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 leaders of the North American intermodal industry convened in sunny, steamy south Florida today to discuss what their industry can be, and what it can't.
It can be an alternative to over-the-road dry-van trucking, judging by data from consultancy FTR Associates. which estimates that 0.1 percent of all dry-van traffic is converted to intermodal each calendar quarter, a reflection of rail's reputation as a cleaner and more fuel-efficient transport mode, as well as shipper concerns over truck-driver shortages and never-ending road congestion.
But it is unlikely intermodal will ever supplant trucking in the budgets of shippers. Intermodal gets elevated in the conversation when oil prices rise and regulators and lawmakers appear to be clamping down on truck safety. However, the talk dies down when the opposite occurs. Today, diesel prices nationwide hover around $2.49 a gallon, the lowest level since June 2009 and far away from the $4-a-gallon-plus levels the conventional wisdom two or three years ago thought would be the case by now. In addition, Congress' 2014 decision to table a controversial provision in the Department of Transportation's governing the hours a driver must be idle before returning to the road has freed up capacity that would have otherwise been lost.
Larry Gross, senior consultant at FTR, told the Intermodal Association of North America's (IANA) annual meeting in Fort Lauderdale that Congress' actions effectively led to a 4- to 5-percent increase in truck capacity by allowing drivers and rigs more time on the road. That may explain why FTR pegs domestic intermodal traffic to grow just 1.6 percent in 2015, while international traffic, which has lagged somewhat recently, will rise by 6.3 percent.
For now, truck capacity is no longer in what Noel Perry, another FTR analyst, called "crisis mode." Like many observers, Perry sees the capacity crunch raging anew two or three years out, as the cost of increased government safety regulations puts many smaller fleets—the backbone of the U.S. truck fleet—out of business, and companies continue to struggle to find applicants who want to drive a truck.
What this means for intermodal is that while it makes great sense for resolving shipper-specific challenges, it does not auger a wholesale shift from truck, nor is it a panacea for the still-looming mother of all truck-capacity crunches. "We are a long ways away for truck capacity to be shifting to intermodal," Gross said.
That hasn't stopped the railroads from trying. William Clement, vice president, intermodal, for CSX Transportation, a unit of Jacksonville-based CSX Corp., said on a separate panel that CSX still "sees great opportunity for conversion from over-the-road (trucking), especially on the East Coast." Clement said intermodal accounts for up to half of CSX's overall growth. Tim Roulston, director, sales and wholesale intermodal for Canadian National Inc., the giant rail, said on the panel that CN would move relentlessly toward converting truck users because, frankly, that's what intermodal folk do. The fuel factor, Roulston said, is just one component of the strategy, and other qualities will be brought to the table to showcase intermodal's benefits. Intermodal accounts for about one-quarter of CN's traffic.
Shippers appearing on a panel with executives from CN, CSX, and Union Pacific Corp. said the intermodal supply chain, which includes dray drivers trucking goods to and from intermodal ramps, must focus on service consistency above all else. Denis Marion, director of U.S. transportation for the U.S. arm of Korean electronics giant LG Electronics, said it doesn't help if a box containing hundreds of thousands of dollars in high-value goods arrives at the destination ramp two days earlier than scheduled and must be moved to a yard because LG's customer isn't ready to take delivery. Marion, whose unit moves about a quarter of its goods via intermodal, said consistently hitting transit-time metrics is essential in satisfying end customers, who expect flawless delivery performance because they don't want to hold inventory.
"Don't make me micromanage every single box," Marion said.
That said, LG USA will spend more for intermodal service than for trucks on some lanes, because the company's needs justify it.
Ben Ball, director, transportation services, corporate freight, for Dalton, Ga.-based Shaw Industries Group Inc., the world's largest carpet manufacturer and a big flooring producer, said Shaw would like to devote more budget to intermodal—about 18 percent of Shaw's loads move via rail—if the service were to improve. "The service got bad and there was no hint as to when it would get better," Ball said.
Ball didn't specify a time frame, but he was likely talking about the disastrous period in 2014 when bad winter weather in the first quarter paralyzed the nation's rail system and threw intermodal service into chaos. The nightmare was compounded by what intermodal users said was the rails' inability to provide them with visibility into when things would improve.
Paul Boothe, director of transportation, TSP Development for Miami-based Ryder System Inc., said intermodal in 2014 accounted for $85 million of Ryder's $5.1 billion in transport spend. Boothe said Ryder will likely boost its intermodal spend to $100 million by the end of 2015, though he added that with a current on-time rate of 83 percent, intermodal's delivery performance needs to improve before more truck users make the switch.
Virtually everyone at today's sessions acknowledged that after a one- or two-year breathing spell, the trucking industry could face a capacity crisis that could bring trucking services of varying types to their knees. This could mean a great opportunity for the intermodal segment, as long as its executives recognize that their business, too, cannot survive without drivers and rigs.
Marion of LG said that many companies, including his, behaved badly toward drivers by taking them for granted, forcing them to sometimes wait hours to load and unload freight, and then blithely expecting the goods to be delivered on time. That mindset has changed, he said. "Everything we do today is about drivers," he said. He added, "We have to be the shipper of choice."
Shippers of choice would also do well with Clement of CSX. "We have to treat customers who are behaving the best," he said, noting that the railroad has created scorecards to encourage good behavior. One of the carrots, Clement added, is that more equipment will be reserved for better customers.
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.”