rebound falls flat appeared first on FreightWaves.

At times, innovation is born out of curiosity, as inquisitive minds look for ways to simplify dated processes. Often, however, it arises from necessity, driven by the need to compete on a global scale.

Technology solutions provider Speedcargo was formed in response to necessity and has made global headlines for its work to provide scalable operations to the airfreight industry.

In May, Speedcargo announced it had partnered with Etihad Cargo, the logistics arm of Etihad Airways, to integrate its AI tools to optimize available cargo space and improve cargo planning.

Origin story

In an interview with FreightWaves, CEO Krishna Kumar explained that Speedcargo’s technology was born from a logistical problem discovered by the Civil Aviation Authority of Singapore  (CAAS).

In 2014, the CAAS issued an industrywide call to address three areas of growing challenges: automated solutions to stack, store and break down pallets, a job the next generation of workers was not looking forward to being a part of.

“There was a team from [the Technical University of Munich] that was headed by our founder and Chief Technology Officer Dr. Suraj Nair. That team was able to demonstrate before robots were common that you can actually automate the buildup and breakdown of cargo,” said Kumar.

He explained that once the team figured out how to automate the building and breakdown processes, it could leverage warehouse data to standardize the growing operation and overall airfreight ecosystem.

“When you have this trifecta of activities including high mix, high volume and high payload and you are working in a very unstructured environment, it becomes very difficult to optimize unless you can orchestrate the entire environment. Most airports have between two and five ground handlers and they are oligopolistic. Our team was able to demonstrate technically how these competing operations could be done,” he said.

After two years of working on its automated solution, Speedcargo found that in order to automate the handling of cargo it would first need to build a solution to digitize the physical cargo.

This led to the development of three products: Amplifi, Cargo Eye and Assemble, all being used by Etihad Cargo today.  

Amplifi updates available cargo capacity based on booked cargo, the cargo offering, and type of aircraft being deployed.

Cargo Eye provides automatic cargo dimensioning in two seconds, and when used with robotics tools Cargo Arm, it can produce a placement plan for cargo. 

Lastly, Assemble plans individual unit load devices based on ready-to-fly cargo available in the warehouse and the load plan generated by Amplifi for each flight.

While the company has recently struck a deal with Etihad, according to Kumar, the airfreight industry and Speedcargo have a lot more room to grow. He believes most airfreight providers still have 25% to 30% available space, which could contribute up to $750 million to the bottom line of the industry annually.

“Airline space dedicated to cargo is very, very small compared to the space designed for passengers so how will they handle more cargo in limited space is the big question … . The reason why the airline adopted this technology is very simple: They are able to carry more cargo with the same available space,” he explained.

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With questions swirling around the fate of the nation’s third-largest less-than-truckload carrier, Yellow Corp., industry analysts have started looking at which carriers stand to benefit the most if the company fails.

Seemingly running out of options, Yellow (NASDAQ: YELL) filed a $137 million lawsuit against the Teamsters union on Tuesday. The suit alleges the union is unjustifiably blocking proposed operational changes that the carrier is contractually allowed to implement. Yellow asserts the union’s slow response and unwillingness to negotiate have added to the company’s deteriorating financial condition.

Yellow recently asked health and welfare and pension funds if it could delay contribution payments for the months of July and August in order to preserve its cash, which it says will be depleted by mid-July. Also, the lawsuit revealed Yellow unsuccessfully solicited the White House’s help brokering a deal.

“YELL’s situation creates huge benefits for the remaining, stronger LTL players that are able to profitably handle the extra volumes,” Deutsche Bank (NYSE: DB) equity research analyst Amit Mehrotra told clients on Wednesday.

He said the negative press has likely resulted in more freight leaving the company.

A recent intraquarter report from Yellow showed its tonnage was down 16% year over year in April and May and 33% lower than in the same two months of 2021. Some of the declines can be attributed to recent yield improvement initiatives and the dislocation caused by a multiyear restructuring, which has allowed it to consolidate its four LTL brands and reduce its terminal footprint.

However, Mehrotra notes, customers are also seeking other transportation options given Yellow’s inability to reach a deal with the Teamsters.

“Based on all the developments over the last two weeks, we continue to think it’s more likely than not that a meaningful piece of Yellow’s business is diverted away to competitors.”

He also pointed to a final report issued Tuesday from the congressional oversight commission tasked with overseeing the 2020 COVID-relief lending program. The report noted numerous mistakes made by government agencies during the approval process of a $700 million Treasury loan to Yellow. It also advised the Treasury to unwind its debt and equity holdings in the company.

“These developments make it highly unlikely, in our view, for a last-minute deal via outside intervention,” Mehrotra said.  

Yellow has narrowly averted bankruptcy in the past by orchestrating wages and benefits concessions from Teamsters as well as eleventh-hour debt restructurings. With the unfavorable loan commission report and the Biden administration’s recent pass on lending a hand, it doesn’t appear the government is interested in a bailout.

TD Cowen (NYSE: TD) analyst Jason Seidl said union carriers like ABF Freight, an ArcBest (NASDAQ: ARCB) subsidiary, and TForce Freight, a TFI International (NYSE: TFII) company, would likely be the biggest winners of Yellow’s $5.2 billion slice of the LTL industry.

He said these carriers are more compatible with the way Yellow operates and could hit the upper end of the earnings-per-share growth ranges he calculated. The high end of the EPS range was 32% for ArcBest and 14% for TFI. XPO (NYSE: XPO) had an EPS growth range of 9% to 35% but presumably with a lower confidence level assigned.

He doesn’t see Old Dominion (NASDAQ: ODFL) as a big beneficiary due to its “strict pricing discipline and freight profile.” He also noted some “strong private carriers” would likely see incremental volumes if Yellow were to fail.

Seidl said he wasn’t predicting Yellow’s demise or its survival, just providing some math in case the carrier exits.

He drew on comparisons to the 2002 failure of Consolidated Freightways, the third-largest LTL carrier at the time. That company was generating more than $2 billion in revenue with 20,000 employees, 14,500 of whom were Teamsters.

Seidl said that competitor ArcBest reported an 11% increase in daily tonnage the month that followed the announcement of CF’s bankruptcy. ArcBest’s tonnage was down 2.4% in the month prior to CF’s bankruptcy.

However, Mehrotra said the events at Yellow create the potential for “massive earnings accretion,” noting Old Dominion and Saia could see their earnings increase by more than 20%. He said a “wall of freight” could present some execution challenges to network-centric businesses like LTLs, but believes high-quality service standards at Old Dominion and Saia will allow them to more effectively onboard any windfall.

“The bottom line is we continue to see significant further upside in LTL shares on the back of developments at YELL,” Mehrotra said.

Shares of YELL were down again on Wednesday, off 19% following a 22% decline on Tuesday. Shares of other LTL carriers were up slightly to as much as 4% on the day, following mid- to high-single-digit increases on Tuesday.

More FreightWaves articles by Todd Maiden

• Yellow running out of options, sues union for $137M
• XPO finishes expansion project in Salt Lake City
• Yellow asks to defer health care, pension contributions

The post Analysts contemplate a Yellow bankruptcy appeared first on FreightWaves.

Having laid off more than half its U.S. workforce and turned its attention to China, autonomous truck software pioneer TuSimple is taking steps to exit the U.S. market it once led.

The move follows months of turmoil in the boardroom that stained its reputation. It includes exploring a sale of its U.S. operations.

A TuSimple exit would be the second major player in autonomous trucking to leave the field. Startup Embark Trucks sold itself to Applied Intuition for $71 million in May.

Half of U.S. employees previously laid off

San Diego-based TuSimple has laid off more than half its U.S. workforce since December. It shuttered driver-monitored autonomous freight hauling for UPS and other customers. The company determined the cost was more than it could book in revenue.

It is in arrears in filing required financial reports. That could result in a delisting of its stock from the Nasdaq.

The company is controlled by co-founder Mo Chen, a Canadian who holds 59% of the company’s voting shares. He essentially determines the company’s course, though TuSimple has a new board of directors appointed following a series of messy events last fall.

The new board unanimously supported the hiring of Perella Weinberg Partners as a financial adviser to explore possible transactions for the U.S.-based portion of TuSimple’s business. That could include a sale of U.S. operations.

TuSimple focuses on China efforts

In announcements since the layoff of 300 employees in May, TuSimple has touted a 39-mile driverless pilot on an open highway near Shanghai and plans for its autonomous software to be tested in Japan without humans in the cab.

TuSimple, founded in 2015, was the first autonomous trucking software company to conduct driverless pilots in the U.S. In December 2021, the company sent one of its Navistar International trucks 80 miles from Tucson, Arizona, to Phoenix without a human in the cab. It conducted several more pilots on the same route.

It had announced plans to begin a commercial route on the same stretch of Interstate 10 in late 2024. Those plans are in question given the decision to explore “strategic initiatives” for the U.S. business.

“If this process results in a sale of TuSimple’s U.S. business, TuSimple would remain a global Level 4 autonomous driving technology company with an emphasis on operations in Asia-Pacific and other major global markets,” TuSimple said in a statement after markets closed Wednesday.

Government scrutiny of China ties

TuSimple (NASDAQ: TSP) shares have nearly tripled in price from a low of 83 cents in recent weeks. They closed Wednesday at $2.31. 

TuSimple stressed that its operations in the U.S. and China were distinct. Until the second round of layoffs in May, the company said it was exploring the sale or spinoff of its China-based operations. 

The Committee on Foreign Investment in the United States (CFIUS) had raised questions about technology sharing between TuSimple and a company started by Chen that was based in China. 

CFIUS earlier had cleared TuSimple of any conflicts with its China operations. But it required two board members who were part of Chinese conglomerate Sina Corp. to leave the TuSimple board. TuSimple went public in a traditional initial public offering in April 2021.

TuSimple manufacturing partnership with Navistar ends

A drama involving co-founder Xiaodi Hou played out last fall. He had assumed the CEO role in March 2022. Independent directors outsted him in October. Ten days later, he fired them. Manufacturing partner Navistar called off its 2 1/2-year partnership with TuSimple in December. 

That left the company without a source for a purpose-built autonomous truck with redundant safety systems. Those systems are critical when no driver is present.

CEO Cheng Lu told FreightWaves in a March interview that TuSimple could go it alone in working with Tier 1 suppliers to equip a truck for driverless operation. But the lack of a partner also led to many of the thousands of reservations TuSimple had collected being canceled. One of those was digital brokerage LoadSmith, which planned to get 350 TuSimple trucks. 

Customers with reservations for TuSimple autonomous trucks look elsewhere

Loadsmith last week announced plans to purchase 800 autonomous trucking software systems from rival Kodiak Robotics beginning in the second half of 2025.

“No assurances can be given that TuSimple’s exploration of strategic alternatives will result in any change in strategy or a transaction,” the company statement said. “The decision to explore strategic alternatives for the U.S. business was guided by the company’s review of multiple business factors and commercial opportunities.”

TuSimple said it would have nothing more to say until its board approves a specific transaction or other alternative or the review of strategic alternatives is completed.

Related articles:

Loadsmith orders 800 Kodiak Robotics autonomous trucking systems

TuSimple stock faces delisting from Nasdaq due to unfiled financial reports

TuSimple completes 39-mile driverless run in China traffic

Click for more FreightWaves articles by Alan Adler.

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The U.S. Department of Transportation has awarded a combined $33.5 million to build new truck parking facilities in Texas and Louisiana as project sponsors find ways around a lack of dedicated funding pools for such projects.

A truck travel plaza in Caldwell County, Texas, was awarded $23 million from DOT’s Rebuilding American Infrastructure with Sustainability and Equity (RAISE) program, a competitive grant program used to fund freight and passenger transportation projects.

Another truck parking facility in northeast Louisiana was awarded a $10.5 million RAISE grant.

The parking expansion was included in the RAISE program’s FY2023 grant awards announced Wednesday — 162 infrastructure projects totaling $2.2 billion. The latest round of funding received an $800 million boost from the 2021 Bipartisan Infrastructure Law.

“This round of RAISE grants is helping create a new generation of good-paying jobs in rural and urban communities alike, with projects whose benefits will include improving safety, fighting climate change, advancing equity, strengthening our supply chain, and more,” stated DOT Secretary Pete Buttigieg.

The grants for the two projects follow similar truck parking expansion grants awarded last year through another DOT program — Infrastructure for Rebuilding America (INFRA) — in Florida and Tennessee totaling $37.6 million.

The four projects are evidence that state and local governments are heeding Buttigieg’s call last year to apply for truck parking expansion funding from within existing DOT programs absent a dedicated grant program for truck parking.

RAISE grants (formally known as TIGER grants) and INFRA grants were both created under the Obama administration, in 2009 and 2015, respectively.

The Owner-Operator Independent Drivers Association has been backing legislation on Capitol Hill for several years to create a grant program dedicated to truck parking. The latest bill, which would set up $755 million in funding over three years, passed through committee in the House in May and awaits a floor vote. Companion legislation in the Senate is still in committee.

The truck plaza in Texas will be between Austin and San Antonio, near the intersection of state highways 130 and 80. It will include approximately 20 short-term and 100 long-term truck parking spaces, entry/exit gate control, lighting, fencing, a rest stop with restrooms and showers, and 24-hour monitored security.

“Safety will be addressed by constructing truck parking that will help reduce crashes and fatalities involving trucks parked in unauthorized locations,” according to DOT. “The project also aims to encourage truck drivers to use SH 130 rather than I-35 to diversify the traffic load and reduce crashes on the interstate. Innovation was addressed throughout the development of a mobile application to help truck drivers find and reserve available parking at a safe facility.”

The Louisiana facility is part of a $20 million “multimodal connectivity and safety” project adjacent to the Port of Columbia, an inland port on the Ouachita River. The facility will be able to accommodate 50 trucks for overnight parking as well as 100 cars. It will also be equipped with six electric vehicle chargers for semi-tractors and six chargers for passenger vehicles.

The Columbia Port Commission, the project’s sponsor, noted in its grant application that a lack of designated truck parking “typically makes a challenging issue worse: through premature damage to roads not designed to handle heavy loads, higher crash risk from trucks parked in the right-of-way or on side streets, and complaints from residents.

“For drivers, the stress of finding legal parking is just one of many concerns. The time spent looking for parking results in lost productivity and lost wages. Parking illegally or in undesignated areas often presents the risk to personal health and safety, fines, cargo theft or vehicle damage. The proposed [truck parking facility] has been designed to mitigate community impacts and concerns.”

Related articles:

• Lawmakers introduce ‘clear path’ to more truck parking
• Buttigieg addresses teen drivers, truck parking at Senate hearing
• DOT announces $1.2B for 9 ‘megaproject’ winners

Click for more FreightWaves articles by John Gallagher.

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The Teamsters union said Wednesday that it has demanded that UPS Inc. present its last, best and final contractual offer no later than Friday.

The ratcheting up of hostilities comes one day after the Teamsters gave UPS (NYSE: UPS) one week to submit an economic proposal that was superior to the one the Teamsters called “appalling.”  The company’s initial proposal offered small pay raises and cuts to traditional cost-of-living adjustments, the union said.

A last, best and final offer (LBFO) is a formal offer that one side — usually the employer — submits to the other for an agreement. It is supposed to include all compromises that the offering party is willing to make, but that is not always the case. The LBFO is often submitted to union members for their vote to reject it or accept it.

The Teamsters met with UPS negotiators late into Tuesday night over Article 34 of the union’s National Master Agreement, governing health and welfare and pension benefits for members. Despite early progress, UPS attempted to “move the goalposts at the 11th hour and withhold any additional benefits from the Teamsters, seeking concessionary language instead,” the union said. The Teamsters did not provide any details.

When the Teamsters walked away from the table, UPS agreed to resume negotiations Wednesday. When corporate executives showed up, they only resubmitted the same proposal for worker concessions under Article 34, the union said.

“The largest single-employer strike in American history now appears inevitable,” said Teamsters General President Sean M. O’Brien. “Executives at UPS, some of whom get tens of millions of dollars a year, do not care about the hundreds of thousands of American workers who make this company run. They don’t care about our members’ families. UPS doesn’t want to pay up. Their actions and insults at the bargaining table have proven they are just another corporation that wants to keep all the money at the top. Working people who bust their asses every single day do not matter, not to UPS.”

“Last week, we provided our initial economic proposal. This week we followed with a significantly amended proposal to address key demands from the Teamsters,” UPS said in a statement. Reaching consensus requires time and serious, detailed discussion, but it also requires give-and-take from both sides. “

The current contract expires July 31, and union leaders have warned that they will strike Aug. 1 without a contract. Teamsters nationwide authorized a strike this month by 97% should UPS fail to come to terms on a new contract. The strike authorization vote was expected.

“We have an economy today that is reliant on parcel delivery and no one in the game handles more packages per day or provides better service than Teamsters at UPS. Our members are fighting for a post-pandemic agreement that honors the sacrifices they made to keep this country moving during the last several years,” said Teamsters General Secretary-Treasurer Fred Zuckerman. “Time has run out for UPS to give workers that honorable contract. “

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Connectivity has become a hot topic in the logistics industry. Shippers are increasingly embracing integrations as a way to connect with partners, save money and automate tasks. That means brokers are being pushed to up their integration game. 

Bitfreighter CEO, Brad Perling, founded the company with the goal of helping brokers scale integrations and provide the connectivity shippers crave. 

“I felt there was nobody out there that really wanted to help brokerages do that,” Perling said. “It is not an easy task, and it is one of those things that people forget about until it becomes a requirement. At that point, it becomes very expensive.” 

Historically, brokers have reserved EDI integrations for only the shippers that absolutely required them in order to do businesses. This is because integrations tend to be priced on a transactional, per-character basis, making them expensive and inaccessible.

Bitfreighter left behind the transactional pricing model that once characterized EDI, instead opting for an “unlimited everything” approach. As a result, the company’s clients have been able to scale their shipper integrations without taking on added costs. 

Not only does Bitfreighter offer unlimited messaging at a flat rate, the company also has a Trading Partner Price Lock Guarantee. That means that no matter how much freight a client moves, their integration price will never go up. 

“We have taken some very large brokerages that maybe only had a handful of trading partners and helped them scale their entire networks with Bitfreighter,” Perling said.  

By making integrations accessible and affordable, Bitfreighter enables brokers to enter into the once-dreaded “EDI conversation” with shippers on the front end, using connectivity as a selling point.

Leveraging integrations in client and potential client interactions allows brokers to set themselves apart and not only win more business but also improve relationships and create an innovative reputation for themselves. 

In today’s competitive environment, calling companies and asking for their business is not enough. Brokers must be able to have educated conversations — and offer solutions — about things like visibility, connectivity and automated quoting.

Shipper demand for EDI integrations has been growing for several years, but the industry’s increasing focus on automation and connectivity has recently propelled API integrations into the spotlight as well. 

“In 2023, not only do you have to check the EDI box, but for a lot of these clients you have to check the API box as well,” Perling said. 

Several different terms — automated quoting, real-time rating and dynamic pricing — have become popular across the industry. All three refer to the ability to leverage API integrations to create real-time quotes based on load details and market conditions. These kinds of  integrations became increasingly appealing to shippers that needed to access more competitive pricing during the pandemic-fueled rate spikes seen over the past few years. 

Despite a current market downturn, API integrations continue to pique shippers’ interest due to the increased levels of efficiency and preparedness that accompany automation. 

Bitfreighter offers clients a real-time truckload quoting API — dubbed LiveQuote — that enables brokers to send their shippers automated quotes tailored to each shipper’s expectations, capacity and requirements. This feature allows brokers to issue a virtually endless number of quotes with no extra legwork by simply setting their parameters and letting the computer do the work for them.

When combined with bitfreighter EDI, LiveQuote opens up opportunities for automated quoting, acceptance, updates and invoicing. 

Demand for API integrations is expected to continue growing over the next several years, largely pushing out old-school manual quoting techniques.

“Shippers want to get creative, and they want to save money,” Perling said. “There are different ways to price check their carrier partners, and this is one of those ways. If you don’t have it, you are missing opportunities.” 

In order for brokers to compete in an increasingly automated landscape, they must choose software partners that can help them connect via the integrations that are important to shippers. Getting involved with those partners now allows brokers to save money, stay ahead of the curve and influence crucial software development decisions. 

Click here to learn more about Bitfreighter. 

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More small and midsize businesses than ever are beginning to ramp up their sustainability efforts. For many fleets, adding electric vehicles to reduce their carbon footprints is an increasingly realistic way to do so.

Electric pickup trucks, vans, and even medium-duty and heavy-duty trucks are just starting to gain momentum in the market. It will likely take decades before gasoline- and diesel-powered engines are fully phased out, so in the meantime, there will be a transitionary period when an increasing number of fleets will comprise vehicles running on traditional fuel sources and others powered by electricity.

Fuelman, a fleet card provider and part of the fleet and mobility solutions division of global B2B payments leader FLEETCOR, is already ahead of the game, anticipating the current and coming expense management needs of fleet managers as they begin this transition.

During May 31’s WHAT THE TRUCK?!? episode, Dooner sat down with Keagan Russo, Fuelman president, and Ashlie Summer, vice president of product, to discuss Fuelman and how its fuel card solutions are helping fleets manage and control their vehicle and fuel spending for both EVs and fossil fuel-powered vehicles.

“One of the places where we’re investing the most energy and research and product development is creating products and services that will really lower the complexity threshold of managing those two different asset classes for large fleets,” Russo said.

As part of these efforts, Fuelman developed a solution for sustainability-minded fleets, Fuelman Clean Advantage Card, which allows them to manage expenses for mixed internal combustion engine (ICE) and EV fleets.

The Fuelman Clean Advantage Card and Fuelman Mastercard programs help fleets running on either unleaded or diesel fuel to offset their carbon emissions by 100%. At the same time, fleet payments programs provide fleets on average 15% fuel cost savings¹ while offering the same features, driver management controls and business protection benefits that Fuelman provides across its products.

One of those value-added features Fuelman offers across its products, Summer mentioned, is card authorization. This allows fleet managers to restrict card access at pumps based on driver proximity, helping to prevent fraud. 

“We want our customers to have that peace of mind when their drivers leave with company vehicles so that their drivers are fueling and spending the company’s money how they want them to. They want them to fuel at the right places [and] buy fuel at the right times,” Summer said. “We do this through providing customers with controls and reporting and efficiencies in managing their fleets.”

With more than 62,000 sites nationwide for unleaded and diesel fueling², and access to more than 97% of EV charging stations³, Fuelman’s network is focused enough to facilitate greater discounts for customers but expansive enough to encompass a wide array of options, including many premier regional locations drivers can access.

“The Fuelman network is a competitive advantage that allows our drivers to save at the pump or plug, and get tighter controls than other options are able to offer,” Russo said.

Click here to learn more about Fuelman.

Disclaimers:

1. *Source: Business Fleet, Fuel Cards Can Save You Money, 2007.

2. *Fuelman sites can be found at www.fuelman.com/sitelocator 

3. *Based on the Alternative Fuels Data Center of the U.S. Department of Energy as of 4/7/22, and public network operators supplied information

The post What’s a fuel card provider’s electrification strategy? appeared first on FreightWaves.

More than 60 small trucking companies are collectively owed millions of dollars after a Mississippi-based logistics firm filed for bankruptcy liquidation recently.

Transplus Freight System Inc. (Transplus), headquartered in Hernando, Mississippi, filed its petition in the U.S. Bankruptcy Court for the Northern District of Mississippi in mid-June.

In the petition, Transplus, not to be confused with Transplace, a subsidiary of Uber Freight, lists its assets as up to $50,000 and its liabilities as between $1 million and $10 million.

The shuttered brokerage states that it has up to 99 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees. 

It’s unclear why the company was forced to cease operations. However, many freight brokerages and trucking companies have been forced to file for bankruptcy protection in 2023 amid declining freight volumes and rates.

Toni Campbell Parker, attorney for Transplus, did not respond to FreightWaves’ request for comment. 

Matthew Huff, who signed the petition, is listed as the president of Transplus, while J. Faith McGregory is named as the chief financial officer of the brokerage, according to its 2023 corporate annual report. In May 2022, Huff filed articles of incorporation documents for Transplus, according to documents filed with the Mississippi secretary of state’s office.

McGregory declined FreightWaves’ request for comment.

Among Transplus Freight’s top 20 unsecured creditors are Shannon Robinson of Southaven, Mississippi, who is owed nearly $3 million, and  Zoom Technologies of Baldwin Park, California, which is owed nearly $66,000.

The petition lists over 60 small trucking companies as unsecured creditors, including CTH Transport LLC of Dallas, owed more than $23,000; RedStar Trucking, also of Dallas, owed nearly $8,000; and Power Transport LLC of Memphis, owed nearly $9,400.

U.S. Bankruptcy Judge Jason D. Woodard ordered Transplus to file the required paperwork, including a summary of schedules and the company’s statement of financial affairs, by Wednesday.

Late Wednesday, Transplus filed a motion seeking to extend the deadline to complete the schedules and other necessary documents in the case. However, the clerk filed an entry to the docket on Thursday stating that corrective action is needed by July 3 after an “incomplete PDF image [was] attached to the docket entry.”

A creditor’s meeting is scheduled for July 14.

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