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E-commerce may spur more trucking acquisitions

Logistics has become an “integral component” of e-commerce business models as it is responsible for planning, control and flow of products from the point of origin to end-consumers, according to a new report by global consulting firm Research and Markets

The firm predicts that the global e-commerce logistics market will expand at a compound annual growth rate (CAGR) of 19.5% between 2017 and 2025.

The proliferation of the e-commerce sector and consequent rise in cross-border and international e-commerce trading activities is also cited as one of the major factors driving e-commerce logistics market worldwide.

Thus, rise in both intra-regional and cross-border trades are collectively contributing towards the growth of the e-commerce logistics market, Research and Markets said in its report. “With the expansion in breadth of offerings of e-commerce companies, reliable and robust logistic service is crucial for firms of all sizes,” the firm noted.

That trend is helping to spur more e-commerce focused acquisitions in trucking, such as the recent move by J.B. Hunt Transport Services to buy Special Logistics Dedicated LLC (SLD) and its affiliated entities for a reported $136 million.

“This acquisition will also allow our customers to deploy ‘big and bulky’ inventories into key markets, improving order fulfillment times for final mile deliveries and further enhancing our e-commerce delivery capabilities,” noted John Roberts, president and CEO of J.B. Hunt, in a statement.

SLD provides pool distribution services throughout North America using 14 terminals and fulfillment centers and a fleet of over 850 pieces of equipment. Its service offerings include: dedicated transportation at both dedicated and multi-use sites; cross-docking and contract logistics; less-than-truckload product consolidation; commingled pool distribution; and a Texas-based intrastate 57-ft. dry van highway service.

Overall, e-commerce activity continues to increase rapidly, according to a report by Adobe Digital Insights. Between November 1st and December 31st last year, the firm said, online sales hit $91.7 billion – up 11% from $82.5 billion during the same period in 2015.

“E-commerce is not new but it has reached critical mass; it’s increasing 20% per year and is a destructive force most prominently in the retail sector,” Marianne Rowden, president & CEO of the American Association of Exporters & Importers (AAEI), explained in a recent conference call with reporters.

“The impact of this colossal growth on online sales is especially being felt in cross-border sales, affecting shippers, transport providers, and others,” she said.

And those challenges are only growing, noted Gary Barraco, director of product marketing for Amber Road, on the same call.

“The pace of change is only accelerating – redefining what it means to be ‘agile’ in supply chain operations,” he said. “Online [sales] grew by leaps and bounds [last year] especially emerging markets where low cost goods are hard to find in local shops.”

Barraco also noted sales of goods over the Internet is expected to be a $1 trillion business by 2020 and will comprise 13% of global trade by 2019. E-commerce alone will be worth $3.5 trillion by 2023, he added.

“The sheer size and potential of e-commerce sales are too lucrative to pass up,” Barraco stressed.

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Van Rates Are Going Up, But Slowly

Competition with railroads, plus extra trucks on the spot market, kept rates in check most of the year. But last week, the national van load-to-truck ratio hit 3.7 loads per truck. That’s the highest it’s been since early January. The reefer load-to-truck ratio was also the highest since January. That helps vans, since those reefer trucks are busy when they might otherwise have competed for van freight. So we can expect conditions to improve for vans.

Van rates continued to trend up last week, in fact, but it’s a slow and steady trend. The national average added 1¢ to $1.69/mile, while prices rose on 55 of the top 100 van lanes. That’s compared to just 30 lanes that paid less than the previous week. (The other 15 were unchanged.)

A quick note about load-to-truck ratios: These should be viewed as more of a barometer than a thermometer. When there are 3.7 van load posts per truck post, the important part of the story is not the number itself but whether it moves up or down from one week to the next, or one market to the next. The ratio is useful as a pressure gauge, to see if demand for trucks is going up or down in a specific place or time. Whichever way the ratio goes, rates often follow.


Darker-colored states have higher load-to-truck ratios, meaning that there’s less competition for van loads in those states.

Dallas and Denver had a lot more loads available last week. The whole state of Texas has been hot for spot market freight. Half of the top 6 markets for van load posts on DAT TruckersEdge last week were in Texas:

Top Six Markets for Load Posts, May 14 – 20

1. Atlanta
2. Houston
3. Charlotte
4. Dallas
5. Lakeland, FL
6. Laredo, TX

Philadelphia and nearby Allentown, PA, both had more loads last week, but rates moved in opposite directions – down in Philly, up in Allentown.

All rates below are based on real transactions between brokers and carriers. Lane rates are available in TruckersEdge Enhanced.

RISING

Outbound rates from Chicago continued to lag, but one exception was the lane to Buffalo. It’s a relatively low-volume lane, but it happened to have the biggest jump in price last week: Up ?16¢ to $2.31/mile

Rates on the lane from Atlanta to Philadelphia rose ?14¢ to an average of $2.30/mile

Denver had the biggest increase in volumes last week, and rates also rose on some major inbound lanes. For example, the lane from Stockton, CA, to Denver paid ?12¢ better at $2.03/mile

FALLING

Most declines were small, with a few exceptions:

  • Memphis to Columbus dropped the most, down ?13¢ to $1.90/mile
  • Atlanta to Memphis lost ?11¢ to $1.71/mile, but rates were up ?12¢ in the opposite direction
  • Houston to Oklahoma City has been topsy turvy, and last week it was down ?13¢ to $1.80/mile

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Could House Bill Slow or Even Stop ELD Rule?

The House Transportation Committee has attached a directive to this year’s Transportation, Housing and Urban Development (THUD) appropriations bill that could end up delaying or repealing the electronic logging device mandate set to go into effect on Dec. 18. Also added to the bill was a directive calling for a review of the technology platforms of ELD suppliers.

The committee voted 31-20 late in the evening of Monday, July 17, to send the bill to the full House. The legislation also moves forward with a rider long sought by trucking interests that would prevent states from enacting laws dictating meal and rest break requirements for truckers.

14 Things You Need to Know Before ELDs Become Mandatory

Also still included is a rider that would prevent advancing a safety-fitness determination rulemaking until the DOT Inspector General has issued certain certifications required by law.

As for ELDs, the House THUD bill now directs the Department of Transportation “to analyze whether a full or targeted delay in ELD implementation and enforcement would be appropriate and, if so, what options DOT has within its statutory authority to provide temporary regulatory relief until all ELD implementation challenges can be resolved.” In addition, the Federal Motor Carrier Safety Administration is directed to “provide a report on its findings to the House and Senate Committees on Appropriations within 60 days of enactment of this Act.”

The second directive calls for FMCSA to review ELD manufacturers’ technology platforms  “to confirm that devices not only meet standards and specifications necessary for all affected industries and fleet sizes to be compliant, but also provide a user interface that is reasonably easy to navigate.” There is no deadline for complying with this order.

In its report on the bill, the committee justified its concern by noting the “heavy burden of this mandate, especially on small carriers.” It also stated that the mandate is “projected to cost over $2 billion to implement,making it one of the most expensive of all transportation rulemakings advanced under the previous administration.”

The report also makes this argument for Congress to step in: “While large carriers already deploy similar technologies for fleet management, smaller carriers will disproportionately bear new costs associated with the mandate and with no compensating benefit to their bottom line. The committee is concerned by reports of serious complications associated with implementation. Many significant technological concerns remain unresolved, including certification of devices, connectivity problems in remote locations, cyber vulnerabilities, and the ability of law enforcement to access data.”

Echoing the concern about the impact on smaller carriers expressed by the committee, Todd Spencer, executive director of the Owner-Operator Independent Drivers Association, told HDT that “clearly, members of Congress have heard concerns about the mandate from their constituents. The agency has failed to answer important questions from Congress and industry stakeholders about this mandate.

“This includes issues related to enforcement, connectivity, data transfers, cybersecurity vulnerabilities, and many other legitimate real world concerns,” he continued. “The agency refuses to certify any ELD as compliant with the rule, thus leaving consumers with no idea if a device they purchase is indeed compliant.”

On the other hand, the American Trucking Associations lambasted the directive to revisit the ELD rule.

“ATA is disappointed that this misguided provision was included in this version of the FY 2018 T-HUD appropriations bill,” ATA Executive Vice President of Advocacy Bill Sullivan told HDT. “It would take a step to potentially weaken the electronic logging device mandate due to go into effect this year…  This is a nakedly transparent effort by opponents of ELDs to chip away at a rule that will ensure compliance with hours-of-service and improve safety.

“We will work to ensure members are educated about the difference between the existing hours of service rules and the basics of logging, whether electronically or on paper,” he added. “As this appropriations bill moves to the House floor and through the Senate, we believe that members in the Senate or in conference will not support this language becoming law. ATA is committed to helping FMCSA as it moves toward meeting the December implementation deadline for this critical safety rule.”

In a joint statement, Steve Williams, president, and Kevin Knight, vice president, respectively, of the Alliance for Driver Safety & Security (aka the Trucking Alliance) also took exception to the committee’s stance on the ELD rule.

“Contained within the legislation is language that would delay the installation of electronic logging devices (ELDs) in all interstate commercial trucks,” stated Williams, chairman and CEO of Maverick Transportation, and Knight, executive chairman of the board of Knight Transportation.

“There’s no valid reason to delay this much-needed truck safety measure,” they argued. “In fact, the Federal Motor Carrier Safety Administration is doing an admirable job to meet the timeline by the date which requires that all commercial interstate trucks install these electronic devices.”

The two prominent trucking executives pointed out that they had warned DOT Secretary Elaine Chao back in April that “certain small segments of the trucking industry would try and delay this important safety measure. The House appropriations committee’s action appears to bear this out. We want to reemphasize in this statement the importance of what we wrote to Secretary Chao just four months ago.”

They also stated that the ELD rule “will improve highway safety and lower the number of large truck accidents” and also “enable both trucking companies and their drivers to proudly demonstrate their enviable work ethics, but within the legal framework of federal hours-of-service rules. Industry-wide compliance will ensure that the nation’s commercial truck drivers are rested, safer and more secure in their jobs.

“The ELD rule is one of several current safety reforms that must be adopted to reduce large truck accidents, injuries and fatalities,” added Williams and Knight. “Our industry shares the highways with millions of people each day. We must keep the public’s trust, by ensuring the public that commercial drivers are properly trained, rested, drug and alcohol free and compliant with the law. The ELD rule is critical to achieving that goal.”

Offering an ELD supplier perspective, Pete Allen, executive vice president of MiX Telematics, said that “the rider has little chance of surviving” the legislative process. “The original bill mandating the use of ELDs passed through a Republican House and Senate. How likely is it that a Republican House and Senate will repeal their own bill?”

Allen also pointed out that there are benefits to ELDs beyond compliance. “Most fleets we talk with are interested in much more than compliance. They are investing in ELD solutions to improve safety and efficiency, and as a result are saving $50 to $100 per month, per vehicle –even after taking into account the cost of the technology.”

Still, the ELD passage in the bill report is certainly hard-hitting. If nothing else, it signals that Republicans on the committee wanted it on record that they proposed delaying the implementation of the ELD rule if not chucking it altogether — even at this late date.

It’s the sort of legislative language that may look good on paper to certain constituents, but has little chance of staying in a bill that is ultimately passed by Congress.

What’s more, the timing does not bode well for anyone hoping to slow or stop the rollout of the ELD rule.

The mandate kicks in five months from now. So, for the committee’s directive to have any impact, a final THUD bill would have to be passed by both the House and Senate and signed into law by President Trump no later than mid-October.

But wait – then the full Congress would still have to pass and get signed a separate bill (based on what the DOT report finds) directing DOT to delay or reverse the mandate.

 

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DAT: Total February truckload volume up 48% from 2015; freight index down 13%

PORTLAND, Ore. — Total February truckload freight volume increased 48 percent from the same month last year, DAT Solutions reported yesterday. However, the DAT North American Freight Index fell 13 percent to 345 and spot truckload rates fell across the board compared to January. An influx of capacity from contract carriers held down spot van and refrigerated freight rates.

“Volume on the spot market in February was robust for what is traditionally a slow month for freight,” said Don Thornton, senior vice president, DAT Solutions. “The strong freight volumes attracted an unusual number of contract carriers, and the added capacity helped keep rates down on many high-traffic van and reefer lanes until late in February, when national average contract rates began to firm up.”

The national average spot van rate was $1.62 per mile including a fuel surcharge, down 5 cents from January, while the average reefer rate was $1.86 per mile, 9 cents off the previous month. However, by the last week of February, load-to-truck ratios were up sharply and spot rates had increased week over week, DAT reported.

For more of the story click here

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Shippers Could Face Trouble Later In The Year

The environment for shippers is said to be “benign” right now, but there’s rate and supply trouble coming later in the year, according to the Shippers Conditions Index (SCI) compiled each month by transportation forecasting firm FTR. Capacity is expected to get steadily tighter throughout the year, climaxing early in 2018.

It’s possible, FTR notes, that the deregulatory stance of the Trump administration could temper some of the capacity concerns, especially if the electronic logging device (ELD) mandate is altered to be more friendly to trucking companies and owner-operators.

The most recent SCI score recorded by FTR came in at 1.9, which is good news since any reading above zero indicates a favorable environment for shippers.

“Freight markets are currently operating at a relatively optimal level, with plenty of capacity to carry small increases in freight levels,” says Jonathan Starks, FTR’s chief operating officer. “This continues to give transportation managers the opportunity to focus on negotiating the best rates. However, the shipping environment is approaching a transitional time, with the potential for significant capacity shortages by the end of the year.”

Although the Trump Administration has suggested it plans to reduce the regulatory burdens on companies, Starks still thinks the electronic logging device (ELD) rule is a safe bet to be implemented in December. “As of now, the main uncertainty relates to the enforcement environment. Without a clear answer from an administration that is still in its infancy, shippers are wise to prepare for a full implementation, and to send clear signals to their carrier base that they need to be in compliance as well.”

Starks cautions shippers to “keep an eye on how your negotiated contracts would be impacted by a severe capacity shortage. It may be wise for transportation managers to begin thinking about securing capacity, rather than focused on a purely rate-based negotiation.”

In other, mostly positive news, throughout the U.S. economy “there is a growing number of data points that suggest that the worst is over and the economy is getting better,” reports Donald Broughton, senior transportation analyst with Avondale Partners and author of the monthly Cass Freight Index for Cass Information Systems. In January, the Cass Shipments Index increased 3.2% year-over-year, the latest in a string of recent events that indicates the overall freight recession, dating back to March 2015, might finally be over. Other promising signs, according to Broughton, include the surge in the price of crude, the fracking of drilled but uncompleted wells, and an increase in consumer spending.

The increase in freight volumes, he says, is largely due to parcel shipments associated with e-commerce. Air freight, too, has shown sequentially improving strength. Also, while rail volumes have been a significant part of the weakness in freight flows over the past two years, lately they’ve become “increasingly less bad,” Broughton points out, adding that in recent weeks rail volumes have turned positive. As for trucking, though, over the past six months, “the data coming out of the trucking industry has been both volatile and uninspiring,” he says.

to read entire article click here

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Fleets optimistic about 2017

Fleets optimistic about 2017

Business forecast

MarketPulse survey respondents are increasingly bullish about business conditions over the next six months, with 56.5 percent of respondents expecting business conditions to improve (41.3 percent last month). Respondents from fleets with up to 100 power are more optimistic, with 61.2 percent saying business will be better compared to 44.6 percent of respondents from fleets with more than 100 power units. On a month-over-month basis, survey respondents indicated improving business conditions in November compared to October, with 26.0 percent of all respondents saying November was better than October and 18.2 percent saying it was worse. Compared to the same month last year, however, 48.0 percent of all respondents said November 2016 was worse, while 24.7 percent said it was better.
Despite the growing optimism for 2017, only 33.8 percent of all respondents have plans to add capacity in the next six months, while 63.7 percent plan to keep fleet size the same by either replacing aging equipment or not making any changes.

Driver shortage remains top concern

Once again, driver availability ranks as the biggest worry for survey respondents, with 44.8 percent listing it as their top concern. Freight pricing (32.9 percent) and freight volume (17.1 percent) trade spaces as the No. 2 and No. 3 concerns, respectively. The political climate in Washington was a top concern for only 2.6 percent of respondents, still good enough to rank No. 4 on the list.

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Shipper predictions: Freight will pick up in 2017

Shippers mostly expect freight movement to grow in 2017, according to a survey of more than 2,200 shippers recently conducted by Averitt Express
Nearly three out of four shippers surveyed said they anticipate shipping volume in 2017 to be greater than in 2016. Respondents also indicated a need for better working relationships between carriers and shippers to tackle supply chain obstacles like poor infrastructure upkeep and capacity issues. “Moving the vast amount of freight throughout the continent while faced with infrastructural decay and a lack of qualified drivers requires carriers and shippers to work hand in hand,” Averitt’s report notes.

Averitt’s 2017-focused survey shows shippers are more optimistic heading into this year than they were at the beginning of 2016, when 68 percent of shippers surveyed said they expected freight volume to increase from the year prior. This year, 73 percent of shippers said they expect shipping volumes to increase from 2016. Just 2 percent of shippers said they expect freight volume to drop from 2016, while 25 percent said they anticipate freight volume to stay the same.

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Van, reefer demand and rate picture mixed the first week of the year

Van rates opened 2017 higher than they did 2016, and at $1.77 per mile, the national average van rate was higher than the December average.
Prices were down in pretty much every major van market, though, when compared to the highs we saw the past couple of weeks.
At once, noted DAT’s Ken Harper with this week’s update, owner-operators might be right to be expressing optimism about their business prospects for 2017. “With the economy picking up,” he says, “and economic forecasts showing growth, it should (could?) be a very good year for spot freight. We’ll see.”
Van hot markets: The markets where rates didn’t fall were mostly the ones that weren’t part of the surge at the end of 2016: Denver and Stockton, Calif.
Allentown, Pa., was down last week, but the average outbound rate there is still 4 percent higher than it was a month ago. On the upside, volumes were up in Los Angeles, Atlanta, Houston and Memphis. Winter weather will likely play a role this week.

Not so hot: The biggest declines were in the Midwest and West Coast. Typically good lanes out of Chicago took a hit: The lane to Columbus, Ohio, fell 36 cents to an average of $2.42 per mile, and van loads going from Chicago to Denver paid 24 cents less at $2.26 per mile. It was the same story for outbound lanes from Columbus. The lanes to Allentown, Buffalo and Atlanta were all down more than 20 cents. Out West, Los Angeles to Denver was down to $2.22 per mile. Winter storms are also making things difficult in the Pacific Northwest.

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