Gary Frantz is a contributing editor for CSCMP's Supply Chain Quarterly and a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
The U.S. trucking industry chalked up a record year in 2018, one that arguably was the best the industry has seen in decades, if not in its history. Most truckload and less-than-truckload (LTL) carriers set new high-water marks for freight tonnage, revenues, and profits as the economy surged, e-commerce continued its rapid growth, and businesses pulled forward inventory in advance of the Trump administration's China tariffs.
"I've been in this business 40 years and have never seen a year that busy," notes Marty Freeman, executive vice president and chief operating officer of Old Dominion Freight Line.
Article Figures
[Figure 1] National average linehaul truckload (van) rates and fuel surchargesEnlarge this image
But 2018 is proving to be a tough act to follow. Demand for motor freight services in 2019 has softened. Last year there were an average of six truckload shipments vying for every one truck; this year, there are three truckload shipments competing for space on one truck. Dry-van truckload spot-market rates in July versus last year were down nearly 19% (see Figure 1), and the pricing pendulum has begun to swing back in the shipper's favor. Carriers are carefully trimming their fleets and scaling back truck purchases this year as the new capacity brought online to handle last year's surging volumes is now competing for fewer shipments.
Last year, when truckload capacity tightened, heavier shipments—typically those around 10,000 to 15,000 pounds—migrated from truckload fleets to LTL carriers, boosting LTL tonnage. That trend has reversed itself this year; those heavier shipments are transitioning back to truckload operators. At the same time, the explosion of e-commerce-generated freight is changing the profile of shipments—and tonnage handled—in LTL carrier networks. It's driving smaller, lighter, and more frequent shipments to and from more distribution centers strategically located to enable next-day—and in some cases same-day—delivery of goods to the end-user.
On balance, carrier executives are cautiously optimistic about the year aheadand expect capacity to gradually tighten as the year progresses. Yet the road ahead is not without challenges. "We are coming into some really critical periods," says Jim Fields, chief operating officer for LTL carrier Pitt Ohio. "Fortunately, the economy is still doing OK, still growing."
A challenging future
So, what's keeping trucking executives up at night? One of the big challenges, Fields believes, is managing the escalation of costs. "They're going up for all service providers," he says. Trucking executives are seeing constant increases in virtually every expense involved in running their businesses—from driver wages to maintenance to health insurance and the cost of tires, trucks, and trailers.
Another factor to keep a close eye on is the December deadline set by the U.S. Federal Motor Carrier Safety Administration for trucking operators to implement upgraded electronic logging devices (ELDs) to improve compliance with driver hours-of-service (HOS) regulations. For larger carriers, it's a technology mandate they are well on their way toward meeting. For smaller carriers, however, issues around the selection of a technology provider and the timing of the implementation may lead to missed deadlines and end up affecting industry capacity at year-end.
Fleets that already have upgraded their ELDs, however, are seeing a positive result: the number of HOS violations has been reduced by half. "[With] fewer hours-of-service violations, you have fewer vehicles ordered out of service. That opens up capacity you might not otherwise have available," says Bart De Muynck, research vice president, transportation technology, for the research firm Gartner Inc.
The potential benefits of upgraded ELDs and their data could go beyond regulatory compliance, says Darren Hawkins, chief executive of the LTL carrier YRC Worldwide. He believes that a trusted third-party clearinghouse, such as the American Transportation Research Institute (ATRI), could gather and analyze ELD data to provide insights about traffic and freight flows, time-of-day issues, detention, and more.
One issue that still remains unresolved is who owns the data gathered by the ELD and how this data will be used. "Many of the ELD contracts state that the telematics vendors own the data, and they can sell it ... to a third party," De Muynck says.
This idea of "infonomics" is very contentious, according to De Muynck. "Carriers understand their data is getting monetized," he says. "At some point, they are going to say, 'Give me a cut of that revenue, or I won't give you my data anymore.'"
Indeed, the growing importance of data and the speed of technological change has made having a cohesive technology strategy crucial for trucking companies, according to Pat Martin, corporate vice president of sales for LTL carrier Estes Express Lines.
"Today, data—how you capture, use, share, and manage it—has become just as important as the movement of the freight itself," says Martin. "Our ability to give [customers] visibility from the pickup all the way through to a clear delivery is critical. They are expecting shorter and shorter transit times and [setting] tighter delivery windows. We have to have the technology in place to deliver on those expectations."
Technology is important, but without drivers to move the freight, the industry will see increasing challenges in maintaining, much less growing, capacity. For now, driver recruitment and retention remain a universal concern for trucking companies, as more drivers reach retirement age and fewer younger driver replace them. A recent analysis by the American Trucking Associations threw this challenge into stark relief: If current trends continue, the industry could face a shortage of 160,000 drivers by 2028.
And that concern will not be eased by recently enacted federal regulations that set across-the-board standards for entry-level driver training. Essentially, under the new rules, candidates who want to enter the industry will need a certificate of completion or diploma from a certified driving school in order to get a commercial driver's license (CDL). But third-party schools today already are at capacity, says Greg Orr, president of truckload carrier CFI. "That's potentially a chokepoint in the industry's ability to produce enough drivers with the required training," he says. "And that will impact capacity."
Finally, crumbling infrastructure and increasing congestion also made the list of carrier executives' top concerns. "America's roads and bridges are dangerously deteriorated, and our interstate system is over 60 years old," notes John Smith, president and chief executive of FedEx Freight. "Our federal and state governments need to work toward modernizing our infrastructure ... and [to] adopt common-sense policy solutions, such as [allowing the use of] longer-combination vehicles to increase the efficiency, safety, and capacity of our transportation system."
It's not just potholes and aging bridges that are a concern. An ATRI study found that the U.S. trucking industry lost 1.2 billion hours in congestion-related delays on the national highway system in 2016—the equivalent of 425,000 commercial truck drivers sitting idle for an entire year. That's an image oddly out of sync with the nation's growing appetite for next-day and same-day delivery.
Shipper of choice
All of the issues and concerns cited above make shipper-carrier relationships more crucial than ever before. Indeed, the Great Freight Market of 2018 cemented the concept that it pays to be a "shipper of choice." During that period of time, carriers with scarce capacity gravitated to those shippers who demonstrated a desire to collaborate and cooperate rather than engage in old-style transactional relationships. But has the softer market put a damper on that trend?
"I think [shippers] are definitely collaborating now more than ever," says Estes Express' Martin. Most shippers, he says, recognize "a good working relationship is important to make sure they are not causing undue expense for the carrier to move their freight."
Orr, however, has seen more mixed results over the past six months. While some customers still are trying to figure out what they can do to be a shipper of choice, he says that those conversations are not happening with the same frequency they did in 2018.
And yet, Ricky Stover, executive vice president, sales and marketing at the nationwide refrigerated carrier C.R. England, believes that most shippers "have a sincere desire to be good partners and recognize that shippers and carriers have to collaborate more closely." This is crucial because the current market uncertainty makes good carrier-shipper relationships more important than ever before. "We can overcome that better together," he says.
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.”