Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
When you look at the truckload portion of the motor carrier industry as a single entity, you see the segment—the word segment hardly does it justice—that handles the vast majority of for-hire tonnage in the United States. According to the Truckload Carriers Association (TCA), the major trade association for the industry, truckload carriers handled 97 percent of the for-hire tonnage in 2002—the latest numbers available. That makes the truckload business, as fragmented as it is, a substantial part of the nation's economy.
But examine just a bit further, and you see one of the most fragmented portions of the industry, with thousands of carriers, big and small, and where even the giants, the best-known names, control only a small portion of the overall market. Thus, generalizations about the industry can be misleading. What is almost universally true, though, for truckload carriers big and small, is that business has been tough, but it is getting better.
Over the last four years, the industry has gone through substantial turmoil. Chris Burruss, president of TCA, describes it as a "perfect storm."
"The industry will face cost pressures at any time," he says. "It might be fuel or insurance, or new engines, or you might have to deal with drivers. Over the last four years, all of those have come to bear at once."
Lately, though, as the economy has recovered and trucking volumes have risen— and truckload rates along with them—truckload carriers, or at least the larger carriers, have shown strong signs of recovery. J.B. Hunt, for instance, the largest publicly traded truckload carrier, reported both record revenues and earnings in the first quarter of this year. Werner Enterprises, another large truckload carrier, reported its first-quarter revenues increased by 11 percent and profits by 31 percent over 2003's first quarter. (Schneider National, the nation's largest truckload carrier, is privately held and does not break out its financial results. However, for all of 2003, the company said its truckload services revenue grew by 6 percent.)
Rates on the rebound
For shippers, that opens several issues. First, rates are up and certain to rise. Carriers have had to absorb substantial increases in insurance and fuel costs; increase driver compensation; and take on the higher acquisition and maintenance costs of new cleaner-burning engines.With capacity tight, carriers will pass those costs on to customers and attempt to improve their margins as well. But with costs being particularly volatile, getting a grip on exactly how far rates will rise is difficult.
William Rennicke, a managing partner with Mercer Management Consulting's transportation practice, says, "While rates have gone up—most carriers have seen much higher rates and the rates are sticking—there's a built-in uncertainty in the cost structure. It gets hard for the carriers to find out if they are pricing the right way, or you end up with contingency-based pricing. "Many carriers have been successful in passing on at least a portion of the steep run-up in diesel fuel prices, but constant changes in rates can also cause tensions between shippers and carriers. Rennicke describes the pricing environment as "crazy and unsettled." (An example of the cost issues: Diesel fuel in early May averaged $1.71 a gallon across the country, 23 cents a gallon higher than a year earlier.)
Even with tight capacity, Rennicke believes that shippers still have most of the leverage because of the number of competing carriers in the truckload market.
The driver dilemma
Attracting and retaining drivers has long been an issue for truckload carriers, and the pool of available drivers may be as great or greater a restraint on capacity as equipment. "Drivers are as big a problem as before the downturn," Rennicke says. "The ability to serve the market is capped by the ability to attract drivers."
Speaking to the International Association of Refrigerated Warehouses conference in April, Lance Craig, chairman of TCA and president of Craig Transportation in Perrysburg, Ohio, said,"By every standard measurable, the issue of drivers is particularly worrisome."
Tight capacity and the issue of driver retention have led more carriers than ever to consider using rail intermodal services for linehauls. J.B. Hunt and Schneider National, the largest truckload carriers, have used intermodal for portions of their business for several years, but Rennicke says that even relatively small carriers are considering that option. But even intermodal capacity is getting tight, Craig warns.
Another factor whose consequences are still imperfectly understood: Carriers are also continuing to learn how the new driver hours-of-service rules that took effect in January will affect productivity. Already, major carriers have gotten more serious about imposing detention charges on shippers or receivers that tie up equipment.
Be late, get detention
Craig says detention billings by his company are more than double what they were before the rules came into effect.
"This is not a 'hurrah' thing," he says,"but it highlights for shippers and receivers that there is a cost to inefficiency."
Perhaps even more important heading into the peak shipping season is that capacity is getting tight. "There's definitely going to be a problem as we wind into the busy season," Craig says. Shippers without contracts with carriers may find trucks difficult to find as volume picks up—especially those shippers who carriers perceive as operating inefficient docks.
Craig says, "It's not a secret that it's swung back the other way. There's a much higher demand for trucking. It is more of a carrier's market now."
But the pain inflicted on the industry over the last four years—plus questions about driver availability—has caused many carriers to invest in new capacity cautiously, which suggests that capacity is not likely to expand in step with demand. "Expansion has to be done in a careful manner," Craig says. He says his own company could move as much as 50 percent more freight every day, based on the demand he's seeing. Yet major investments won't come quickly.
"Trucking companies have learned from the last recession what it takes to be a profitable company," Craig says. "They are going to be cautious about who they deal with and how they do business. A lot of carriers now have tools that tell them who their good customers are and who the bad customers are."
Shippers aware of the coming tight capacity have been making efforts to expand their base of contracted carriers. Craig reports a sharp increase in requests for bids from shippers. "They are trying to gain specific commitments knowing that things are ready to bust loose," he says. "The only way to gain capacity is to roll out those bids and issue awards for traffic."
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.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”