Freight Delays Due to Hurricane Ida - Industry Update
Hurricane Ida is a dangerous tropical storm that has hit the Mississippi coast. It is headed northeast, affecting Alabama and Florida, according to the National Hurricane Center. Due to the severity of the storm and the need for people to evacuate the area, shipping for all modes in the area will be affected.
eShipping LTL and TL Shipments
The eShipping operations teams for all modes are monitoring any shipments that may be impacted by Hurricane Ida. The eShipping team will notify customers with any shipment delays due to the storm. We anticipate continued power outages in the path of the storm that already has (or will) impact shippers and receivers. Below is a sampling of notifications from various carriers. If you have any questions regarding any specific shipments, please contact your eShipping account manager or the Client Care team at ClientCare@eShipping.biz.
Due to extreme weather and mandatory evacuations along the Gulf Coast, we are taking operational precautions for the safety of our personnel and customers. We will continue to monitor the path of Hurricane Ida and provide updates on facility closings and service suspensions in impacted areas and areas of potential impact.
In preparation for Hurricane Ida, the following facilities will be closing on Mon, Aug 30, 2021:
Alabama
Mobile: OPEN, with limited service
Due to flooding in areas to the west of Mobile, there will be no pickup and delivery service to any areas in Mississippi serviced by the Mobile service center on Monday, Aug 30.
Louisiana
Baton Rouge: CLOSED
New Orleans: CLOSED
Mississippi
Jackson, MS service center and warehouse: CLOSED
Meridian: OPEN, with limited service
Due to flooding in the area, there will be very limited pickup and delivery service in the Meridian service area on Monday, Aug 30.
In preparation for Hurricane Ida, the following facilities will be closing on Mon, Aug 30, 2021:
Louisiana
Baton Rouge: CLOSED
New Orleans: CLOSED
Mississippi
Jackson, MS: CLOSED
Due to Hurricane Ida, the following terminals will be either closed or limited in status for today:
Closed:
JAM-075
HAM-085
Limited:
AXL-057
MOB-109
TPM-167
New Orleans Terminal and Ports America for containerized operations will be CLOSED Monday, August 30, 2021.
Empire, Coastal Cargo, Gulf Stream Marine and Ports America for breakbulk operations will be CLOSED Monday, August 30, 2021.
Hurricane Ida made landfall Sunday along the coast of Louisiana and Mississippi as a major category 4 storm. The storm system brought damaging winds and flooding, prompting mandatory evacuations, road and customer closures across multiple service territories. Forecasts suggest tropical storm/depression conditions to continue throughout the remainder of day as the storm moves North/North East. As a result, the zip codes tied to the following service center areas are embargoed:
Service Center Areas Embargoed:
Jackson, MS (JCK) - New
New Orleans, LA (NRL)
Baton Rouge, LA (BTR)
Lafayette, LA (LAF)
Mobile, AL (MOB)
Orange, TX (OTX)
Please continue to check our website for updates at the link below.
Weather Alert/Map: http://www.sefl.com/seflWebsite/new/weatherMap.jsp
The Power of Pool Distribution
The Power of Pool Distribution
If you’re managing a high volume of Less Than Truckload (LTL) shipments across different regions, and you’re trying to lower freight costs in addition to transit times (especially for your longer hauls), then hopefully you’re familiar with pool distribution.
Before we can dive into the many uses and benefits this approach has to offer, let’s first establish what pool distribution actually is. Similar to LTL, pool distribution is the process of consolidating different shipments with others that are heading to the same geographic region. Contrasting LTL, however, pool distribution is typically shipped together with other product from the same origin to a location closer to the consignees and sorted there, whereas LTL is usually sorted closer to its origin, then line-hauled to network terminals for final delivery.
The name comes from using a full trailer to transport the “pooled” shipments to a single regional distribution center, or “pool point facility,” located within the main area hub, where they are then offloaded, re-sorted, and sent out for delivery to their final destinations. So, for example, if you have a group of shipments that need to be delivered throughout the southeast in cities such as Atlanta or Memphis. Rather than resorting to typical LTL freight consolidation, you would arrange for these goods to be loaded onto a full truck, schedule drop-offs at a center in these respective cities, and let the local distribution network handle the final deliveries from there.
Major Uses
In order for pool distribution to make sense for your situation, you’ll not only need to have sufficient volume going to the same geographic region, but also a critical mass of consignees. With not enough consignees, a multi-stop Full Truckload (TL) can become a more economical (and faster) option. At the same time, without enough volume or density of destinations, a shipper may be better off using LTL.
But with planning and some extra coordination, shippers of any size can pool their goods to save transit-time and money because with the help of an established third-party logistics provider (such as eShipping), you can easily take part in pool distribution. 3PLs can similarly help companies, small or large, more effectively coordinate the many moving parts the process requires.
The benefits of pool distribution are significant and make it an option worth considering, including:
1. Faster delivery speed
Compared to LTL, pooling products together reduces the number of stops a truck needs to make, so you’re transitioning from routes full of frequent stops at many locations to one long hike with a single stop at a pool point facility at the end. After that, you only have that last mile to worry about before the goods arrive at their final destinations. An advantage exists compared to LTL which usually requires two or more stops at the carrier’s terminals versus just one for a pooled load.
2. Reduced freight costs
Generally speaking, the longer a Full Truckload (TL) can drive without stopping, the lower the costs to operate it – from driver time to fuel to mechanical costs. This is why TL is usually the lowest cost method of shipping any type of over-the-road freight and why LTL is commonly more expensive on a cost/lb or cost/unit basis. Pool distribution is a perfect in-between of TL and LTL because it maximizes the flexibility to make a large number of deliveries and the cost efficiency of a long-haul truck.
3. Decreased risk of damages and insurance claims
Given that pool distribution generally includes only one initial loading/unloading, the risk of a shipper’s product being damaged in transit decreases, which in turn, decreases the number of insurance claims a company may need to file. When the likelihood of problems goes down, it’s a win for both you and your customers.
4. Minimized carbon footprint
When you pool shipments, you also cut down on carbon emissions and waste because fewer trucks, less fuel, and reduced miles equate to substantial energy savings. For those looking to make their supply chain operations a little greener and more socially responsible, it’s one of the most eco-friendly shipping solutions on the market.
It Doesn’t End There
In the past, many shipping professionals struggled to manage dynamic pool distribution routes due to their reliance on outdated, manual systems. Today’s technology, however, streamlines a traditionally manual or Excel-based transportation management approach by bringing real-time tracking and other automated optimization tools to the table.
Once you integrate technology into your pool distribution strategy with the expertise of the eShipping team, you’ve positioned your logistics operations for improved cost efficiency and service performance.
Read our latest case study HERE about how eShipping helped one of the largest U.S. tire manufacturers reduce their costs and increase transit speed through a pool distribution strategy.
Visit eShipping.biz to learn more about how eShipping’s comprehensive supply chain management services can help your company unlock the true power of pool distribution.
Demand for Freight Drives Up Spot Market Rates
Transport Topics has released on article about how the demand for freight has driven up sport market rates, which could affect our customers who are sending loads that need immediate movement. Read the article below to see the trends and current prices to help you better plan your shipments and manage your freight accordingly:
Trucking has seen a turnaround bolstered by spot market rates and increased demand.
“There is definitely strong upwards trends in both demand and rates,” Nick Wynkoop, product manager for rates and analytics at Truckstop.com, told Transport Topics. “Usually in past Junes, we’ve had yearly peaks in spot markets. That’s usually the highest month. This year, instead of dropping off for July and August, we have continued the upwards trend for spot freight.”
Truckstop.com is an online freight-matching marketplace that tracks industry trends weekly in partnership with FTR Transportation Intelligence. Their latest report found that during the week ended Aug. 7, demand for loads increased 5.4% to 80.05 index points from 70.96, and spot rates for that week increased 1.6% to $2.32 from $2.28.
“This has been a very fast evolving environment,” said Avery Vise, FTR vice president of trucking research. “So if you go back to the April and even May time frame, we saw a fairly significant decline in rates in the spot market. You don’t tend to see contract rates change that quickly.”
Spot market rates apply to shipments that need to be moved immediately. Contract rates are the price agreed upon to move a type of shipment over a certain amount of time.
“We’ve seen a pretty dramatic firming of the rate environment,” Vise said. “If you look back to mid-April, we were down on the order of 25% year-over-year in spot rates. At this point, total spot rates are up about 17%.”
The weekly report showed the dry van segment had the most significant year-over-year spot rate increase at 35% for the week ended Aug. 7. The refrigerated segment followed at 27%. The flatbed segment was up 12%.
“We’re talking about levels similar to the increases we saw in the peak in 2018, [when results were up 16%],” Vise said. “But there are differences that are important. One is, we have a demand-driven response here that is combined with capacity. Both are setting the stage for this.”
DAT Solutions found similar trends. Its Truckload Volume Index, a measure of dry van, refrigerated and flatbed loads, increased 2.1% in July from June, bucking seasonal trends, and was 3.7% higher than July 2019.
“States are reopening at different rates and are being hit by the virus at different times. This is leading to unseasonal peaks and valleys in manufacturing output and consumer demand,” Ken Adamo, DAT chief of analytics, said Aug. 13.
“Carrier networks are out of balance due to inconsistent freight demand at a commodity and lane level, and this is leading to a spike in demand for spot freight in order to meet the capacity need,” he added.
DAT said its load-to-truck ratio for vans was up for the third straight month to 4.4, up 25% from June. Spot van rates averaged $2.03 per mile nationally, up 23 cents compared with June and 19 cents higher versus July 2019.
Reefer volumes in July were up less than 1% month-over-month. The load-to-truck ratio was 7.4, four times higher than April’s all-time low of 1.7 loads per truck. The rate was $2.30 per mile, up 15 cents compared with June, and 11 cents higher year-over-year.
Flatbed volume in July was steady compared with June and down 6.6% compared with July last year. The spot rate was $2.20 per mile, 13 cents more than June but 7 cents lower than July 2019.
The trucking industry has much volatility since early in the year when the coronavirus pandemic started rippling through the economy.
“With COVID, supply and demand has been all over the place,” said Kevin Zweier, vice president of transportation at Chainalytics. “Demand for shipments were down when we were in March, April and May and then it started coming back in June, July and August. That’s where we’ve been seeing the rise in spot rates.”
Further, trucking companies have had to adapt to demand shifting considerably in favor of retail (over the commercial sector) since more people have been staying in instead of going out to restaurants and bars.
“All of these things are adding up,” Adamo said. “Spot rates are up. At their lowest, they may be $1.35 in April when we saw all the restaurants were closed and people weren’t going out. And now we’re seeing rates bumping up if not exceeding $2 a mile for the spot market. That’s just tremendous. Unprecedented levels of rate increases.”
Jim Nicholson, vice president of carrier sales and operations at Loadsmart, said there is reason to believe there will be prolonged demand through the rest of the year with the strength in imports leading into the holiday retail season.
“Consumer spending remains healthy,” Nicholson said, “supported by stimulus and shifting spending patterns, including from services to retail.”
Source: Transport Topics
Truck Movement Declines Across US After July 4th, Businesses Close Again
Beginning after the close of the July 4th holiday, truck movement “is down in nearly all 50 states over a two-week moving average,” according to TransportDive and U.S. DAT data. This downturn coincides with record-breaking COVID-19 positive-test cases and businesses closing again in hot spots such as Arizona, Florida, Georgia, and Texas. However, this downturn is not universal across industries, and in some markets where businesses remain open, trucking companies are facing capacity challenges and meeting demand.
The eShipping team is tracking industry-specific shifts in the market and helping our customers plan accordingly for the continued volatility. While the week-to-week uncertainty creates unique challenges, we will continue to proactively manage our customers’ freight programs and support with a full menu of services, from technology to procurement to financial and recovery services.
Brief of Article:
Truck movement is down in nearly all 50 states over a two-week moving average, according to data from FourKites. "We are seeing the residual effect of coming off a quarter end and the July 4th holiday," Glenn Koepke, VP of network enablement at FourKites, told Transport Dive.
Inbound movement was particularly lower in several of the Great Lakes states. Movement in Michigan was down nearly 30% compared to its two-week moving average.
The downturn coincides with states closing businesses again after a resurgence in COVID-19 cases. States witnessing a spike in positive cases, such as Arizona, Florida, Georgia and Texas, faced decreases in truck movement ranging from 10% to 12%.
Full Article:
Shades of red represent a decline in inbound truck movement against a two-week moving average.
Screenshot from FourKites
After volume growth in May following a floor in late April, trucking movement is again trending down across the U.S. DAT data revealed similar trends in the demand slowdown. Load-to-truck ratios fell in van, flatbed and reefer the week of June 29 compared to the week before, though in all three modes the ratios were significantly higher in June compared to May. FTR and Truckstop.com reported a 16% week-over-week dip in load volume the last week of June.
The up-down, up-down again pattern of trucking movement makes the market unpredictable and uncertain, and makes planning and forecasting difficult for trucking executives. "The world is tougher and tougher to predict these days," Joe Boyle, CEO at Truce Software, told Transport Dive.
Part of the volume downturn can be attributed to seasonal trends. "Produce volumes from Mexico typically tail off quickly this time of year, and are now down 27% week over week," DAT wrote in an email. The U.S. Department of Agriculture found seasonal truckloads of produce fell 17% week over week June 28 as a result of fewer imports.
Many retailers and grocers stocked up ahead of the Fourth of July, which created a demand increase over the last two to four weeks, Koepke said. "In the weeks right after a quarter end or holiday, volume typically declines," he said.
Volume downturns are not universal across industries. FourKites' customer base has a strong presence in food and beverage, grocery, and CPG, so its data reflects movement in those industries. Agriculture, construction and manufacturing restarted in New York in mid-May, making June the "first full month where the state’s main manufacturing freight markets were fully active," Dean Croke, principal analyst for DAT, wrote in a Wednesday blog post. Month over month, dry van volumes rose 26% in June in markets in upstate New York.
Tight capacity may also contribute to the nationwide downturn of trucking movement. Boyle said trucking firms are facing the challenge of meeting demand and expanding capacity. FTR data showed an 11% decline in the supply of trucks the last week of June. DAT said capacity was tighter in the majority of southern markets, many of which were first to reopen businesses.
As a result, rates remain elevated. "The holiday might have even contributed to rate increases given decreased truck capacity in all segments," FTR wrote. Spot rates are up across modes, according to DAT, though the firm said its model shows early July as the peak for rates.
Shefali Kapadia / Transport Dive, data from DAT
The near-term future holds continued uncertainty for the trucking market. "The market is in a significant state of flux," Koepke said. "Shipment volumes are fluctuating significantly week-to-week, [and] states and cities opening up at different paces causes imbalances in supply and demand within a market."
The upcoming back-to-school season is typically busy for supply chains, but not all school systems will move forward with normal reopening plans. New York City Mayor Bill de Blasio announced public schools will limit classroom attendance to one to three days per week, a move that would reduce the need for services such as school lunches, creating a knock-on effect on the industry transporting supplies.
Import volumes at U.S. seaports continue to decline, resulting in fewer loads for haulers. Preliminary June estimates predict a 6% year-over-year import volume decline. Imports shrank 9.3% year over year at the Port of Long Beach last month.
The National Retail Federation forecasts the lowest level of imports for peak season since 2014. Cass said it does not expect a return to pre-pandemic volumes until next year.
"There's such a lack of predictability right now," Boyle said. "The good news ... in the fleet segment is that this is essential work, so it's continued to be a very busy and demanding time."
Source: Truck movement declines across US after July 4th, businesses close again
Cass Freight Index For May Suggests a Long Recovery Road Ahead
Cass Information Systems released their Transportation Index Report for May 2020 providing a unique look into the health of the industry’s economy.
Domestic shipment volumes increased 1.6% in May compared to April, but still lag significantly in relation to previous years
Freight Expenditure lowered again in May, down another 5.7%
June shows signs of continued rebound, albeit from a particularly weak base line
In analyzing the shipment trend data, David G. Ross, CFA, author of the Cass Freight Index explains that, “volumes dropped 23.6% vs. year-ago levels, slightly worse than the -22.7% year over year change in April.”
While modest, there was a 1.6% increase in shipment activity between April and May. This, as the Cass research team note, “shows, in our view, a continued severe weakness in the U.S. economy that is counter to the stock market surge we saw from mid-May.”
Regarding freight expenditures, the Cass Freight Index is down 21.2% year over year, the worst reading since the global financial crisis, falling a further 5.7% relative to April.
The good news is that there are small but consistent increases in intermodal volume through May and into the first week of June. The gains appear to be powered by improved INTL volume through US ports and offer hopes for a domestic ripple effect for the month of June.
Mr. Ross summarizes the month’s data by offering, “the Cass Shipments Index likely bottomed for this cycle in April, May was not as strong as anticipated. June readings should be better and, like many other things right now, will depend on how quickly the economy re-opens and how quickly the very high unemployment levels can retreat.
Source: Cass Freight Index - May 2020
5 Ways Amazon is Changing the Manufacturing Industry Forever (And What To Do About It)
Procurement professionals and B2B buyers now expect high levels of customer service, shipment visibility, and an enjoyable checkout experience when purchasing products and materials from suppliers. In fact, companies are switching suppliers for a more consumer-like experience, with "free" shipping, instant order visibility and tracking, predictive shopping, and more.
Overview:
Amazon has set online shopping customer experience standards for B2B companies
B2B professionals want the came online shopping experience as B2C
Manufacturers should invest in eCommerce and fulfillment solutions to stay ahead of the industry and customer needs
Procurement professionals and B2B buyers now expect high levels of customer service, shipment visibility, and an enjoyable checkout experience when purchasing products and materials from suppliers. In fact, companies are switching suppliers for a more consumer-like experience, with "free" shipping, instant order visibility and tracking, predictive shopping, and more.
The Amazon Effect has already impacted companies across multiple industries and paved the way for a new way of thinking.
How can manufacturers, distributors, and suppliers improve their supply chain customer experience? What are practical examples and strategies to create an eCommerce buying experience like Amazon? How can we plan for and adapt to so we can stay ahead of the competition?
Watch the video below.
Uber ‘Re-Evaluating’ Non-Core Units Like Freight, WSJ Reports
Uber Technologies has laid off 3,000 more employees and closed 45 more offices, The Wall Street Journal reports, just after the first round of layoffs that totaled more than 3,700 employees.
Overview:
Tech heavy freight management solutions under pressure to return profits
Uber Freight lays off 6,700 employees and raise rates on several key customers by double-digit percentages
John Paul Hampstead, Director, Passport Research
Uber Technologies has laid off 3,000 more employees and closed 45 more offices, The Wall Street Journal reports, just after the first round of layoffs that totaled more than 3,700 employees.
CEO Dara Khosrowshahi wrote in an email to employees that Uber was “making really, really hard choices right now,” including re-evaluating non-core cash burning businesses like Uber Freight and autonomous driving. Khosrowshahi said that Uber was looking at “strategic alternatives” for its staffing business Uber Works, but did not use that language specifically for Freight.
“We remain committed to growing the Uber Freight business, innovating in the Freight industry, and supporting our partners – carriers and shippers alike,” an Uber Freight spokesperson told FreightWaves. “Today’s news does not impact our product roadmap, or our ability to provide best-in-class service to our customers.”
Uber Freight, Uber’s digital freight brokerage business, had already adjusted its growth strategy and the way it priced freight to customers as part of Uber’s new emphasis on driving toward profitability. As late as February 2020, Khosrowshahi said that Uber would be EBITDA-profitable by the end of 2020, but the coronavirus pandemic pushed that date back to 2021.
Uber’s financial reporting and channel checks across the freight brokerage industry confirmed that Uber Freight was adjusting its model earlier this year. Uber Freight raised contracted rates on several large customers by double-digit percentages. Multiple sources told FreightWaves that the digital brokerage gave back a multi-million dollar award to a Fortune 100 consumer packaged goods shipper earlier this year.
And the digital brokerage’s attitude toward growth changed – the first quarter of 2020 marked the second quarter in a row that Uber Freight’s gross revenue had declined sequentially. Still, the $199 million in gross revenue Uber Freight reported in the first quarter 2020 put it on a $796 million annual run rate, enough to place the business in the top 15 or 20 freight brokerages in the United States.
But Uber Freight is far from achieving profitability; the segment lost $64 million in ‘adjusted EBITDA’ in the first quarter of 2020, which was admittedly better than the $81 million loss in the fourth quarter of 2019. Uber’s financial reporting makes it impossible to reconstruct Freight’s gross margins – the typical measure of performance for non-asset third-party logistics providers reliant on purchased transportation – or its operating costs. Uber Freight’s operating costs are thought to be much higher than most freight brokerages because of its investments in technology, which allowed the business to move tens of thousands of touchless loads.
In January, the Chicago Tribune reported that Uber was offering some of its new Chicago space up for subleases; when FreightWaves questioned Uber Freight management earlier this month, they did not comment further on the subleasing.
The question around Uber Freight has always been how and why it fits into Uber’s overall business. Uber’s Rides business was unique because the company created capacity by convincing people to drive passengers in their own cars, but the Freight business cannot create Class 8 trucks out of thin air. That left Uber Freight subject to the supply-and-demand dynamics of a fragmented, highly competitive market with many tech-savvy brokerages already established. Freight brokerage revenue, it turns out, is more volatile – and so are its margins – unlike the B2C marketplaces for rides and food delivery that Uber has effectively been able to create and control.
Ultimately the difficulty of acquiring non-recurring freight revenue and managing volumes in a volatile, cyclical industry makes freight brokerage a fundamentally different kind of business than Rides. And the variable performance of a digital freight brokerage could ultimately be dilutive to Uber’s valuation, if it got big enough to matter.
In July 2018, FreightWaves wrote about Uber shuttering its autonomous trucking program, which had the potential to make its freight brokerage offering something truly revolutionary: “If Uber Freight loses the benefit of selling the concept of an autonomous trucking future, investors might prefer company executive attention on protecting and building out the core business.”
"Durable Goods" Data Shows Alarming Decrease For Second Consecutive Month
Thursday, May 28 The Commerce Department released the Monthly Durable Goods Report which makes for bleak reading. An ominous sign of future economic activity particularly as it relates to the shipping industry.
Overview:
Key economic logistics forecasting drops 17% in April
Shipments of core GDP related products decrease for the third month in four, fueling recession fears
Thursday, May 28 The Commerce Department released the Monthly Durable Goods Report which makes for bleak reading. An ominous sign of future economic activity particularly as it relates to the shipping industry.
The manufacture and shipment of Durable Goods (expensive items that last three or more years), and one of their subset categories, Core Capital Goods (tangible goods or services) are used by economists as leading indicators of future economic activity because as Investopia notes, “Businesses and consumers generally place orders for durable goods when they are confident the economy is improving. An increase in durable goods orders signifies an economy trending upwards.”
The full report, which can be found here notes, “New orders for manufactured durable goods in April decreased $35.4 billion or 17.2 percent to $170.0 billion… [which] followed a 16.6 percent March decrease.” The report confirms that, “Transportation equipment, down three of the last four months, led the decrease, $23.9 billion or 47.3 percent to $26.6 billion.”
Like with Orders, the Shipments of Manufactured Durable Goods decreased in April for the third time in the last 4 months by, “$41.5 or 17.7 percent to $192.3 billion. This followed a 5.5 percent March decrease.”
Additional GDP reporting from the Commerce Department released May 28 revised first-quarter GDP figures to a 5 percent decrease instead of the previously estimated 4.8 percent contraction. These datasets as Lucia Mutikani of Reuters explains, “ leaves economists expecting gross domestic product could drop in the second quarter at as much as 40%, the worst since the Great Depression.”
Sources:
