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.
The federal government's new rules governing a commercial truck driver's hours of service (HOS)
has reduced median driver wages by between 3.2 and 5.6 percent by cutting the number of hours in a
driver's workweek, according to a survey by the National Transportation Institute (NTI), a Kansas
City-based consultancy.
The survey, to be released later this month, canvassed 412 trucking firms. Specific wage reductions
will depend on the nature of the job and the types of services that drivers perform, according to Gordon
Klemp, founder and president of NTI.
NTI estimates align closely with projections by Cameron Holzer, president of CRST Expedited, which announced
earlier this month a $10 million wage increase over the next 12 months covering about 4,000 drivers. The increases,
which take effect tomorrow, are the largest in the Cedar Rapids, Ia.-based truckload transportation and logistics carrier's
58-year history. CRST Expedited is the largest unit of the $1.3 billion concern CRST International.
Holzer said the increases are aimed in part at offsetting the roughly 5-percent wage hit its drivers have taken as
a result of HOS compliance. Holzer wouldn't comment on driver wages at his company. It is believed that base wages for
truckload drivers range between $48,000 and $55,000 a year.
The hours-of-service rules were written in December 2011 and enforced 18 months later. The rules reduce a driver's
seven-day workweek by 15 percent to 70 hours from 82 hours. For the first time ever, drivers have limits placed on their
traditional 34-hour minimum restart period, requiring it to occur once every seven days and to include two rest periods
between 1 a.m. and 5 a.m. over two consecutive days. The 2011 rule bars truckers from driving more than eight hours without
first taking at least a 30-minute break. The rule left unchanged language allowing drivers to operate 11 consecutive hours
behind the wheel; safety advocates had hoped the agency would reduce it to 10 hours.
The rules were the subject of a fierce legal battle pitting the Federal Motor Carrier Safety Administration (FMCSA), which
wrote and enforced the rules, against the unlikely alliance of safety groups and the American Trucking Associations (ATA).
However, in early August a federal appeals court in Washington, D.C., let stand virtually all of the FMCSA rules, effectively
ending the legal fight.
To accommodate the rules, CRST Expedited uses two-driver "sleeper" teams that operate dry van services over a median length of
haul of 1,400 miles. A typical sleeper team can make a 1,000 to 1,200-mile run in a 24-hour period while still meeting HOS
guidelines, according to Charles W. Clowdis Jr., managing director-transportation for consultancy IHS Global Insight.
EXPEDITED VS. NONEXPEDITED
Expedited shipments are time-sensitive in nature and can command as much as a 50-percent rate premium over shipments not needing
rush deliveries, according to Clowdis. Shippers are willing to pay more for urgent, time-definite deliveries, and CRST Expedited
will be able to embed the higher labor costs in its rates, Clowdis said. Holzer said customers understand CRST Expedited's
position and are willing to tolerate higher rates. Perhaps not surprisingly, Holzer said the wage increases would not apply
to drivers working for CRST's nonexpedited operation.
Holzer said the increases are also designed to retain CRST Expedited's existing drivers and to add about 200 new drivers to its
fleet. CRST Expedited is experiencing driver shortages in California, the Midwest, and Texas, Holzer said. "We will hire from most
any region at this time," he said in an e-mail.
Wage increases will continue beyond this year, and top performers can see their wages rise well above the median per-driver
rate, Holzer added.
OVERDUE FOR RATE INCREASE?
The last time industrywide driver wages rose appreciably was in 2004 and 2005 when they increased by about 20 percent over
the two years, according to Noel Perry, a principal for Transport Fundamentals, a consultancy. The gains were fueled by a
tight market for drivers and by an economic boomlet propelled by what was in retrospect a pyrrhic rise in housing-related
activity. A freight recession which began in 2006, the collapse of the housing market, and the financial crisis and subsequent
recession forced drivers to effectively give back half of those gains, Perry said.
Perry, who for several years has forecast an acute driver shortage by the middle of the decade, said the market is overdue
for a sustained upward spike in rates as a result. Besides a reduced labor pool, freight demand is "moderately positive," Perry
said. In addition, fleet operators have been unusually reluctant in the past few years to push through wage increases, he said.
Carrier executives burned by the downturn have focused more on controlling costs rather than on adding capacity or boosting the
revenue line with price hikes, according to Perry.
A quarterly carrier survey issued last week by consultancy Transport Capital Partners found that conservative habits die hard.
The number of carriers expecting capacity additions of less than 5 percent has risen to 45 percent today from 22 percent in
February 2011. The number of respondents that expected to increase capacity fell to between 6 and 10 percent today from 25
percent in February 2011, according to the survey.
Part of that reluctance may be due to a change in shipper views of end demand. A quarterly survey of shippers from investment
firm Morgan Stanley & Co. found that 45 percent plan to reduce inventory over the next six months. In June, the last time shippers
were polled, the figure stood at 39 percent. About 19 percent of respondents said they plan to boost inventories, up from 17
percent in the June survey. The firm said the decline in shipment activity correlates with shippers' projections that capacity
will loosen among all transport modes.
But even if capacity eases, will that be enough to offset the scarcity of labor? Klemp of NTI said the pool of qualified
drivers remains very shallow and few new drivers are entering the trade. The situation is so critical that recruiting managers
are making "exceptions" to their base driver qualifications criteria just to put drivers in the seats, he said. The anecdotal
evidence is supported by NTI's survey results that show a decline in the minimum experience levels of driver candidates, Klemp
said.
The difficulty in retaining truckload drivers is exacerbating the problem. The ATA said last week that the annualized turnover
rate at large truckload fleets—defined as carriers with more than $30 million in annual revenue—rose to 99 percent in
the second quarter, up two percentage points from first quarter numbers. This pushed the turnover rate to its highest point since
the third quarter of 2012 and just above the annual rate of 98 percent in 2012, ATA said. Klemp expects the third-quarter turnover
rate to hit 100 percent.
Rates will need to head higher as fleets pay more to retain good drivers in a tightening market, Bob Costello, ATA's chief
economist, said in a statement. Klemp added that perhaps never before in trucking's long history has driver retention strategy
been as important as it is today.
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.
“Unrelenting labor shortages and wage inflation, accompanied by increasing consumer demand, are driving rapid market adoption of autonomous technologies in manufacturing, warehousing, and logistics,” Seegrid CEO and President Joe Pajer said in a release. “This is particularly true in the area of palletized material flows; areas that are addressed by Seegrid’s autonomous tow tractors and lift trucks. This segment of the market is just now ‘coming into its own,’ and Seegrid is a clear leader.”
According to Pajer, Seegrid’s strength in the sector is due to several new technologies it has released in the past six months. They include: Sliding Scale Autonomy, which provides both flexibility and predictability in autonomous navigation and manipulation; Enhanced Pallet and Payload Detection, which enables reliable recognition and manipulation of a broad range of payloads; and the planned launch of its CR1 autonomous lift truck model later this year.
Seegrid’s CR1 unit offers a 15-foot lift height, 4,000-pound load capacity, and a top speed of 5 mph. In comparison, its existing autonomous lift truck model, the RS1, supports six-foot lift height, 3,500 pound capacity, and the same top speed.
The “series D” investment round was funded by existing lead investors Giant Eagle Incorporated and G2 Venture Partners, as well as smaller investments from other existing shareholders.
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.”