Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
William J. Logue knew the whole world wouldn't be watching when FedEx Freight, the less-than-truckload (LTL) unit of FedEx Corp. that he heads, rolled out its revamped service on Monday.
But he knew one person would be watching intently: Fred Smith, FedEx's founder, chairman, and CEO, and Logue's direct boss. As far as Logue and his team were concerned, it might as well have been the whole world.
A year in the planning, the reconstituted FedEx Freight took the field one week before Super Bowl XLV with the goal of forever changing the LTL game. To do so, the unit seeks to take a page from the playbook used so successfully by the parent's air express business: leverage a dual-use network design and robust information technology to give LTL shippers choices and service levels they've never had before.
The new services "reflect a unique approach to the LTL arena," Logue said in a late December e-mail interview with DC Velocity. "In general, the LTL industry [has] focused on the number of miles a shipment traveled instead of the type of service needed."
The rollout also represents FedEx's most ambitious effort yet to wring profitability from a unit that has struggled with an economic downturn, a severe freight recession, and destructive price wars that took their toll on the entire LTL field. However, the launch comes amid encouraging signs for truckers that the years of margin-denting rate discounts may finally be abating. In its fiscal second-quarter results released in mid-December, FedEx reported mid-single-digit gains in base rates for both its regional and national freight units, citing an improving overall pricing environment.
FedEx Freight's two new services—"priority" for expedited shipments that require delivery within two days, and "economy" for less-urgent deliveries (typically three days or more)—are the byproducts of extensive research into what LTL shippers want in 2011 and beyond, according to Logue.
But even as the operation gets its sea legs, the question being asked is how unique it really is. One trucking industry veteran, speaking on condition of anonymity, said shippers already have their pick of carriers offering a menu of transit times regardless of the shipment's characteristics or the length of haul.
For example, LTL carrier ABF Freight System Inc. says it has operated a dual-system network for regional and long-haul deliveries for five years. ABF launched its network in 2006 along the Eastern Seaboard, expanded it to the eastern two-thirds of the United States several years later, and will soon take it coast to coast, according to Roy Slagle, the trucker's senior vice president of sales and marketing.
"It's a proven model that meets the customer's requirements, no matter the distance," he says.
How it works
The new FedEx unit fuses the former regional and national LTL units into a single operation with one point of contact, one driver, and one truck. For the first time in its history, FedEx Freight will tap into the railroads' intermodal network to support its "economy" service, though Logue stressed it would just be for a small fraction of its moves.
Here's how it works for a hypothetical load moving from Boston to Jacksonville, Fla.: A shipment booked as "priority" is routed through a dedicated sorting facility in Newburgh, N.Y., about 50 miles north of New York City. The next morning, the cargo is loaded on the company's relay network for delivery to a dedicated hub in Valdosta, Ga. From Valdosta, the shipment is delivered to a service center in Jacksonville for two-day delivery to the consignee. The same shipment moving via "economy" service is routed through a sorting facility in Harrisburg, Pa., and then shipped to a hub in Orlando, Fla., where it is prepped for delivery on the third day to Jacksonville.
At each shipment's origin point, the cargo will be sorted and segregated based on the delivery level requested by the customer. Once the shipment arrives at the origin facility, the cargo will be scanned by on-dock computers to determine how the shipment should be loaded and the appropriate departure times.
A key distinction between the two service levels is that shipments booked for the slower deliveries will be handled in daytime sort shifts, while the expedited cargoes will move through nighttime sorts. That parallels the network design that the company's air express unit has used for decades.
The operation has hubs dedicated to each service level in addition to dual-use hubs like the one in Orlando. Logue says the dual-use hubs are located to "maximize efficiency and density as well as [to provide] access to rail facilities." The dual-use model is a "critical component" of the program's success, he adds.
As part of the restructuring, FedEx Freight shuttered 100 freight terminals, nearly 20 percent of the unit's 470 terminals. In the process, about 1,700 of the unit's 34,000 jobs were eliminated. FedEx estimates the restructuring will cost between $140 million and $170 million by the time it's completed.
No room for fumbles
As for how the new service will fare in the marketplace, a lot will depend on the execution.
Charles W. Clowdis Jr., managing director, transportation and supply chain advisory services for consultancy IHS Global Insight, says the new FedEx service could make market inroads as long as it focuses on careful and near-flawless segregation of each shipment.
In fact, Clowdis foresees a day when the network's reliability allows FedEx to offer services that "segment [shipments] by specific delivery dates and times, accompanied by appropriate pricing." From this could evolve a spate of products that guarantee deliveries before 10 a.m., by 12 noon, and the next afternoon, service levels long available to air express users but virtually unheard of in the LTL category, he says.
From an operations standpoint, it would be hard to find someone inside FedEx more qualified to quarterback the new game than Bill Logue. A 22-year FedEx veteran, Logue has held top operational positions throughout the company; before being named FedEx Freight's president in late 2009 (he added the CEO title in the spring of 2010), Logue was executive vice president and COO of FedEx Express's U.S. operations, responsible for all of the unit's air, ground, and domestic support services.
According to sources, Logue sold top management on the combination not just as a way to cut costs and improve efficiency, but to reshape the way LTL is sold in the United States and how shippers perceive its value.
Management agreed. Now, for Logue, it's game time. Mr. Smith is watching from the luxury box.
The Port of Oakland has been awarded $50 million from the U.S. Department of Transportation’s Maritime Administration (MARAD) to modernize wharves and terminal infrastructure at its Outer Harbor facility, the port said today.
Those upgrades would enable the Outer Harbor to accommodate Ultra Large Container Vessels (ULCVs), which are now a regular part of the shipping fleet calling on West Coast ports. Each of these ships has a handling capacity of up to 24,000 TEUs (20-foot containers) but are currently restricted at portions of Oakland’s Outer Harbor by aging wharves which were originally designed for smaller ships.
According to the port, those changes will let it handle newer, larger vessels, which are more efficient, cost effective, and environmentally cleaner to operate than older ships. Specific investments for the project will include: wharf strengthening, structural repairs, replacing container crane rails, adding support piles, strengthening support beams, and replacing electrical bus bar system to accommodate larger ship-to-shore cranes.
Commercial fleet operators are steadily increasing their use of GPS fleet tracking, in-cab video solutions, and predictive analytics, driven by rising costs, evolving regulations, and competitive pressures, according to an industry report from Verizon Connect.
Those conclusions come from the company’s fifth annual “Fleet Technology Trends Report,” conducted in partnership with Bobit Business Media, and based on responses from 543 fleet management professionals.
The study showed that for five consecutive years, at least four out of five respondents have reported using at least one form of fleet technology, said Atlanta-based Verizon Connect, which provides fleet and mobile workforce management software platforms, embedded OEM hardware, and a connected vehicle device called Hum by Verizon.
The most commonly used of those technologies is GPS fleet tracking, with 69% of fleets across industries reporting its use, the survey showed. Of those users, 72% find it extremely or very beneficial, citing improved efficiency (62%) and a reduction in harsh driving/speeding events (49%).
Respondents also reported a focus on safety, with 57% of respondents citing improved driver safety as a key benefit of GPS fleet tracking. And 68% of users said in-cab video solutions are extremely or very beneficial. Together, those technologies help reduce distracted driving incidents, improve coaching sessions, and help reduce accident and insurance costs, Verizon Connect said.
Looking at the future, fleet management software is evolving to meet emerging challenges, including sustainability and electrification, the company said. "The findings from this year's Fleet Technology Trends Report highlight a strong commitment across industries to embracing fleet technology, with GPS tracking and in-cab video solutions consistently delivering measurable results,” Peter Mitchell, General Manager, Verizon Connect, said in a release. “As fleets face rising costs and increased regulatory pressures, these technologies are proving to be indispensable in helping organizations optimize their operations, reduce expenses, and navigate the path toward a more sustainable future.”
Businesses engaged in international trade face three major supply chain hurdles as they head into 2025: the disruptions caused by Chinese New Year (CNY), the looming threat of potential tariffs on foreign-made products that could be imposed by the incoming Trump Administration, and the unresolved contract negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX), according to an analysis from trucking and logistics provider Averitt.
Each of those factors could lead to significant shipping delays, production slowdowns, and increased costs, Averitt said.
First, Chinese New Year 2025 begins on January 29, prompting factories across China and other regions to shut down for weeks, typically causing production to halt and freight demand to skyrocket. The ripple effects can range from increased shipping costs to extended lead times, disrupting even the most well-planned operations. To prepare for that event, shippers should place orders early, build inventory buffers, secure freight space in advance, diversify shipping modes, and communicate with logistics providers, Averitt said.
Second, new or increased tariffs on foreign-made goods could drive up the cost of imports, disrupt established supply chains, and create uncertainty in the marketplace. In turn, shippers may face freight rate volatility and capacity constraints as businesses rush to stockpile inventory ahead of tariff deadlines. To navigate these challenges, shippers should prepare advance shipments and inventory stockpiling, diversity sourcing, negotiate supplier agreements, explore domestic production, and leverage financial strategies.
Third, unresolved contract negotiations between the ILA and the USMX will come to a head by January 15, when the current contract expires. Labor action or strikes could cause severe disruptions at East and Gulf Coast ports, triggering widespread delays and bottlenecks across the supply chain. To prepare for the worst, shippers should adopt a similar strategy to the other potential January threats: collaborate early, secure freight, diversify supply chains, and monitor policy changes.
According to Averitt, companies can cushion the impact of all three challenges by deploying a seamless, end-to-end solution covering the entire path from customs clearance to final-mile delivery. That strategy can help businesses to store inventory closer to their customers, mitigate delays, and reduce costs associated with supply chain disruptions. And combined with proactive communication and real-time visibility tools, the approach allows companies to maintain control and keep their supply chains resilient in the face of global uncertainties, Averitt said.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.