Welcome to my blog series, where we delve into the dynamic world of the land transport industry. As a seasoned professional with 30+ years of experience in this ever-evolving sector, I am excited to share my industry insights and provide commentary on the latest news and trends shaping the landscape. From advancements in autonomous vehicles to the impact of sustainable transportation solutions, this blog series aims to keep you informed, engaged, and at the forefront of this rapidly changing field. Join me as we explore the fascinating world of land transport and uncover the driving forces behind its future.
Joe Jaska, Executive Vice President Land Transport, Americas region, for DB Schenker
Unpacking the Labor Day Lull and How the Freight Industry Navigates Seasonal Shifts
Labor Day marks a unique point in the world of ground transportation. It’s a time when the bulls and bears in the market are sharply divided, and freight demand takes a temporary dip. This happens because the Outbound Tender Volume Index (OTVI) is calculated as a seven-day moving average, and holidays like Labor Day are considered “null days,” which bring the weekly average down. FreightWaves Supply Chain Pricing Power Index has the latest data for us to break down together.
Before the holidays, the OTVI usually sees a surge as shippers rush to move their freight; however, there was no such frenzy this time. The OTVI still fell by 12.06% week over week, though it could have been worse. On a year-over-year basis, it’s down by 3.35%, indicating a decline in actual freight demand.
Looking at Contract Load Accepted Volume (CLAV), which measures accepted load volumes under contracted agreements, we see a 14.15% drop weekly and a 1.44% decline yearly. This suggests genuine cracks in freight demand, not just influenced by tender rejections.
There are concerns despite the recent talk of a “soft landing” to tame inflation without causing a recession. Rising oil prices, driven by production cuts and low inventories, could impact consumer confidence. Higher gas prices during the winter travel season could affect freight demand and the broader economy.
Used vehicle prices are another potential concern, especially if the United Auto Workers (UAW) labor union goes on strike, disrupting new car production. This could lead to a surge in used car prices, which the Federal Reserve wants to avoid.
While most markets reported weekly decreases in tender volumes due to the holiday, the Pacific Northwest saw continued freight flow, thanks to its abundant produce supply. Reefer demand in this region remained strong.
In terms of mode-specific trends, both reefer and van markets experienced declines due to the Labor Day lull. Reefer demand was affected, but it should rebound soon. Flatbed rejection rates returned to July levels, with holidays in the fourth quarter expected to exert upward pressure on them.
Diesel prices have been rising steadily since mid-July, posing challenges for carriers, especially when the spread between retail and wholesale diesel prices is narrowing. This impacts fuel surcharges and carrier profits.
Lastly, Contract rates have recovered from earlier losses but remain lower in Q3 compared to the previous quarter. The spread between linehaul spot rates and contract rates suggests the potential for adjustments in the remainder of the year.
The freight market remains dynamic, with fluctuations that will always be driven by various factors like seasonal trends and external events. Labor Day may be a momentary pause, but the wheels of ground transportation keep turning. I’ll keep an eye out for the rebound, so be sure to check back with me again soon.
Cargo Theft on the Rise: Protecting Your Shipments Over Holiday Weekends
More on the Labor Day Lull — it’s not just barbecues and relaxation on the minds of those in the logistics and shipping industry. Year after year, this holiday brings growing concerns about cargo theft, and this year was no exception. This time, the spotlight burns even brighter as the unsettling trend of shipment theft and pilferage seems to be gaining momentum.
According to CargoNet, approximately 200 such incidents have been reported each month this year. If this pace continues, we could see an alarming 2,400 reported incidents by year-end, well above historical norms. What’s even more concerning is the diversity of stolen goods. Thieves seem to target a wide range of items, from solar panels and consumer electronics to energy drinks, motor oil, and alcoholic beverages. The unpredictability of their targets keeps the industry on high alert.
We see a significant shift in the landscape when it comes to the methods employed by these criminals. Traditional thefts, which involve goods being stolen while in transit, have surged by a staggering 60% year over year, according to Keith Lewis, Vice President of Operations at Verisk.
But what’s even more startling is the dramatic rise in nontraditional incidents, which include “fictitious pickups” that have skyrocketed by 600% to 700% year to date. This unconventional approach to theft is proving to be highly effective and problematic for cargo owners and carriers alike.
Given the concerning rise in cargo theft, it’s more crucial than ever for businesses involved in logistics and shipping to take proactive measures to safeguard their shipments. Here are a few essential steps to consider:
- Enhanced Security Measures: Consider investing in advanced security measures such as GPS tracking, tamper-evident seals, and real-time monitoring systems.
- Employee Training: Educate your employees about the latest theft tactics and how to identify suspicious activity. Implement strict protocols for verifying the identity of carriers.
- Communication: Foster better communication between your company, carriers, and law enforcement. Rapid response and information sharing can be critical in recovering stolen cargo.
- Background Checks: Conduct thorough background checks on carriers and vendors to ensure their legitimacy.
- Insurance: Review your cargo insurance policies and consider increasing coverage to mitigate potential losses.
If you need a trusted partner, look no further than DB Schenker for all your transport needs. We can guarantee a safer and more secure holiday season for your business. Wherever you are moving your cargo, stay safe, stay informed, and keep those shipments secure.
Tackling Freight Fraud
So, check this out. There’s been a significant increase in fraudulent activities in the transportation sector lately, and the Transportation Intermediaries Association (TIA) is not taking it lightly. They’ve just announced the creation of the TIA Fraud Task Force to tackle this issue head-on. This task force consists of top executives from the third-party logistics industry and leading tech companies who are all about using technology-driven solutions to combat fraud.
TIA is a big deal in the world of third-party logistics professionals. Their members play a crucial role in the global and domestic supply chains by facilitating freight. They’ve always been at the forefront of fighting fraud in the transportation supply chain through education and advocacy. But here’s the thing: fraud in transportation just keeps rising, and it’s costing trucking companies, shippers, freight brokers, and ultimately consumers roughly $1 billion!
Anne Reinke, the President & CEO of TIA, is placing her bets on the Fraud Task Force. She says it’s going to study the latest marketplace trends, come up with strategies to tackle fraud within brokerage operations and work on short, medium, and long-term legislative and regulatory solutions. They’re not just talking the talk; they’re taking action!
The ball is already rolling— TIA has also teamed up with carrier organizations to raise awareness on Capitol Hill. In fact, Senator Braun from Indiana and Congressman Bost from Illinois recently sent a letter to the FMCSA Administrator and the Department of Transportation Inspector General, asking them to establish a Task Force to address this fraud issue and deal with the numerous complaints lodged with the agency. Kudos to them and everyone who signed that letter!
The Task Force will meet regularly to fulfill its mission and goals and will continue working closely with the FMCSA to tackle these concerns. Sadly, the agency’s response has been pretty minimal so far, so urgent action is needed. Let’s hope their efforts make a real difference!
Survey Shows Promise of Cutting Emissions in The Transport Sector
The 2023 State of Transportation study revealed compelling insights from 500 transportation executives in the United States. I’m going to fill you in on some of the highlights.
First up – Linehaul rates. Approximately 63% of these leaders anticipate that linehaul rates will remain higher than average in the near term. This projection is attributed to the rise in labor and equipment costs within the industry. However, it is noteworthy that long-term expectations paint a different picture that linehaul rates will gradually decline and reach their lowest point by the end of this year. This prediction suggests a potential shift in the pricing dynamics within the truckload market that could be influenced by improved supply chain management.
On the green side of the house, an impressive consensus of 94% expressed that their top priority for 2024 is to actively reduce emissions.
The demand for sustainable products from consumers is escalating rapidly, creating a pressing need for sustainability throughout the entire value chain. This shift represents a remarkable opportunity for shippers and carriers to take advantage of the availability of intermodal capacity and substantial investments in alternative energy technology and vehicles. The stage is set for a transition towards greener operations.
According to the study, 99% of shippers are willing to embrace these green solutions if offered by their carriers, and an overwhelming majority of carriers (97%) recognize the value of incorporating electric vehicles (EVs) into their fleets. In fact, a significant portion (59%) of carriers plan to adopt EVs by the end of 2023.
Lastly, partnerships and relationships as they play a pivotal role in emission reduction and efficiency gains. A notable 70% of transportation leaders emphasize the significance of forging mutually beneficial partnerships in the next 12 months. Though, sometimes, easier said than done. Finding partners that align with specific requirements and standards can be challenging due to competing priorities, so make sure you choose the people who support your mission.
According to Jenny Vander Zanden, CEO of Breakthrough, transportation leaders are placing a premium on fortifying existing partnerships and exploring new ones to bridge gaps, particularly in support of their sustainability objectives. Collaborative efforts hold immense potential to drive meaningful change. At DB Schenker, we remain fully committed to collaborating with the industry to uncover and implement greener solutions. Check out our next steps for our EV fleet, all part of our 2040 carbon-neutral goal, and be sure to check back with me to see how these trends unfold over the next year!
