What a difference a year makes. In 2014, the U.S. domestic for-hire trucking industry experienced a bounce-back after several years of contraction. Total tons and ton-miles reached the highest level in years, rates were on an upward slope by the end of that year, and, according to the American Trucking Associations, trucking revenue grew to over $700 billion for the first time ever. But just one year later, rates, tonnage, and revenue were stagnating, and the outlook was—and still is—trending toward slow growth in freight movements.
IHS Markit, a global provider of business information, analytics, and solutions, expects total U.S. domestic for-hire truck tonnage will see low year-over-year growth rates over the medium and long term. The proprietary IHS Transportation Transearch database of U.S. commodity movements shows that after a solid 2014, for-hire truck tonnage grew at a rate of just over 1 percent in 2015, to a total of roughly 4.4 billion tons handled by truckload carriers and 110 million tons by less-than-truckload (LTL) carriers. By the end of 2016, total tonnage for both truckload and LTL carriers is expected to be up only slightly—less than 1 percent each—from the 2015 year-end totals.
Truck tonnage should recover slightly in 2017 and 2018. Over the next decade, truckload tonnage is expected to increase at an average annual rate of 1.9 percent, while less-than-truckload tonnage will grow at a 2.5 percent rate. (See Figure 1.) Even with higher growth rates, total LTL tonnage is not expected to exceed 3.0 percent of the total for-hire domestic tonnage during the forecast period.
Why the slowdown?
The slow growth in truck tonnage doesn't seem to be due to any shift to other transportation modes. In fact, any move from truck toward rail intermodal should not impact the total tonnage on the road, as the typical container shipped on the rails has a corresponding truck drayage movement on both the origination and termination sides. Nor are we seeing private fleets taking business away from for-hire carriers. Private fleets are expected to see the same tonnage softness as for-hire trucking, and companies with private fleets increasingly are considering outsourcing their moves to dedicated, for-hire carriers as a cost-cutting measure. Additionally, rail carload and inland barge tonnage are both down. While these are not traditionally competitors for truck tonnage, this decline is another indicator that the slowdown is systemwide and is not limited to any particular mode.
Limitations on the availability of drivers do not seem to be causing the slow growth, either. While the industry continues to experience a shortage of qualified drivers, it's also true that trucking companies are looking to reduce excess capacity rather than expand their hiring. One indication of that trend is a sharp decline in orders for heavy-duty Class 8 tractors, down by one-third year-over-year as of June 2016.
Instead, the overarching reason for slow growth in truck tonnage is weak economic growth in the short term. In other words, the cargo is not there to be moved in the first place. Even the few bright spots in the economy may not offer much hope for a trucking recovery in the near term. The most recent data from the U.S. Department of Commerce shows housing construction rebounding from recession levels, particularly in the West and Northeast. Spending on highway and road construction has also been rising every year since 2011, to an estimated $1.07 billion in 2015, according to the U.S. Census Bureau.
While this is certainly good news for the U.S. economy as a whole, the impact on the trucking sector is somewhat circumscribed. For one thing, the effects tend to be more regional; shipments in the construction industries often are associated with a shorter length of haul and therefore have a smaller revenue impact. For another, many of the primary commodities used in those industries—particularly aggregates, steel, lumber, and other building materials—are more likely to be transported by specialty haulers, so the gains are limited to a subsector of the for-hire trucking industry. Due in part to these factors, it is likely that the growth of freight movements will lag behind the growth in U.S. total gross domestic product (GDP).
The road ahead
Shippers have already been experiencing the impact of slow freight growth in the form of lower rates. In May, the Cass Truckload Linehaul Index, which measures per-mile truckload rates, showed three consecutive months of decline and fell to its lowest level since the summer of 2014.
IHS Transportation expects trucking prices to start heading upward in the second half of this year, assuming carriers are able to constrict supply enough to support higher rates. Other potential factors behind rate increases include higher costs for trucking companies in the form of higher wages and fuel prices. Due to the soft market, costs are currently out of synch with rates, and carriers are anxious to pass those higher costs along to customers as soon as the market allows. The industry's extremely high turnover—over 100 percent—and a period of wage stagnation in recent quarters could lead to driver wage increases. Additionally, average highway diesel prices started the year at $2.00 per gallon, but by the end of 2016 could be over $2.50 per gallon, echoing crude oil prices, which at this writing have bounced from their bottom of around $30 a barrel to more than $50 a barrel.
The expectation is for slow growth to continue. With energy prices low and employment gradually improving, U.S. consumers may be inclined to spend more of their paychecks, driving up demand for retail goods and therefore demand for transportation services. But there are a number of risks to consider. Unanticipated economic, political, or security shocks could upset the economic recovery. Another recession could mean a decline in freight movements; it could also lead to higher freight costs as smaller carriers go bankrupt and capacity shrinks further. Federal regulations, particularly upcoming greenhouse gas emissions standards and potential changes to hours-of-service restrictions, could also impact the trucking industry by reducing capacity and further slowing growth. And finally, what happens abroad has a direct impact on U.S. domestic trucking: a slowdown in the global economy or a revisiting of trade agreements may result in fewer goods and materials being transported to and from U.S ports of entry. With so many risk factors in play, buyers of trucking services will need to be vigilant if they're to anticipate how rates and capacity will play out in the coming year.
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”