If analyst Chuck Clowdis seems unusually familiar with the ins and outs of the trucking business, there's a reason for that. He spent the first 16 years of his career on the inside.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Charles "Chuck" Clowdis knows whereof he speaks. Unlike many of the analysts who follow the freight transportation market, he has actually worked in the business. Before switching gears two decades ago, he was a trucking professional himself, working at various times as a dock foreman, terminal manager, sales rep, and vice president of sales and marketing.
Last June, Clowdis joined the renowned economic forecasting and analysis firm IHS Global Insight as managing director - North America in the Global Trade and Transportation Advisory Services practice. In that role, he is responsible for all trade and transportation products and clients in the United States, Canada, and Mexico. Clowdis brought to his current position 30-plus years of experience in transportation, logistics, and supply chain design and management. Earlier in his career, he served as vice president of marketing at Transcon Lines, as vice president at TNT North America, and as an executive at Sun (Oil) Carriers Inc. and Mason & Dixon Lines Inc. He established an independent consulting practice in 1988, and has been an executive consultant since 1992 to Ernst & Young LLP, and since 2001, to KPMG.
His industry involvement includes stints as chairman and past president of the Sales & Marketing Council of the American Trucking Associations and membership in the National Defense Transportation Association.
A frequent contributor to industry publications and speaker to industry groups, as well as author of numerous white papers, Clowdis met recently with DC VELOCITY Group Editorial Director Mitch Mac Donald to discuss his unorthodox career path, the gathering economic storm clouds (and their silver lining), and which carriers stand the best chance of survival.
Q: How did you begin your career in the motor freight business?
A: A I started as a trainee with Roadway Express in 1972 and worked at various times as a dock foreman, a salesman, a city sales manager, a regional sales manager, a terminal manager, a director of operations, and a vice president of sales and marketing for both large and small carriers. In 1988, I decided that I possibly could offer my services to the motor carrier industry as a consultant. After establishing my own little practice, I was fortunate enough to become a subcontractor or an executive consultant to Ernst & Young when they had a national transportation practice. Up until June of this year, I was a sole practitioner transportation consultant but working with KPMG, Capgemini, CSC, Index Consulting, and a lot of other clients along the way as either a subject matter expert or as a project manager on specific trade and transportation matters.
Q: I'm sure you've seen a lot of change since those early days in Akron with Roadway.
A: I was just talking with a colleague about the changes in the industry over the past 30 years—things like the emergence of third-party logistics service providers and the contribution that they make and how much things have changed.We fought for years to bring the purchasing agents or the procurement function or the sourcing function into the supply chain. We finally won that battle. Now, when you think "supply chain," the first link in that chain is the sourcing of raw materials and the transport to either the processing center or the manufacturing plant.We have come a long way, and as you just said, we've seen a lot of change over those years.
Q: Absolutely. I think one of the most intriguing developments we've observed is the emergence of this thing we call the "supply chain." It seems that the logistics component in particular is involved at almost every stage of a business's operation.
A: It does indeed touch every function—everything from the purchasing agent who is looking for the best price on goods or raw materials or services to the marketing director who needs to get his product to market on time and in good condition.
Right now, the supply chain is starting to get more attention at the CFO level because there are an awful lot of dollars spent at every link of the chain. I think each time the economy suffers, good companies start looking for ways to trim costs and do things more efficiently for less money.
Q: The economy is certainly in the forefront of almost everyone's mind right now. How would you describe the environment we're in? Have you ever seen anything like it?
A: I never have. In all my years in this industry, I have never seen the economic stars, if you will, align in such a manner as they have this year. First, we had the slowdown, which I think did start over a year ago, in December 2007; then there was the oil price spike in June and July—I don't think any of us saw that coming or expected we'd ever see $5 per gallon diesel fuel and gasoline. I think that has left a lasting impression, especially on the consumer. We're not only reeling from that experience, but all of a sudden, we're becoming concerned about our jobs. We are concerned about making the mortgage payments. We are concerned about buying the kids new shoes.We are concerned about basic everyday spending. All of those signs plus the credit crunch have aligned to make it a challenging, challenging time for not only motor carriers and transport service providers but for the consumer as well.
Q: From the forecasts I've been hearing, it sounds like we're looking at a deep recession that could last as long as 30 months.
A: Exactly. It is not a pleasant outlook. I think it takes every bit of executive skill that management can muster to deal with the cards we've been dealt. It is not going to be easy.
Q: How do we go about surviving the downturn? Do you think there are ways shippers can actually thrive during the recession?
A: I think there are some opportunities in both cases. It may sound trite to some, and it is not an original thought on my part, but if you are a shipper, you really have to work more closely with your carriers, as genuine partners, than ever before. You need to work together to recognize and understand the carriers' costs and do all you can to help them control and lower those costs.
For years, we've been hearing carriers complain about showing up on time for a delivery, then having to wait two hours to get an empty door and unload. Likewise, we've heard from plenty of disgruntled shippers who wanted a truck there at, say, 11, but had to wait until 1: 30. I think a closer dialogue between the parties—between the shippers, receivers, and the motor carriers—could help both the shipper and the carrier understand the costs that they can control and then work toward controlling those. I think that if we have ever needed teamwork between the transportation provider and the transportation buyer, it is with the situation we are in now.
Q: Some have suggested that, as painful as the economic downturn may be, there could be a longer-term benefit in that it's likely to force many of the weaker players out of the market. Do you think that is correct?
A: I think that is absolutely right. I think there is tremendous overcapacity now, despite the fact that we still have carriers teetering on the brink of bankruptcy. When the economy rebounds, we are the first to know in the transportation industry. We can feel that recovery first, and that is good. That will give us a chance to ramp back up.
It is my opinion that the carriers that survive this are those that don't have a great deal of debt, aren't struggling to hold their creditors at bay, and have some extra cash— and at the same time, are devoting executive attention to finding new revenue sources and making sure that their sales forces maximize their penetration of every possible account. I hate to say it—it is not like picking over the bones of the dead—but you have to take advantage when a carrier does unfortunately drop out of the market. You have to be in a position to capture that business while still being careful—even with those new accounts—to go in and open that dialogue and work closely together. The carriers that survive will be the smart ones, and there are an awful lot of smart ones out there.
Q: I've been covering this field since 1988, and I doubt if a year has gone by when I haven't written at least one story or column about the state of our bridges and roads, or the fact that we don't have enough runways, and so forth. But now it seems that for the first time, we're actually hearing officials at the highest level of government saying, yes, we have a problem; yes, we should invest in infrastructure repair and rebuilding projects as part of our economic stimulus package. Is this perhaps a silver lining in the economic storm cloud?
A: I think it is a silver lining, if not gold. I think it puts people back to work. If people are at work, they are going to spend money. If they are spending money, transportation providers are going to have something to haul. I think it is a great idea.
Like many in this business, I've been talking about the need to repair and rebuild the country's transportation infrastructure for years, long before our newly elected president put it at the top of his administration's agenda. And I'm not even talking about new interstates; I am talking about repairing what needs to be repaired. The bridges, like the bridge in Minnesota. And that's not an isolated case— something like 60,000 other bridges need to be inspected more closely. They have faults and problems, not so much that they are unsafe but that they can become unsafe.
We need to look at ways to move trucks more efficiently on the highways. We need to look at rebuilding a lot of our rail infrastructure and finding ways to do that. If there is a silver lining, all those things mean people can go back to work, and that is needed more than anything.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
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.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."