Posts by Octavio

Semi-Truck

Largest truck show on Earth

By Dean Croke

The first truck show of the 2022 season is this week, and as usual, truckers can look forward to experiencing all four seasons in one week as we transition from Winter to Spring. It won’t be surprising for truckers to be prepping their show trucks at the Mid-America Trucking Show (MATS) this week in the rain, snow, sleet and hopefully sunshine. 

This year also marks the 50th Anniversary of MATS, offering three days full of exhibits, education, entertainment and networking – all at the largest annual trucking event in the world. In honor of MATS founder Paul K. Young, who founded the event in 1972, the PKY Truck Beauty Championship is held in conjunction with MATS. This elite competition hosts some of the best custom show trucks in North America, complete with a light show, awards ceremony, close-of-show parade and several exclusive competitor events. 

This week, DAT goes behind the scenes to look at what it takes to show a truck at MATS.

Do judges really wear white gloves during judging?

In addition to one million square feet of exhibition space, over 1,000 exhibitors, more than 72,000 attendees, including 18,000 owner-operators, there will be a few hundred glistening big rigs lined up outside the main pavilion. Some will be pure show trucks that no longer haul freight, but others will be working show trucks also vying for the top award.

Judging categories range from “Limited Mileage Class” to “Working Dump-Straight Truck” to “Working Interior Cab Only.” Still, regardless of the category, every entrant will have already spent thousands of dollars and many weeks getting their big rig ready. The truck operator who has a non-working show truck will have their truck in the shop weeks in advance, getting all the winter grime removed, but it’s a very different event for the working show truck.

After a winter of hauling freight and a buildup of salt and grime, truckers face an enormous task in getting their big rigs in show condition. Most trucks will go into the shop at least a week in advance and spend on average four days at the very minimum getting buffed, polished and waxed. Because it will almost certainly rain on the way to the event, drivers will have to do it all over again before judging starts on Thursday, March 24 at 9 am. Luckily the “Prep Lot,” a dedicated staging area outside the main pavilion that includes a truck wash, opens on Sunday, March 20, giving contestants three to four days to prepare. 

Unlike most truck shows, MATS is a judged event, and it won’t be uncommon to see drivers under their trucks in the Prep Lot cleaning the underside of chassis rails or even jacking up each wheel so they can dig rocks out of tire treads with a screwdriver. And yes, judges have been known to wear white gloves to ensure every spec of dust has been removed.

Rookie mistakes – yes, even professional drivers make them.

DAT Freight & Analytics spoke to Mike Gaffin, or The Boston Trucker as he’s known to his 26,000 YouTube and 65,000 Instagram followers, about what it takes to work 60 hours each week and still keep a working truck in showroom condition. 

“I keep my W900 Kenworth spotless and wash it every day because it’s my livelihood, plus I take pride in what I do and spend 3-4 hours cleaning it weekly,” according to Mike, a 33-year trucking veteran. “I have a reputation for having a clean truck and can’t be caught riding dirty.” 

Mike was a first-time attendee at MATS a few years ago with a 379 Peterbilt and had some advice for those new to MATS. 

“The hardest part is getting the frame and the fifth wheel clean,” he explained. “Everything else is easy, and at my first show, I rolled in with a greasy fifth wheel and dirty frame and lost judging points immediately.”

Rags down…the big moment arrives.

Once judging begins, competitors will hear “rags down” over the public address system, which means drivers can’t touch their trucks after they’ve been parked in the designated area aligned with the judging category each truck has been entered. The PKY Truck Beauty Championship is located in the J Lot, directly behind the West Wing and Pavilion, where you’ll be able to meet with drivers as they wait for judges to interview them and inspect their trucks.  

The stakes are high, as are the bragging rights.

Once all custom trucks have been judged, it’s time to celebrate these works of art and crown the winners. All attendees will be invited to the Awards Ceremony at 10 am on Saturday, March 26, where the winners of each class will be announced, along with Best of Show, People’s Choice and other awards. 

For some, it’s recognition of all the hard work and dedication to the profession, it’s just for fun and bragging rights, but for others, it’s a way to use awards and their prize-winning show truck for marketing their product and services. Either way, the stakes are high.

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semi trucks

Truck shortage drives growers nuts

By Dean Croke

Each state has crops that dominate annual production and generate thousands of truckloads of freight, but few do so to such an extent as peanuts and almonds.

All of the commercial almonds in North America are grown in California, which also account for 80% of commercial almonds around the world. Peanuts are the official state crop of Georgia, which produces almost 50% of the total U.S. peanut crop. Both states lead the nation in their respective almond and peanut exports.

That’s also an enormous amount of freight for truckers to haul — both short and long-haul.

West Coast’s almond harvest requires more than 150,000 truckloads

California almond orchards are expected to produce 3.2 billion pounds of nuts this year. This is up 3% from last year’s 3.12 billion-pound crop, which was worth an estimated $6.5 billion.

The majority of the almond crop is grown in California’s Central Valley, which includes the Fresno freight market in the south and the Stockton market in the north. This makes for a short trip to Los Angeles, where most export containers are loaded.

“Local drayage carriers take loaded 20-foot or 40-foot dry containers to the port each day and bring an empty one back to be loaded,” says Jonathan Meyer, CEO of Treehouse Almonds.

Based on the 2020 crop tonnage, approximately 70% of almond production — or the equivalent just under 1,000 40-foot export containers per week — are hauled by drayage carriers for export. The almond export market involves port destinations to over 90 countries with India being the top export market.

The almond freight task is larger than one might expect. First, 80,000-pound short-haul loads (in double combination hopper trailers) of freshly harvested almonds are shipped from the orchard to the huller or sheller facility. Once the almonds are shelled, they’re shipped again to the handler for sizing, processing, storage and shipping.

Both steps combine for 150,000 truckloads — and that’s before export or domestic loads are hauled. Domestic loads within the U.S. average just over 21,000 loads each year, which makes a combined total of approximately 141,000 truckloads of almonds annually.

Peanuts required about 263,000 truckloads in 2020

Georgia accounted for 3.28 billion pounds of peanuts in 2020, and Alabama came in second at 637 million pounds.

While Georgia is known as the leading producer of peanuts, approximately half of the peanuts produced in the United States are grown within a 100-mile radius of Dothan, AL. In terms of national production, the vast majority of peanuts are grown in the Southeast Region (Georgia, Florida, Alabama and Mississippi). This region produces approximately 65% of all U.S.-grown peanuts.

Globally, the U.S. was the fourth largest producer last year at 6.134 billion pounds with exports accounting for 25-30% of production.

Once harvested, the peanut crop is shipped in dump trucks to the shelling plant. It’s then processed and packed for shipment a second time to consumer markets and other peanut-based manufacturers (peanut butter, peanut oil, candy, etc.).

Based on the 2020 crop production of 6.134 billion pounds, the freight task involves the equivalent of 123,000 truckloads of bulk peanuts from farm to sheller. And then another estimated 140,000 truckloads are needed to ship to domestic retail consumer markets, intermediate manufacturers or export markets via ports.

That makes an estimated total of 260,000 truckloads of peanuts before we even get to the shipping stage for products like peanut butter, which accounts for around half of all edible peanuts produced in the U.S.

Tighter capacity and higher spot rates

Like all freight types, both almond and peanut shipping right now is impacted by tight capacity, mostly in the longer-haul truckload market.

“The current shortage of trucks is driving us nuts,” a grower told DAT.

In the Southeast Region, DAT dry van spot rates have been steadily climbing for the last four weeks to reach an average of $2.72/mile to all destinations this week. Southern Georgia, the heart of peanut country, is seeing even higher rates.

Using Douglas, GA as the center of peanut production, spot rates to Orlando are currently averaging $4.17/mile. This is up $1.05/mile since February after averaging $3.30/mile for the second half of last year.

On the West Coast in the Fresno market, capacity is tight for long-haul almond shippers. Dry van outbound spot rates are averaging $2.78/mile. On the 922-mile run to Seattle, spot rates are currently $4.01/mile after increasing $1.29/mile since the start of this year.

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Commercial Trucker

Being a trucker during a pandemic

By Brita Nowak

Owner-operator, Brita Nowak, shares her perspective on COVID-19’s impact on over the road truckers.

All of a sudden we, the truck drivers, were hailed as heroes. 

People started waving at us, thanking us, and we enjoyed traffic-free driving through what were usually gridlocked cities. Everyday life changed, sometimes eerily so, and we adapted.

From one day to the next, we were no longer required on the docks, and warehouses were able to load and unload our freight without our supervision. Emailing our PODs became the norm, which in my opinion, is a part of trucking that has finally progressed to how it should be. 

When calling freight brokers, hearing babies and dogs in the background became normal, and I stopped bothering with lipstick because I just covered it with fashionable masks. 

But there was the hunt for food. The very people who supplied the nation with food werenʼt able to find it themselves. Drive-thru only? Well, that doesn’t quite work if you’re driving a big rig. Truck stops stopped serving the self-serve “roller grill” items entirely. 

I somehow felt both appreciated and completely unappreciated at the same time. 

My stainless steel coffee cup couldn’t be refilled, but a new disposable cup could, despite the fact required people touching the dispenser. Desperation created innovation on my part and, while my RoadPro lunchbox didn’t get much use, I found workarounds, like using my own kettle and French press that helped prevent the need to wait in long lines to get coffee. 

The thing I heard over and over from my trucker colleagues was that they stayed away from home out of fear that they might bring back COVID-19 from some random encounter at a distant place they were a week ago.

But then finally, freight rates went up! That made staying away from home more bearable, as I supported family members who are now no longer working. However, months into the pandemic, truck drivers were no longer enjoying the amazing treatment we initially experienced. 

It was sweet and brief. We are back to being cut off while on the road, yelled and eye-rolled at, by the motoring public. ELD exemptions were lifted.

As we look forward to the new year, and better times, I am hopeful that some of the good things that have come out of having a greater awareness of the role truck drivers play will stay beyond COVID-19. 
 

Brita Nowak worked as an actress in Hollywood before starting her trucking career. Now she owns her own trucking company, BratCat Express. Check out BratCat Express at www.bratcatexpress.com and on Instagram at brita.nowak. 

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Commercial Truck Insurance

RFP season arrives amid uncertainty

By Mark Montague

Uncertainty abounds as we begin to look forward to the New Year. Election clarity and virus/vaccine issues aside, a key concern for freight management specialists is the cost of transportation in 2021.

As we have seen in 2020, freight patterns and rate levels can shift suddenly, so it pays to have a strong awareness of factors that can affect the marketplace when bidding on future freight.

Bid on RFPs with confidence using the pricing and forecasting tools in RateView from DAT iQ.

Current state of the freight marketplace

Strong. Since May, demand continues has exceeded supply, leading to record high spot market rates. Contract rates followed but spot rates continue to run ahead. In fact, starting in August, spot rates nationwide rose above the national contract level. We have only seen that happen a few times in past periods like the polar vortex in the winter of 2013-14 and ELD mandate build-up in late 2017 through 2018.

The overall economy continues to improve, albeit slowly. Certain sectors have been left behind, but sustained rises in activity elsewhere show no signs of slowing, even without a new stimulus bill.

Will there be a recession?

Probably not. Maybe. Ten million workers having lost employment continues to be a drag on the economy, especially as stimulus money dries up, but it’s hard to reconcile the current state of the freight marketplace with a recession. Still, another lockdown could put a hard stop on economic activity, then the restart could cause the whole cycle to repeat.

The last major rebound was in 2017, driven by the rapid expansion of oil and natural gas activity. That all began to cool in 2018, as energy production got ahead of demand. Then followed the worldwide drop in energy consumption in early 2020, causing the price of oil to plummet and leading to a near shutdown of US oil fields. Out of more than 1,000 drilling rigs in operation nationwide at the start of the year, the US fell below 250 rigs in operation. That’s recovered to 312 rigs in operation as of mid-November, even as diesel and gas prices remain low. While prices have remained low, keeping diesel and gas prices down, oil & gas well activity has begun to rise in recent months.

Industrial production continues to rise in the US. Internationally, both imports and exports are sharply higher in recent months. In part, new trade deals with Mexico and Canada (USMCA) and a cessation of trade disputes with China have helped provide more sustainability. Inventory positions remain low for customers and the rapid roll-out of vaccines in the first six months could add further pressure to supply chains.

Find loads and trucks on the largest on-demand freight marketplace in North America.

What’s driving the economy

Low interest rates are likely here for at least the next two years. This keeps the cost of borrowing down, keeps housing mortgage rates low and generally provides stimulus across a wide spectrum of the economy. Fortunately, inflation remains in check overall, despite some sharp price rises for some key materials like lumber.

Strategic pricing

Some shippers exploited the sharp drop in demand in the spring to enforce much lower rates. Key lanes like Los Angeles to Chicago nearly dried-up, hitting low points for the deregulated era, 1980 to now. The resulting sharp rebound caught many by surprise and continues to strain shipper budgets.

For carriers, this RFP season looks primed for strong, profitable contract rates. Carriers can trade some short-term profits for a guarantee of stability. Conversely, shippers and carriers could agree that the situation is fluid and create more flexible pricing arrangements, such as 3-month reviews.

A couple of things have changed in 2020 that shippers, carriers and brokers will also have to consider. First, driver mobility has been reduced. It’s not as easy to relocate, let alone find, truck drivers from overseas because of various restrictions. Many older drivers may have exited the workforce, and it’s likely that the increased use of hair follicle testing has tightened driver supply.

If the various vaccines under development prove effective, that is an additional source of economic expansion as the hospitality industry comes back. My thought is that there is a lot of pent-up demand for travel and other experiences outside the home. For this reason, I think the first six months of 2021 will be solid from a carrier pricing standpoint.

The downside is that there is a danger that we can’t quite get the coronavirus under control to fully reopen the economy.  Certainly no one wants that scenario. If the stock market is any gauge, it’s betting strongly that we will avoid the worst case. Politically, almost everyone can agree that we aren’t in an ideal situation, for various reasons.

Tactical pricing

Understanding and responding to changes in the spot market with nimble moves can be another way to get rewarded. DAT iQ tools now contain forecasting elements that provide both a one week look ahead as well as longer term projections. As an analyst using the DAT datasets, I could often get ahead of developing market changes. And with the addition of the new 3-day averages, you can get the closest to real-time view available on the most volatile lanes in the country.

Surveys of a number of small-to-medium size fleets find that locking up all capacity into contracts may not provide the best return on investment. It’s been harder in the past year to place trucks in the right market at the right time. In years past as a dispatcher trying to service contract customers, I found many instances of having to deadhead a truck many miles to meet the needs of the shipper. An optimal mix of freight may be 70% contract and 30% spot or 80/20 rather than 90/10.  Some major carriers used to strive for 95% contract and 5% spot, and they are seeing the value of having a few more trucks free of contract obligations on the spot market.

As long as we continue to see disruptive elements in the freight marketplace, this more recent trend should remain true.  Stability would be great but it looks elusive.

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Commercial Truck Insurance US

Changes in inventory strategies add new wrinkle to fall shipping season

By Dean Croke

Abandoning their lean-inventory strategy, grocery stores and supermarkets have begun stockpiling groceries in readiness for a possible surge in Fall and Winter COVID-19 cases.

That’s just another wrinkle for a fall and winter holiday retail season that’s already full of unknowns. That season includes Halloween, Thanksgiving, Black Friday, Small Business Saturday, Cyber Monday, Super Saturday and Christmas – all events that typically create higher demand from truckers to haul freight.

The accelerated inventory build-ups add yet another dimension to an already disjointed freight market, as manufacturers work to avoid the inventory failures seen in March this year.

Retailers have also started holiday sales earlier, as consumers who are resistant to going out to shop begin to do more of their holiday shopping online earlier this season. Large retailers including Kohl’s indicated that the company is anticipating early holiday demand beginning in October. Target CEO Brian Cornell also said, “we will be spreading our best price holiday offers over a longer timeframe, in order to cater to customers, who start holiday shopping in October.”

How this impacts the overall long-term truckload market remains to be seen. For those hauling retail-related freight, volumes should remain high through year-end, but for those hauling manufactured goods, expect slower volumes to continue. The most recently released August reports for three of the more consistent and reliable freight volume indicators provide some more clarity into truckload demand:

FMIC Pulse Signal: DAT iQ reported that the amount of freight moving under spot increased by 80% from August 2019, even though total freight volume decreased slightly by 3% year-over-year in the dry van sector. Consistent with recent USDA truckload shipments of produce, which were down 12% y/y last week, FMIC refrigerated volumes are also down 10% y/y in August.

ATA Truckload Tonnage Indexreported that tonnage is down 3.4% y/y even though some carriers on the consumer side of the economy are generally seeing strong freight volumes. In contrast, carriers in industrial and energy industries are seeing softer volumes.

CASS Freight Shipments Index: Volumes improved in August, increasing by 8% m/m but remain down 7.6% y/y. Overall, CASS expects freight volumes to, “ move back closer to year-ago levels in the coming months, although we think it will stay in negative territory until 2021”.

On the demand side, many experts, including Deloitte, are forecasting holiday retail sales will be up about 1.5% compared to 2019 even though most U.S. consumers are in worse shape than they were last holiday season. Deloitte contends that retail spending should still rise in 2020 as consumers redirect spending on travel, eating out, and other entertainment to more holiday retail shopping. All good news for carriers in the retail sector, but for carriers heavily dependent on industrial manufacturing where freight shipments are down 7.8% y/y according to the U.S. Census Bureau, freight volumes should continue to be slow.

To highlight the volatility in truckload volumes, the latest August U.S. Census data for manufacturing shipment values for durable goods are down 9.39% y/y, with commodities varying greatly. For example, July shipments of textiles, apparel, paper, printing and plastic products are down on average 5.25% y/y whereas computers, electronic products and equipment, and household appliances are up 1.22% y/y.

Freight volumes will not only vary depending on where the domestic manufacturing of these goods takes place, volumes will additionally vary by manufacturer as they implement physical distancing of workers to meet COVID-19 related safety requirements, slowing down production lines in the process.

On our dry van Market Conditions Map, we’re seeing this play out in multiple markets including on the West Coast in Los Angeles and Ontario markets where outbound load post volumes are up 14% w/w. Notable destinations included the larger warehouse markets of Phoenix and Stockton, which received around 7% and 5% of loads respectively.

On the East Coast, the port market of Savannah, GA, recorded an 18% w/w increase while further north in Grand Rapids, outbound load volumes increased by 13% w/w following a substantial influx of freight from the Pendleton, OR, market four weeks ago. In the Midwest, outbound volumes in Denver cooled slightly dropping by 3% w/w while in contrast, inbound volumes increased by the same amount last week with around 15% of loads coming from Ontario, CA.

Spot market rates stayed around $2.22/mile last week, which is the first week in almost the last five months where rates haven’t continued to climb at a consistent rate. Could we be seeing a plateauing of rates in the dry van sector suggesting some steam may be going out of the spot market? It’s a little too early to call given demand in the consumer-packaged goods (CPG) sector is still very strong amid growing concerns of a rise in COVID-19 cases in Winter and subsequent restrictions possibly being implemented.

Clouding the truckload outlook is this week’s news from The Conference Board, which reported the Consumer Confidence Index declined in August for the second consecutive month. “Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead.”

For reefer carriers, the pandemic has created the same types of volume volatility that we’ve seen for dry van, just across different types of commodities. For example, the volumes for fresh produce have been lower this year, but that’s been offset by higher demand for frozen food, with consumers purchasing products that have a longer shelf life. Dairy products have also been up, while meat, poultry and seafood are down.

Meanwhile, produce volumes are still strong on the West Coast. Grapes are the number one fall season fruit out of Fresno, CA, and those are in season along with carrots, lettuce, strawberries and avocados.

Imported pineapples, tangerines and oranges from Chile continue to arrive in the Philadelphia market, but reefer capacity is fairly loose there which has put a drag on freight prices. Outbound Philadelphia rates are now down 11% m/m. Avocado growers in South Florida are in the middle of peak shipments, which occurs between August and November. Load posts out of Lakeland and Miami, FL, are up 8% w/w.

National average reefer rates seem to be settling around $2.36/mile excluding FSC, with a definite plateauing trend emerging last week. Spot rates are around 5 cents lower than the peak in 2018, which coincided with the typical mid-year peak in the produce shipping season.

This year the reefer rate rally has extended two months longer than in any normal non-pandemic year. Even though frozen food volumes are on the rise, they won’t be sufficient to offset declining produce volumes and keep upward pressure on spot rates as we head deeper into Fall and Winter.

With the exception of wood products, where shipments were up 1% y/y, most manufacturing shipments suited to flatbeds – including, primary metals, fabricated metal products and machinery – were down on average 8.1% y/y, according to the U.S. Census Bureau. There are signs of improvement, though, with shipments in August down just 2.5% m/m compared to double that for the prior month.

Farm, construction and energy-related machinery have been hit the worst during the pandemic. August shipments are down 13%, 19% and 18% y/y respectively.

Flatbed volumes continue to climb In the Southeast freight markets in Georgia (Atlanta and Macon) where outbound load post volumes are up by 13% w/w and 22% m/m – 13% of loads were destined for Richmond VA, 7% to Pittsburgh and 9% to Lakeland FL. In the Pacific Northwest, outbound load volumes are up 17% w/w with 18% of loads destined for Southern California and 4% of loads destined for Phoenix.

Flatbed spot rates inched higher again last week increasing by to $2.20/mile, excluding fuel. Spot rates are now 6 cents higher than this time in 2018, with signs there’s some emerging resistance to move much higher as we get further into Fall and colder temperatures.

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Commercial Truck Insurance

Gulf Coast freight haulers prep for Hurricane Laura’s wrath

By Neil Abt

Port closures and mandatory evacuations are underway in parts of Texas and Louisiana ahead of Hurricane Laura, projected to make landfall on Wednesday. 

Most operations at the Port of Galveston and Port of Houston were halted by Tuesday afternoon. Much of the region’s refining capacity was also shuttered. The Port of Houston handles about 70% of the container cargo making land in the Gulf, so even a brief closure will have ripple effects across the spot market and supply chain for weeks to come.

Texas Gov. Greg Abbott suggested wind is likely to cause the most damage from Laura, unlike the unprecedented rain and flooding the city suffered three years ago this week during Hurricane Harvey. Houston is the nation’s fourth most populous city.

John Esparza, president and CEO of the Texas Trucking Association, said truckers have been pre-positioning empty equipment and emergency supplies near the areas expected to feel Laura’s wrath since last weekend and are prepared to move in as soon as it is deemed safe. The Market Conditions Map from DAT Freight & Analytics showed high demand for trucks along the Texas and Louisiana coasts, with shippers looking to move freight out of the storm’s path and anticipating disruptions.

He lamented the timing of the storm, noting that the “the freight market has begun to stabilize” in the months since the COVID-19 pandemic began in March. 

“Additional stress to the system, such as a large weather event, certainly can create an imbalance,” Esparza said. “We may not be able to respond as quickly as pre-COVID.”

Demand for some consumer goods have spiked since the pandemic began. On a recent conference call, Derek Leathers, Werner Enterprises’ president and CEO, cited a shift in food and beverage consumption to grocery stores from restaurants as an example of the jolt to established supply chain patterns.

The imbalance created by these demand changes, combined with manufacturing slowdowns, have led to an increase in deadhead miles for many truck drivers, including those with Werner.

Esparza noted the Gulf region has gotten used to severe storms this time of year, with hurricanes Rita, Ike and Harvey each providing a template on how the supply chain can more quickly recover from severe weather events. 

He also credited the enhanced role technology continues to play on speeding response efforts to get delayed freight loads to their final destinations. 

The DAT One network quickly connects carriers with freight brokers and shippers.

Refinery closures compound disruptions

Ahead of the Gulf Coast evacuations, numerous refineries in southeastern Texas and southwestern Louisiana announced they were temporarily halting operations.

Among the closures are Motiva Enterprises’ 600,000-barrel-a-day refinery and chemical operations in Port Arthur, TX and ExxonMobil’s refinery in nearby Beaumont, TX and Phillips 66’s facility in Lake Charles, LA. 

Motiva said it was already working to “ensure reliable fuel supply in our communities after the storm passes.” More than half of total U.S. refining capacity is on the Gulf Coast. 

The Gulf was previously breathing a sigh of relief as a weakened Tropical Storm Marco caused less damage than initially feared. 

However, the Port of New Orleans halted operations on Monday, leading to delays for several freight rail and intermodal operators likely to be further compounded by Laura. 

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Commercial Trucks

The next generation of freight analytics is coming soon

By Claude Pumilia

You’ve probably heard some version of the butterfly effect – the idea that a butterfly flapping its wings in a place like Texas can cause a tsunami somewhere as far away as Japan. The scientific evidence for that specific example is pretty slim, but it’s no stretch to say that the freight industry is full of butterfly effects.

Supply chains and freight markets are complicated ecosystems that rely on a multitude of interconnected pieces, and often changes in one area can have far-flung consequences. These ecosystems can become especially volatile in the face of disruption, which the COVID-19 pandemic brought into stark relief.

But now, for the first time ever, transportation professionals and analysts can access data that paints the full picture of the freight marketplace, with visibility into every dot that connects the entire supply chain.

DAT recently acquired the Freight Market Intelligence Consortium from Chainalytics,pairing our existing real-time spot market analytics and insights with FMIC’s world-class intelligence and rate modeling for the contract freight market.

With access to every side of the freight marketplace, we’re able to offer a 360-degree view of transportation like never before.

Providing that level of detailed visibility requires high-quality intelligence. And in order to provide actionable insights that you can trust, they need to be based on facts – not conjecture or conclusions based on incomplete data. Only then can we remove uncertainty that so often clouds the freight industry.

What does that mean for transportation professionals?

For one, you’ll be able to better serve your customers by knowing exactly what’s happening in the marketplace and why – where capacity is heading, truckload demand forecasts, where prices are trending, how margins are shifting. You’ll also be able to make the best business decisions as you anticipate and plan your next moves, with a unique perspective on how trends in one part of the freight industry have unexpected effects in another.

This massive infusion of new data and analytical horsepower bolsters the products already provided by DAT iQ. It expands our access to global market analytics on truckload, intermodal, LTL and other modes of transport, growing our freight rates database to $118 billion in actual transactions.

Combining DAT iQ and FMIC data science capabilities also means our models and benchmarking techniques can inform one another and grow, offering a full view of the entire ecosystem. We also bring together two expert teams for data privacy.

Our industry still faces many challenges, which makes this next generation of freight analytics tools all the more critical as we shine a brighter light on the path forward.

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Commercial Truck Driver

New California owner-operator law on hold for now

By Pat Pitz

One day before California’s Assembly Bill 5 (AB5) was to take effect on Jan. 1, 2020, a U.S. District Court judge in California granted a temporary restraining order that prohibits enforcement of the law for the trucking industry. The restraining order will remain in place until Jan. 13, when the court will consider a motion for a preliminary injunction, which could delay enforcement for a longer period, until a pending lawsuit is resolved.

UPDATE: Jan. 13, 2020: The judge extended his temporary restraining order blocking California from enforcing AB5 on the trucking industry, until he rules on the preliminary injunction.

At issue is how the law would prevent trucking companies from hiring owner-operators as independent contractors. The new law would define those owner-operators as employees of the company.

Contractors must meet ABC test

AB5 states that workers must meet three criteria to be classified as independent contractors, commonly referred to as the “ABC test.”

    A. The worker must be free from control and direction of the hiring entity.

    B. The work performed must be outside the usual course of the hiring entity’s business.

    C. The worker must be engaged in an independently established trade, occupation or business.

That second requirement is virtually impossible for a trucking company to meet because driving trucks is part of a trucking company’s core business.

Does AB5 interfere with interstate commerce?

The restraining order was issued in the lawsuit brought by the California Trucking Association against the attorney general of California, who seeks to enforce AB5. The restraining order states:

The court finds that a temporary restraining order is warranted. At this early stage of the proceedings and within the brief amount of time available, plaintiffs have carried their burden for purposes of emergency relief to show (1) that they are likely to succeed on the merits, (2) likely to suffer irreparable harm in the absence of relief, (3) that the balance of equities tips in their favor, and (4) that their requested relief is in the public interest.

The California Trucking Association’s key argument is that AB5 interferes with the Federal Aviation Administration Authorization Act, which prohibits states from enacting laws that interfere with interstate commerce. The judge appears to agree with that argument:

Plaintiffs have shown that AB-5’s Prong B is likely preempted by the FAAAA because AB-5 effectively mandates that motor carriers treat owner-operators as employees, rather than as the independent contractors that they are. 

AB5 is being watched closely by the trucking industry because other states could adopt similar laws once California sets a precedent. In fact, in November a New Jersey state senator introduced a bill, S4202, that would mandate the use of the ABC test in that state.

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Commercial Truck Insurance Law

5 coming regulations that threaten trucking

By Pat Pitz

There are a number of new regulations coming soon that have the potential to hit the trucking industry hard. Individually, each regulation may not move the needle much, but combined, they could turn the trucking environment from one of excess capacity to situation where trucks are hard to find.

1. AOBRD to ELD switchover may reduce productivity
    (Implementation date: Dec. 17, 2019)

The regulation requiring Electronic Logging Devices (ELDs) for tracking a driver’s hours of service (HOS) took effect on Dec. 17, 2017. However, trucks using the older  Automatic Onboard Recording Devices (AOBRDs) were given 2 more years to switch over to ELDs. 

While few expect the switchover to be as disruptive as the ELD mandate in 2017, it could be enough to decrease productivity and tighten capacity, especially because it hits at one of the busiest times of the year for freight. The December 2017 mandate contributed to a spike in rates, which stayed elevated throughout 2018.

Carriers using AOBRDs are more likely to be the larger carriers, so that’s a lot of trucks. And those who wait till the last minute to switch may encounter glitches running new software or hardware. According to John Seidl, Vice President of Risk Services for Reliance Partners and a former FMCSA investigator, the biggest challenge is training drivers properly in the use of ELDs so carriers can avoid hits to their CSA scores.

RELATED: AOBRD vs. ELD: Will the switch-over jumpstart rates?

2. IMO 2020 could cause a spike in diesel prices
    (Implementation date: Jan. 1, 2020)

Starting Jan. 1, 2020 ocean vessels are required to switch to ultra low sulfur fuels. The distillate used to create these fuels is the same that is used for diesel fuel. That means that distillates normally dedicated to diesel will be diverted to marine fuels. According to current estimates, this could cause diesel prices to spike 25 cents per gallon or more. 

Besides labor costs, fuel is the second biggest expense for a carrier, and a sudden sharp rise in diesel prices could drive some carriers out of business. A report issued this past summer by FreightWaves and Michigan State University professor Jason Miller examined 30 years of truck failure data. The report noted: “The biggest surprise to most outside of trucking industry professionals would be that failures are not primarily caused by spot and contract rates falling steeply in a recession. Instead, failures are primarily due to huge spikes in diesel prices that smaller carriers cannot pass on.”

DAT has freight rate averages on more than 65,000 point-to-point lanes. Learn more.

3. Drug and Alcohol Clearinghouse will weed out drivers
    (Implementation date: Jan. 6, 2020)

Beginning Jan. 6, 2020, trucking companies are required to use the FMCSA’s Drug and Alcohol Clearinghouse, a new online database that gives employers access to information about CDL driver drug and alcohol violations. Currently, a driver who is fired from a job for drug use can often obtain a job with a different carrier in a different state. The clearinghouse is intended to prevent that by making it easier to identify drivers with prior violations.

The clearinghouse could weed out even more drivers if the FMCSA decides to permit hair follicle testing as an acceptable alternative to urine testing. Urine samples can detect drug use in the past few days, but hair follicle testing can detect drugs for up to 2-3 months. In June, the Trucking Alliance testified to Congress that they estimate that more than 300,000 CDL holders would either fail or refuse to take a hair analysis test. That would dramatically reduce the number of qualified drivers. 

RELATED: Drug-Alcohol Clearinghouse: Employer asset or capacity killer?

4. New overtime laws will lead to higher labor costs
    (Implementation date: Jan. 1, 2020)

New overtime rules take effect in 2020, which the U.S.Department of Labor says will make an additional 1.3 million Americans newly eligible for overtime pay. 

While the new rules likely won’t be an issue for most truck drivers, who are paid by the mile, they may affect both carriers and brokerages with back-office staff. The new rules increase the salary threshold for employees to be exempt from overtime, rising from the current $23,660 to $35,568.

In addition, only 10% of commissions and bonuses can be counted as part of an employee’s salary. For example, if an employee earns $20,000 in salary and $30,000 in commissions, the employer would only be able to count $23,000 as the employee’s salary and would therefore be required to pay overtime. 

RELATED: Prepare now for new overtime rules

5. New California law limits use of independent contractors
  (Implementation date: Jan. 1, 2020)

In the trucking industry, it’s common for carriers to “lease on” owner-operators as independent contractors and brokers to take on “agents” as independent contractors. That practice will be severely curtailed in California with the implementation of Assembly Bill 5, which starts Jan. 1, 2020.

AB5 states that workers must meet three criteria to be classified as independent contractors, commonly referred to as the “ABC test.”

    A. The worker must be free from control and direction of the hiring entity.

    B. The work performed must be outside the usual course of the hiring entity’s business.

    C. The worker must be engaged in an independently established trade, occupation or business.

That second requirement is virtually impossible for a trucking company to meet because driving trucks is part of a trucking company’s core business. News outlets have reported that trucking companies are sending out notices to their California-based leased-on drivers notifying them they have a few choices, including becoming a company driver, getting their own operating authority, or moving out of California.

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Reefer rates remain in flux

Posted by Allie Lewis

California and Texas remain in flux with overall volumes roughly the same the last several weeks. Reefer produce failed to climb at the end of July, due in part to a sharp decline in volumes from Fresno.

The national load-to-truck ratio for reefers was up 18% last week compared to the previous week, which meant it was easier for carriers to find loads. The national average reefer rate ended July at $2.19 per mile, which was 7¢ lower than the June average, but 4¢ higher than May.

RISING 

Los Angeles area volumes were up more than 10%, which stopped the rate slide in that market. Elsewhere, Denver outbound rates were up a bit due to higher volumes. 

  • Green Bay to Des Moines jumped 58¢ to $2.68/mi (known to fluctuate) 
  • Philadelphia to Miami rose 23¢ to $2.06/mi
  • Los Angeles to Phoenix increased 7¢ to $3.25/mi

FALLING 

McAllen, TX had a 25% increase in volumes, but that wasn’t enough to raise rates in that market. In Dallas, both volumes and rates were down. 

  • Grand Rapids to Cleveland dipped 25¢ to $3.09/mi
  • Miami to Baltimore declined 23¢ to $1.27/mi 
  • McAllen to Atlanta slipped 29¢ to $1.96 (but demand picked up at the end of the week)

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