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Patrick Soleymani is the associate dean for outreach and strategic engagement and an associate professor within the management area in the School of Business at George Mason University.
As a senior leader, Soleymani oversees the School's external relationships, including advancement, business engagement, and marketing and communications. In his instructional role, Soleymani is an award-winning professor in the fields of organizational behavior, principles of management and entrepreneurship. He teaches in both the undergraduate and graduate programs at the School of Business, and has led numerous global residencies to Europe and the Middle East.
Soleymani received his bachelor of science degree in management and master of business administration from George Mason University before receiving a Juris Doctor from the University of Baltimore. He is also a member of the Maryland State Bar.
David Maloney, Editorial Director, DC Velocity 00:01
When will trucking return to normal? Preventing cargo theft. And workers return to the office in droves. Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by PERC, the Propane Education and Research Council. Propane is the safe, reliable energy for material handling. Propane-powered forklifts can improve air quality inside your facilities for a healthier, more productive workforce. See how propane can give your productivity a boost at propane.com/forklifts.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today, by any measure 2023 has been a difficult year for the trucking industry. Just how bad are market conditions and when will trucking see a return to better times? To find out, here's Victoria with today's guest.
Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:18
Thanks, Dave. Our guest today is Patrick Soleymani. Patrick is an international trade attorney and associate dean and management professor at George Mason University's School of Business. We're going to talk about the sluggish conditions we've been experiencing in the trucking industry and whether or not we can expect to see things turn around anytime soon. Welcome, Patrick.
Patrick Soleymani, Associate Dean, George Mason University School of Business 01:39
Thank you so much, Victoria. Great to be with you.
Victoria Kickham, Senior Editor, DC Velocity 01:42
So, as I said, tough conditions continue across the trucking industry. I wondered, how would you sum up where we are right now?
Patrick Soleymani, Associate Dean, George Mason University School of Business 01:50
Well, you know, Victoria, Americans continue to spend more on services, not goods, in this post-pandemic environment. Planes, as many of us have heard, have been busy, but they haven't been busy with goods. They've been quite busy with people going from one place to another. So, when we think that virtually every good for a home was on a truck at some point in its life, and now there's much less people staying at home, it's become a problem. Some information that I came across is that less-than-truckload shipments -- well, of course, we call those LTL -- fell 17%, between 2021 and 2022 and this year, another 5% in the first quarter. Of course, inflation continues to be a problem, making a bad situation worse, and companies are destocking. And finally, I would say, production of goods in China has decreased. Less goods from China means less ships docking at California's ports. That means less goods being brought in by truck or rail from one coast to another. Specifically, China's exports to the U.S. dropped a whopping 13% during the first seven months of this year.
Victoria Kickham, Senior Editor, DC Velocity 03:10
Yeah, so all of that has really contributed to the freight recession that we've been in, and continue to be in. I'm wondering if you can comment on, you know, do you expect any of that to end anytime soon, and kind of what needs to happen for conditions to improve?
Patrick Soleymani, Associate Dean, George Mason University School of Business 03:25
Right. Well, the pandemic created a strong demand for goods. People were stuck in their houses and products were coming to them. Now it's sort of gone the other way around. Shortages that we used to see at supermarkets and retail stores have been remedied. That is really pushing a lot of the recession. In order to see improvement, we need to see a higher consumer demand for goods, the data shows that consumers are spending. The thing is, they're not really spending on goods. We're also seeing higher gas prices, and coupled with higher inflation, that doesn't bode well for the industry. So, we need to see lower gas prices. We need to see a lowering of the rampant inflation, and these will, if history is any lesson, inspire a higher demand for goods.
Victoria Kickham, Senior Editor, DC Velocity 04:26
How would you assess the impact on the market of Yellow Corporation's recent bankruptcy. You know, talking about conditions and what we're seeing now, what do you expect the impact to be, as I said, and maybe what [are] the labor implications for instance?
Patrick Soleymani, Associate Dean, George Mason University School of Business 04:40
Sure, there's significant implications. Yellow Corp. was a less-than-truckload company, and those are usually pallet-size shipments, drivers on specific routes during the day, and those drivers usually get home at night. Truckload carriers, which are about five times as big as the LTL industry, are the ones that move those full trailers across the country. Most of these companies are hiring. The truckload carriers are, and the reason is truckload carrying sees significant annual turnover, between 55 to 60%, and that's because of the grueling conditions. That's because a lot of these drivers are leaving their families and driving cross country for weeks or months at a time, and there's only so much they can take doing that. And because of the high turnover, historically, they are usually hiring. But the LTL companies are not hiring as much, so they know those 30,000 Yellow employees that lost their jobs, they're going to have a hard time finding a landing spot unless they agree to enter the truckload market, so that's going to be the biggest labor implication.
Victoria Kickham, Senior Editor, DC Velocity 04:52
Interesting. Do you get a sense that we may see more of this, you know, more companies exiting the market and, you know, contributing to this problem?
Patrick Soleymani, Associate Dean, George Mason University School of Business 06:10
Sure. I'm not overly concerned about more companies declaring bankruptcy, I think what you're going to probably see is a continuation of the exit of those mom-and-pop trucking businesses that were created as part of the pandemic boom. Yellow's bankruptcy isn't earth-shattering for the trucking industry. They nearly filed for bankruptcy four times in the past 15 years. A lot of that was related to some acquisition choices. They made labor relations with their Teamsters and some other matters that were quite unique to Yellow. This in no means implies that the trucking industry is doing well, but Yellow can be looked at as an outlier.
Victoria Kickham, Senior Editor, DC Velocity 07:00
How are the conditions we're talking about affecting private fleets such as Walmart and Amazon? I wonder if you can kind of weigh in on that?
Patrick Soleymani, Associate Dean, George Mason University School of Business 07:08
Sure. Well, you know, Victoria, as you drive around, you may see those Walmart and those Amazon trucks there. They've recovering a lot more than what we used to see with UPS, FedEx, and your local postal worker. You know, these fleets help create some jobs for previous LTL drivers like those at Yellow, because they are more localized, they are the going in in the morning and coming back in the evening types of fleets, but generally, they take away [from] the for-hire market, and that's prolonging the trucking recession. So, when you look at the Amazon truck that pulls up, potentially, in your driveway and drops off those products, by doing that, it's no longer many of the LTLs that are involved. You're even seeing some of this getting into the private fleet business. For example, UPS has seen a drop of around 10% in package volume this past quarter, and FedEx saw an 18% average drop around the same period. So, the private fleets are not just impacting LTL, but they're also impacting parcel services.
Victoria Kickham, Senior Editor, DC Velocity 08:28
Earlier you mentioned, you know, the persistence -- persistent, excuse me -- inflation and high prices, and those things obviously remain a problem for businesses and consumers. What's your outlook for how that will impact peak shipping season, which is coming quick, and also into 2024?
Patrick Soleymani, Associate Dean, George Mason University School of Business 08:46
Sure. Well, I see this being a bit prolonged. The Fed has raised interest rates to their highest level in 22 years. Consumer spending is still strong; unemployment is relatively low, and this means that we may see more rate increases going into the end of 2023, which is the peak shipping area, and also then going into 2024. From one perspective, these rate increases can cool inflation, and potentially allow for more goods to travel within the country. That's good news for the trucking industry. But there are some other headwinds to be thinking about. One, when you do have increased rates, that does start to eat away at consumers' ability to put things on their credit cards. It also can start increasing the unemployment rate, which impacts consumer spending. And don't forget China. Recently, China has a major property-market challenge. A major Chinese investment firm actually recently missed payments to its corporate investors. It reminds many of us here in the U.S. of the Lehman Brothers dilemma back decades ago. If Chinese exports continue dropping, it will prolong the trucking recession well into the peak shipping season and 2024.
Victoria Kickham, Senior Editor, DC Velocity 10:19
Given all this, what can shippers expect in terms of pricing, and really just general supply chain trends in the months ahead?
Patrick Soleymani, Associate Dean, George Mason University School of Business 10:27
Well, supply chain issues have eased a bit since the pandemic and the war in Ukraine, and that's one of the reasons why we're in this trucking challenge. However, there are some barriers ahead. For example, Volkswagen recently reported that it wouldn't be able to deliver as many cars as originally anticipated, not because of shortages in semiconductors, which we've heard about through the past years, but actually, logistics delays. The good news is, is that some of these things continue to slowly alleviate. But then there's other challenges that we're seeing more and more of in the past year, and will most likely continue to see going into the future years, which is climate change. It really isn't helping matters. Extreme weather is hampering the nation's supply chain, and also impacting pricing. And finally, fuel costs, which oftentimes are passed on to consumers, which then causes consumer demand to be depressed.
Victoria Kickham, Senior Editor, DC Velocity 11:31
Patrick, thanks so much for joining us today. We really appreciate your insight.
Patrick Soleymani, Associate Dean, George Mason University School of Business 11:35
My pleasure, Victoria. Thank you.
Victoria Kickham, Senior Editor, DC Velocity 11:37
Thank you. We have been talking with Patrick Soleymani of George Mason University. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 11:46
Thank you, Victoria and Patrick. Now let's take a look at some of the other supply chain news from the week. And Ben, you wrote this week that cargo thefts are on the rise. What is causing more of these crimes to occur, and what can be done to prevent them?
Ben Ames, Senior News Editor, DC Velocity 12:01
Yeah, that's right, and this comes on the heels of what we were talking about with our guest. Market conditions are tough, but also we've seen a real rise in the frequency of freight theft lately, which is, of course cargo that's stolen from both warehouses and from trucks. By some estimates it's at a 10-year high. The reasons for this crime wave aren't totally clear, although we actually had a guest on this podcast a few weeks ago, Anne Reinke, who is the CEO of Transportation Intermediaries Association, and she had said that one reason is the digitalization of the freight and trucking market, which enables technology-based scams. So, keeping that in mind, this week we saw a report from CargoNet. That's a company that's a theft-prevention and recovery service, and they gave some extra details on exactly how these thieves are pulling off this rising number of crime[s]. So, the latest crime technique that's favored is what's called a shipment misdirection scheme. It's a kind of a fictitious pickup. Well, it's a real pickup, but it goes to a fictitious place. So, in these schemes, scammers impersonate a motor carrier, and that gains them authorization to transport a shipment. Then they hire a motor carrier to deliver that shipment to a location that they have access to, so they can later steal it. These thieves often impersonate two or three different companies in that profile in order to disguise their identities and deceive the victims.
David Maloney, Editorial Director, DC Velocity 13:37
That is pretty clever, unfortunately, for shippers and carriers. Did the report have any advice as to how to prevent these kinds of scams?
Ben Ames, Senior News Editor, DC Velocity 13:46
They had some advice, yes -- and by the way, this may be particularly important over the coming long weekend, because there's typically a rise in thefts when the people are gone for extended hours and offices and trucks may be parked. So, to guard against these scams, CargoNet said that shippers should consider recording the information about each motor carrier and driver and vehicle that's used to pick up any shipment. Of course, that's for investigative followup in case the shipment is stolen. On a more preventive approach, freight brokers can build better or more sophisticated compliance programs to detect motor carrier identity theft, and that's particularly effective if a certain commodity has been frequently targeted. So, that leads me to the next part: There are certain commodities that are particularly popular with thieves. Historically, cargo thefts, thieves try to steal particularly valuable shipments: televisions, computers, appliances. These are things that are worth a lot of money packed into a dense, single shipment. And more recently, they've been trying to grab a little bit wider variety of stuff. CargoNet listed solar panels, energy drinks, alcoholic beverages, motor oil, and consumer electronics. Go figure, but apparently that's what's popular when folks are trying to rip off the trailer lately. But in looking at the past week, specifically, CargoNet said that thieves may be looking for shipments of building materials. They mentioned shingles, lumber, power tools. Those kinds of things are being moved particularly quickly right now in these days that we're living in, in response to extreme weather events like Hurricane Idalia that hit Florida this week, so that was, you know, really sort of disappointing in human nature, obviously, when folks are trying to get shipments there and help disaster victims and some of those are, you know, exposed to theft.
David Maloney, Editorial Director, DC Velocity 15:54
Right, exactly, and I guess it's bad enough that they steal the shipments, but to take those rebuilding products away from people who really need them is sort of a double whammy to those folks who have really gone through a lot this past week or so.
Ben Ames, Senior News Editor, DC Velocity 16:06
Yeah, it struck me that way as well, but hopefully, with this advice, we can prevent some of that going forward.
David Maloney, Editorial Director, DC Velocity 16:12
Thank you, Ben. And Victoria, of course, during the pandemic, many employees began working from home for the first time, but now companies are requiring that many of them also return to the office. You wrote this week about some recent trends affecting where people work. What can you tell us?
Victoria Kickham, Senior Editor, DC Velocity 16:30
That's right, Dave, yes, and as you say, the remote work has been the norm for many employees since the pandemic forced companies to close their doors and transition to, you know, virtual staffing, but as you alluded to, the practice may soon be a thing of the past. And that's according to data from a company called ResumeBuilder.com, and it was released sort of late August. So, the resume and job search firm set out to examine company's plans for returning to the office post-pandemic. They refer to this as RTO -- return to office -- practices and policies, and they collected and analyzed responses from about 1,000 company decision makers across a pretty wide range of industries. I found this interesting for a few reasons, and one of which is that when we think about warehousing and logistics, we often think of frontline workers -- you know, those who didn't have the luxury of working from home during the pandemic. These include truck drivers; pick, pack, and ship employees; and so forth. But there are many workers in the supply chain that were able to work from home: Those in customer service and sales, in some cases, as well as IT professionals and others. So, there are a fair amount of employees in this industry that fall under the work-from-home camp, and as I said, it looks like many of them will be returning to the office soon if they haven't already.
David Maloney, Editorial Director, DC Velocity 17:47
Victoria, did they give any statistics, or what did the results indicate?
Victoria Kickham, Senior Editor, DC Velocity 17:51
Yeah, well, the majority of those surveyed said that their companies will have employees back in the office by the end of next year. Broken down: 51% said they already require some or all of their employees to work in person, and another 39% said they plan to do so by the end of 2024. Another 8% said they will require some or all of their employees to return to the office by 2025 or later. So, that's 90% of companies that say employees will mostly be back in the office about a year from now. And apparently those companies that have already taken the leap are seeing some pretty good benefits. Three out of four companies surveyed said they've seen an improvement in revenue since employees have returned to the office, and a majority also said that they have seen improvements in things like productivity, worker retention, employee relationships, and company culture. Another result I found interesting: the survey found that many companies are offering incentives to get employees back to the office, and those include things like childcare and catered meals. So, pretty interesting. The lunches sounds like a good idea to me.
David Maloney, Editorial Director, DC Velocity 18:57
Those are very interesting statistics. Thanks for sharing them, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 19:01
You're welcome.
David Maloney, Editorial Director, DC Velocity 19:01
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. Also check out the podcast Notes section for some direct links on the topics that we discussed today.
We'd also like to thank Patrick Soleymani of George Mason University School of Business for being our guest. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, check out our sister podcast series Supply Chain in the Fast Lane. It's coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. Our current series is on transportation tech. Check out Supply Chain in the Fast Lane wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by PERC, the Propane Education and Research Council. Propane is the safe, reliable energy for material handling. Propane-powered forklifts can improve air quality inside your facilities for a healthier, more productive workforce. See how propane can give your productivity a boost at propane.com/forklifts.
We'll be back again next week with another edition of Logistics Matters. Please be sure to join us. Until then, have a great holiday weekend and a great week ahead.
Articles and resources mentioned in this episode:
- George Mason University School of Business
- Theft risk could jump over Labor Day holiday, CargoNet says
- Survey: 9 in 10 companies say employees will return to office by end of 2024
- Visit Supply Chain Quarterly
- Listen to CSCMP and Supply Chain Quarterly's Supply Chain in the Fast Lane podcast
- Listen to Supply Chain Quarterly's Top 10 Supply Chain Threats podcast
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