Georgia Port Authority?s Garden City Terminal (Photo: GPA)But container volumes still going strong this quarter as U.S.-China hash out deal; but first quarter likely to see slowdown.
The Federal Maritime Commission?s final report on detention and demurrage fees highlights the fact that ever larger container ships might be creating diseconomies of scale for the drayage industry and shippers. The FMC report says growing ship size means a container ?might not be discharged until days after vessel arrival,? depending on where it?s stowed and the work schedule of the particular terminal. Despite the increasing visibility across all aspects of the supply chain, containers go into a ?black hole? once they arrive at berth, according to a report from Stifel. Smaller container ships were able to unload containers over one to three days. But today?s mega-vessels may take four to five days to unload, eating into the free time before detention and demurrage fees kick in. Increasingly congested terminals mean less time to move containers, with drayage drivers left with two turns per day, down from three to four turns per day.
Did you know?
U.S. container imports into the U.S. set a new record in October, reaching 2.04 million twenty-foot equivalent units (teu), according to the National Retail Federation, up 9% from September and 13.6% from a year ago. November will only see a small slowdown to 2.01 million teu, the NRF says. As for December, the NRF expects 1.83 million teu crossing U.S. docks, which is still a strong level given the typical slowdown seen for the holiday month.
?If there is a deal to be done we'll make it. The president wants us to make a deal. But as you say it has to be verifiable. It has to be moderated. It can't be just vague promises like we've seen over the last twenty-five years.?
Latest estimate from U.S.G.S. sees bigger potential in the Permian Basin of West Texas. (Dallas News)
Mandate with estimated upfront costs of $9,500 to begin in 2020. (Slate)
But with building space tight, tents and parking garages are being enlisted. (Wall Street Journal)
Agreement on weight rating for tires seen as first step in bring together federal and provinicial standards. (trucknews.com)
Prepare for a holiday hangover . . . in the freight market, according to equity researchers at Deutsche Bank. The well documented pull forward in U.S. container imports through the third and into the fourth quarter mean a ?good potential for a negative inflection in freight flows? in the first quarter of 2019, researchers say. The investment bank says the streak of year-on-year growth in container imports will likely be broken this month. The slowdown is more a reflection of tariff-related demand easing as opposed to underlying consumer demand. But the negative outlook for the first quarter is ?dominating discussions with investors.?
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The fragmentation in the freight industry is quite well known, and so is the skewed tilt towards owner-operators and small fleets, who are an outsized portion of the total number of fleets in the market. However, such a situation is not necessarily advantageous to the small fleets, as fragmentation foments opacity in spot markets - both on rates and the number of available loads.
Small fleets and owner-operators also have considerable inefficiencies in the way they track and file documents, build and bill invoices, and follow up on business reports. Merge Transit, a startup that calls itself a ?spot market agency,? is providing a mobile app and a simplified web TMS system for small carriers that operate in the spot market - a solution that consolidates the tools a trucker would need while on the road and while running operations through mobile offices, rather than behind a desk.
?Just like you use a realtor in the real estate market, we wanted to be a resource for spot market carriers as carriers are not in control in the spot market and don?t always get the right clients,? said Justin Taylor, the CEO of Merge Transit. ?Truckers need some assistance in knowing the market conditions and the best way to approach the spot market. We create tools for that and have carrier agents whom we employ to help owner-operators and small fleets to understand how the market is doing, ways to get top dollar for their routes, and even help them with route planning.?
Taylor explained that though Merge Transit was often classified as a dispatch service by its clients, it was looking to automate the process and was banking on data analytics for understanding the market. ?We work on this every day, trying to predict the market based on trends, which is why we purchase SONAR. This is where we see a value in our services, as in order to negotiate better rates and to be effective, you got to be in the right position and know how to be in that position,? he said.
A lot of what is now being offered through Merge Transit evolved when the company was working on its internal processes to improve efficiency within the team by developing spreadsheets and collecting data. ?Using our algorithms, we can now help point trucks in the right direction - for example, with cargo volumes, and trying to figure out how they can get from 150 calls a day and booking 10 loads to doing 60 calls a day and booking 10 loads, while increasing the rate per mile at the same time,? said Taylor.
Taylor spoke about how drivers in the industry do not have a recording system on deck, and thus are unaware of their numbers. ?The first step is about giving them a report and letting them see what is going on in their business, all in real time. Then it can slowly progress into more detailed reporting, with our dispatchers getting into more business conversations with the drivers weekly,? he said. ?Then through our mobile app, they can track revenue and manage their paperwork to get themselves more organized.?
Customers can generate P+L reports that can be sent to accountants for review, without the need for services like QuickBooks to monitor operations. ?Our goal is to continue to add tools to this app that will help automate the dispatching portion of an independent trucker?s business, by integrating predictive routing tools that will allow them to see past data, mixed with market predictions in order to see potential outcomes of different route selections,? said Taylor.
Quite recently, Merge Transit has started leveraging the various indexes provided by the FreightWaves? SONAR platform along with three years of data collected by the company from fleets of three-and-under trucks, to create an automation tool for its users and employees. Taylor mentioned that this helps the startup provide insight not just with accounting for carrier numbers through real-time cost and revenue tracking, but also with providing market analytics for smaller fleets by a combination of the said resources.
?There is so much data out there, and people may not have the time to sift through it every day or know how to fully utilize it,? said Taylor. ?This is why we believe it is paramount for us to make full use of what?s available, and work to create tools that can streamline smaller carriers? operations. We will be internally testing with our employees as the model is being built, and hope it will be able to help small carriers plan their routes for the week with greater accuracy, as well as optimize the route they choose based on their preferences.?Want more content like this? Click here to Subscribe
KeepTruckin continues to expand its leadership team as it works to build out new solutions for drivers, taking advantage of the data now available to it.
KeepTruckin just keeps on growin?. The company has announced it has filled four key leadership positions and has added an update to its IFTA reporting function.
?These leadership hires reflect the scale of our opportunity and the quality of the team we have built,? CEO & Co-Founder Shoaib Makani told FreightWaves. ?KeepTruckin is now the leading fleet management platform for growing trucking companies. We have brought 250,000-plus trucks online and the data we have unlocked can help our customers run safer, more efficient and more reliable fleets. These leaders recognized the value of this network and what we can build on top. But they also know the importance of culture in building a great company. Our success has been a direct result of the team we have built and the culture we have instilled.?
Maintaining that culture will be part of the jobs of Bradford and Sansone. Bradford most recently served as director, Google Cloud, for Google while Sansone joins KeepTruckin from Weebly and also served as general counsel for Amazon Robotics from 2011-2013.
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?Despite our incredible growth this past year, going from 400 to now 800 employees across six global offices, we have stayed true to our values and created an environment where people feel empowered to do their best work,? Makani noted. ?Maureen and Alice recognized the culture we have built and are helping us scale it.?
Gurumurthy worked as director of engineering at Twitter, leading a 200-plus person team responsible for developing and maintaining the company?s consumer-facing products. He also has worked at Yahoo! Labs and IBM Research. Ranganathan joins the company from Uber, where he served as senior director of product, managing core data and AI capabilities. Both men will join the KeepTruckin team as it seeks to develop and grow its product portfolio.
?Our first act was to connect trucks through our hardware and software fleet management platform; the compliance and telematics data we have unlocked is of incredibly valuable,? Makani said. ?Our next act will be to help drivers and fleet managers leverage that data to run smarter fleets. Machine learning will allow us to deliver insights that are prescriptive and predictive instead of just presenting raw data.?
For example, Makani points to intelligent geofencing, automatic video analysis, and driver churn prediction.
The addition of the new leaders represents an expansion of the KeepTruckin team. Co-founder Ryan Johns remains in his role as CTO and Kush Kella will continue as head of product for fleet management.
?These new hires will help us build on top of the great foundation we have developed over the past 5 years,? Makani pointed out. ?We are going to scale our engineering team to over 200 people over the next year so that we can build the modern technology that trucking companies need to grow their businesses.?
Last week, KeepTruckin also announced an update to its IFTA reporting. The key change is that drivers will now be able to upload fuel purchases to the KeepTruckin dashboard at the point of purchase, including bulk imports from major fuel cards.
According to the company, drivers can simply ?download a CSV file of fuel purchase history directly from Comdata or EFS and upload that very same file to KeepTruckin via the bulk import option. Your fuel purchase data will automatically appear under IFTA in the dashboard.?
Drivers can take a picture of the fuel receipt and input required information to have the data automatically sent to their KeepTruckin dashboard. The information is included and readily available for download for quarterly fuel tax reporting, the company said.Want more content like this? Click here to Subscribe
Zoof-It, a Netherlands-based company that provides a last-mile blockchain platform that instantly rewards for parcel delivery in a convenient, inexpensive and responsible way, has joined the Blockchain in Transport Alliance (BiTA). BiTA is the leading organization dedicated to determining best practices and standards relating to blockchain in the transportation/logistics/supply chain marketplace.
Blockchain can help companies in this marketplace digitally identify and track transactions, contracts and shipments as part of a distributed ledger system, making operations more transparent and reliable. Blockchain can help organizations improve customer experiences and create new revenue streams by improving fleet management and other areas.
?Blockchain technology will revolutionize the way the logistics industry operates and creates new value and efficiencies for customers and partners across the supply chain,? said Stefan Verhagen, CEO and co-founder of Zoof-It. The Zoof-It product is based upon a permission-less blockchain or sidechain, enabling ease of entrance to equally treated stakeholders, while ensuring censorship resistance without any need for governance.
Oliver Haines, Vice President of BiTA-Europe, stated, ?On behalf of the members of BiTA, I welcome Zoof-It to the Alliance. As an innovative blockchain start-up, Zoof-It?s solutions and expertise will help BiTA in its work to develop blockchain standards.? Haines continued, ?In the supply chain, services like those Zoof-It provides in the Netherlands add value and can help companies be more efficient.?
Verhagen continued, ?Instead of trying to solve everything, Zoof-It focuses on instant financial settlement in the last-mile delivery space, benefiting couriers and consumers. Promoting neighbors in the delivery process costs less than returning a package to a depot, not only financially but also in delivery speed.? He added, ?Zoof-It?s mission is to create efficiency and trust in the last-mile with lower information and communications technology costs as possible.?
Based in Tilburg, the Netherlands, Zoof-It was founded in 2015. The company concentrates on clustering of parcels, organic growth of neighbors who earn a bit as well, and using a deflationary currency, all depicting its environmental friendliness. The company?s on-request software can show how couriers, brokers and neighbors work together, ensuring immediate earnings while immutably recording liability and reducing disputes. Zoof-It?s solution helps eliminate late payments of 30 to 400 days, as well as calls and dunning letters. Liquidity and fewer administrative burdens are positive benefits. Immediate payments are made possible by the latest blockchain technology, like the Lightning Network and Raiden.
About the Blockchain in Transport Alliance
Founded in August 2017, BiTA has quickly grown into the largest commercial blockchain alliance in the world, with nearly 500 members that collectively generate over $1 trillion in revenue annually. BiTA members are primarily from the freight, transportation, logistics and affiliated industries. Alliance members share a common mission to develop a standards framework, educate the market on blockchain applications and encourage the use of those applications. BiTA has offices in: Chattanooga, Tennessee (USA); Sydney, Australia (Asia-Pacific Region) and London (European Region). For more information, please visit www.bita.studio/.Want more content like this? Click here to Subscribe
The smartest minds on Wall Street use charting analytics to quickly identify and then track trends in multiple data sets. Why? Because it works. Even the most intelligent investor or skilled trader identifies patterns in numbers when they are charted far faster than when those numbers are simply displayed in columns and rows. Graphically depicting data becomes more important when you are trying to compare two or more data sets and understand the relationship between them over time. When viewing a chart of a couple of data sets that are related, you begin to understand the reason of the marketplace. If you can add a series of technical indicators to the graph, you begin to understand the rhyme and the reason of the marketplace.
SONAR allows you to quickly view graphical series of data, many of which weren?t previously available to professionals trading the marketplace. More importantly, it allows you to view those data series compared to other data series (some proprietary, others not) and then apply the type of sophisticated technical indicators to the data series that are normally reserved for Wall Street. Patterns in the data don?t just sit there quietly as numbers; they literally jump off the screen at you. What are a few of those ?jumping off the screen? at us right now?
Capacity in trucking has increased over the last year, but is it where it?s needed?
As truckers in all modes and carriers with fleets of all sizes appear to on an ever-increasing basis and learning how to adapt to the use of ELDs, improving utilization has restored much of the capacity initially lost.
Strong pricing power was first achieved, then collected, and then used to significantly increase driver pay. Higher driver pay means more people willing and able to be truck drivers instead of in other competing jobs.
The focus on the loading and unloading times of shippers and receivers that was necessary to recover lost utilization post-ELD adoption has provided dispatchers and fleet managers with the data needed to provide the added benefit of improving the driver?s quality of life. Whether it was directly penalizing those shippers and receivers who abused the driver?s hours through higher rates and detention charges; indirectly penalizing them through decreased access to equipment; or simply managing the equation through increased drop and hook ? drivers are spending less time than ever waiting to be loaded and unloaded.
More trucks have been built and purchased, and with higher pay and better working conditions, enough additional drivers have been brought into and retained in the industry to increase the number of trucks on the road.
All the new trucks added to the nation?s fleet have brought down the average age of trucks. New trucks have more capacity because they spend less time in the shop. If a truck spends one day a month in the shop, and is only on the road 20 days a month (to keep the math simple), that one day is 5% of its monthly capacity.
Demand has also continued to grow, but one of the age old challenges facing the trucking industry is being emphasized. When demand exceeds capacity to the extent necessary to create pricing power, and that pricing power is sufficient to grow trucking capacity, it still faces further challenges. Where the loads are is seldom where the trucks are. Even in that perfect moment in time in which all the trucks are where the loads are, they pick up those loads, take them to destination and then are out of place again.
With the market data available on SONAR, we have ability to see all these ebbs and flows happen in real-time. Admittedly, some of these ebbs and flows are exactly as you would expect them to be but seeing the marketplace data as it is actually occurring highlights that where the trucks were needed last week is not necessarily where the trucks will be needed this week. Where the trucks are needed this week is not where they will be needed next week.
Since early May, the demand for dry van trucks in southern California has been significantly boosted by an almost ever increasing amount as import container traffic has steadily grown and achieved new record highs. As a result, the OTMS (Outbound Tender Market Share) for the Ontario, CA, region (ONT) grew so much that it eventually exceeded one of the consistently largest outbound markets in the country, Atlanta (ATL), peaking in mid-November, as the last of the containers bringing goods to stuff those holiday stockings arrived. Volumes have begun to decline in the ONT market for a very simple reason, if it?s not in the store, distribution center, or fulfillment center already, it is about out of time to get wrapped and put under the tree.
SONAR chart of Outbound Tender Market Share for the Atlanta market. (Chart: SONAR)
Unfortunately, not everyone got the memo. As demand falls in that market, and dispatchers make the mistake of thinking, ?We have needed ever more trucks in Southern California for months; I better take more loads destined there, send more trucks out there,? we expect rates out of ONT to see some ?surprising? pressure to the downside.
Stay tuned, and stay nimble.
- Donald Broughton ? chief market strategistWant more content like this? Click here to Subscribe
A freight broker at Echo Global Logistics. (Photo: Echo)
Last Thursday equities analysts from investment bank Cowen Inc. (NASDAQ: COWN) issued a trucking industry update following visits to Echo Global Logistics (NASDAQ: ECHO), HUB Group (NASDAQ: HUBG), and Redwood Logistics in Chicago. Cautious guidance from Echo?s senior management on truckload rates in 2019 contributed to Cowen?s somewhat bearish forecast, which falls in line with Morgan Stanley?s recent projections.
?Trucking capacity remains relatively tight from a historical perspective but definitely has softened of late. TL pricing is expected to increase 0%-3% in ?19, a negative sign for TL stocks,? wrote Cowen analysts Jason Seidl and Matt Elkott.
Cowen thinks?and we agree?that 3PLs and brokerages are generally in a safer position in a softening market than asset-based carriers. Currently brokerages are enjoying a wide (20 to 23 cents per mile) delta between average ?contract? and spot rates, and incremental additions to trucking capacity, especially in small fleets that move brokered freight, have made it even easier for 3PLs to find trucks. In Cowen?s view, a stabilizing, flat market where contract and spot rates converge poses a more serious downside risk to brokerages than a somewhat volatile softening market, where prices for capacity fall faster than shippers can react.
?ECHO generally locks into contract rates between Dec and March,? Cowen said. ?ECHO is able to purchase transportation a little cheaper now, and as a result, net revenue margin has held up well. Expect that to change a bit to the downside if we get a flat market. If the market declines, however, we would expect gross margin gains, particularly in the first half of 2019.?
The relationship between ?contract? and ?spot? rates for trucking capacity is more complex than trucking companies and Wall Street analysts like to admit. ?Contract? freight is, of course, not a legal commitment to move a load or pay; it just refers to a rate that both shipper and carrier have said they can accept. Far more important to a trucking carrier or asset-light logistics provider than average ?contract? prices is the company?s position on a shipper?s routing guide. If a shipper has five transportation providers listed in order of preference on its routing guide, there could be a 100% difference in price between the first and fifth position.
Tender rejections?also called ?turndowns??tell us about carrier sentiment and where in the routing guide shippers are finding capacity. As carrier reject loads tendered by shippers, the shippers work down their routing guides and the load gradually becomes more expensive. See the SONAR chart below, which shows daily levels for national tender rejections (OTRI.USA). With turndowns in the basement, we can infer that carriers in the first position in the routing guide, usually the cheapest option, are taking the freight. Therefore, instead of quoting ?average? ?contract? rates, industry analysts should be thinking about the very lowest part of that range, which will be much closer to spot.
Turndowns have fallen off a cliff since the beginning of July. (Chart: FreightWaves SONAR)
In an October 26 note on Echo?s Q3 results, Stifel (NYSE: SF) analyst Bruce Chan was similarly optimistic about ECHO?s business in a variety of market conditions.
?We anticipate low-to-mid-single-digit revenue growth through 2019 as persistent structural capacity tightness drives modest pricing gains as well as continued demand for Echo?s services,? Chan wrote. ?But if assuming a slow-growing or stagnating gross revenue line, one would also assume an offsetting expansion in gross margin, in our view.?
Stifel set ECHO?s price target at $38, or 18.5x estimated 2020 EPS of $2.07; Cowen?s price target for ECHO shares is $40.
Cowen also heard from executives at Redwood Logistics about their views on rates going into next year.
?In terms of rate increases in [the first half of 2019], management believes that most customers are attempting to roll to June with same rates, at which point a low single digit increase is likely,? Cowen wrote.
Finally, Seidl and Elkott were bullish on Hub Group, given continued demand for intermodal services as port activity and railroad intermodal volumes are expected to grow next year. Cowen said that Hub Group expected price increases in the 5% range, and hoped that Union Pacific (NYSE: UNP) and Norfolk Southern?s (NYSE: NSC) adoption of precision scheduled railroading-inspired ?Hunter principles? would not disrupt service as severely as what CSX (NYSE: CSX) experienced last year.Want more content like this? Click here to Subscribe
Port of Long Beach (Photo: Wikimedia Commons/Charles Csavossy)Main U.S. maritime agency?s probe into practices of ocean carriers and terminals winds down, but no changes yet seen.
Drayage carriers see little, if any, improvement among ocean carriers and marine terminals in when and why they charge fees for the length of time a container sits on or off port, much less the underlying causes for delays in moving containers.
This, despite a year-long U.S. probe into the issue.
Last Friday, the Federal Maritime Commission released its final report on detention and demurrage practices. The report was the culmination of hearings and field interviews at major U.S. ports into what goes into those charges, which are borne by both shippers and drayage carriers.
The amount of such fees collected remains unclear. But Laura Crowe, Wal-Mart?s (NYSE: WMT) senior director of global logistics, testified earlier this year that company incurred demurrage fees ?in the millions? at a U.S. Southeast marine terminal due to containers remaining on-site two days longer than allowed under the terminal?s demurrage policy.
The FMC?s interim report on the topic said these fees rose 30% in 2017, reaching the level seen toward the end of the West Coast port strikes. A.P. Moller-Maersk (Nasdaq OMX: MAERB) said revenue unrelated to ocean shipping rose 22% to $2.5 billion so far this year, in part ?supported by increases in demurrage and detention.?
In its year-long look at the issue, the FMC found the definition of detention and demurrage varied across ocean carriers and terminals; there was no consistent way to address disputes; and it was not even clear at times which entity was actually charging the fees.
To that end, the FMC?s final report recommends ?transparent, consistent, and reasonable? practices for billing and dispute resolution. It also recommended setting up a shipper advisory board to look further at the issue.
Even with the hearings, ocean carriers and terminal operators have done little to take those steps already, says Bob Leef, East Coast vice president for Ohio-based intermodal logistics firm Container Port Group.
?If the carriers or terminals put into practice any type of form dispute resolution or something like that, it?s not one that I am aware of,? Leef said.
In his own testimony before the FMC, Leef says the main issue was having a clearer understanding from ocean carriers on the rules for determining the fees. Indeed, the FMC said ?clear, simplified, and accessible? billing would help resolve detention and demurrage disputes.
Leef, whose firm faced $369,000 in such fees last year, says each phone call to an ocean carrier to dispute a fee can result in different outcomes, with little clarity as to when fees should be waived.
?If three ships get backed up because of bad weather and they all hit in two days instead of three to five days apart, the terminal is now congested,? Leef said. ?It?s unclear when something like that should be taken into account for waiving fees.?
For Fred Johring, president of California-based Golden State Express, says the detention and demurrage issue over the last year has ?actually gotten worse.?
Johring agrees with the FMC?s final report that one of the major problems is finding appointments within the time allotted to pick up a container. Likewise, he says there are inconsistent practices among marine terminals as to the length of free time before fees kick in and when they notify drayage carriers of container availability.
The terminals ?are welcome to make an appointment and push it out to us,? Johring said. ?Often times, we cannot get appointments for loads we are trying pull.?
Johring adds the requirement by ocean carriers to use chassis pools also increases delays for drivers at ports. High numbers of container imports to the U.S. has resulted in an overall shortage of available chassis.
Golden State Express has invested in its own chassis to improve its efficiency. But it still faces the fact that some shippers opt for chassis pools paid for by carriers.
?In many cases, we have no choice but to go in and try to find one of the pool chassis that are paid for by the steamship line,? Johring said. ?That increases our dwell time significantly and dry runs, all of which are paid for by the customer.?
Leef agrees that consistency across marine terminals would also help relieve the congestion that gives rise to detention and demurrage in the first place. In the Port of New York and New Jersey, only Global Container Terminal?s Bayonne site has an appointment system for drivers. But nearby Maher Terminals offers longer operating hours to accommodate drivers.
?The more uniformity, the better it is for drivers,? Leef said. ?When I go rent a car at the airport, and Hertz and Avis open and close at different times, that?s going to be a problem.?
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Chart of the Week: Ultra-Low Sulfur Diesel Rack Price and DOE U.S. average fuel price (SONAR:ULSDR.USA and DOE.USA)
The spread between diesel cost and retail price has widened rapidly. (SONAR chart of ULSDR.USA and DOE.USA)
The average wholesale or rack price for ultra-low sulfur diesel has dropped rapidly over the past two months as crude oil production increases out of the U.S. On October 7th the difference between the rack price and retail price was $0.76/gal. Currently the price differential is $1.28/gal, a 41% jump. In a market where fuel prices are falling rapidly carriers have an opportunity to get a temporary boost to their margins.
Many carriers purchase their fuel at a rate close to the rack price, but they pass along the variable fuel cost at a rate that is tied to the national retail average price that is reported by the DOE every Monday in the form of a fuel surcharge. The fuel surcharge will typically be a rate per mile for truckload carriers that is associated with the average retail price per gallon. An example of this would be if the average retail price is $3.00 per gallon the customer would pay something like $0.31/mile. In situations where fuel is dropping rapidly carriers can benefit from paying less for fuel than their fuel surcharge is reflecting.
The average retail price takes time to reflect dropping costs as it is reported on a delay. Last week?s numbers are reported and used for the current week. Another reason for the delay is the fact the fuel purchased at fueling stations was purchased in an earlier portion of the price drop and takes time to get used. For instance, this week?s fuel was purchased two weeks ago when prices were higher.
Depending on the carrier fuel purchase program they can be able to purchase fuel based on the current rack rate without waiting on the retail price drop. The faster the rack rate declines in relation to the retail price the higher their margins will be.
The tradeoff is that when the situation is reversed when rack prices are climbing rapidly, as they did in 2015, carriers will pay higher prices for fuel while the retail rate takes its time catching up, shrinking margins.
The big news this week was the OPEC meeting where they decided to cut oil production 1.2 million barrels per day with 800,000 of that coming from OPEC nations and 400,000 of it coming from non-OPEC nations. This cut in production should stabilize fuel costs and keep the price from falling much further. Most consumers want to see fuel prices fall but the reality is that if the price of oil drops too far then the economy tends to suffer. Wells cannot afford to operate unless the market price will support the cost to draw oil from the wells.
Oil production has become a large part of the U.S. economy. The U.S. has become a net exporter of oil meaning it ships out more oil than it receives. This is good news as it means the U.S. gets foreign dollars placed into its economy. Many other trickle-down effects of oil production exist in the form of raw materials and all the products derived from oil such as plastics.
Transportation is directly impacted by oil production as well with over 300,000 estimated truckloads a week moving back and forth from the oil producing areas to the ports due to pipeline constraints. Carriers will enjoy the nice bump to margins this quarter, but they certainly would rather keep the price of oil high enough to not have any detrimental impact on the economy. The latest decision by OPEC is probably a good thing.
About Indices presented in this article
(SONAR: ULSDR.USA) Ultra-Low Sulfur Diesel Rack Price - USA - The average national price paid at the ?rack? for ultra-low sulfur diesel. The rack price is the wholesale price paid for ULSD. This rate includes the cost of pulling the oil from the well and transporting it to the racks where retailers purchase it. It does not include retail markup and taxes.
(SONAR: DOE.USA) Department of Energy average price of diesel fuel - USA - The average national price of diesel fuel paid at the retail level. It includes the cost of production, taxes, and all markups.
About Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week the Sultan of SONAR will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry- in real time.
The FreightWaves data-science and product teams are releasing new data-sets each week and enhancing the client experience.Want more content like this? Click here to Subscribe
(Image: Trucker Tools)
On Thursday, FreightWaves hosted an hour-long conversation with Trucker Tools and its customers about its Smart Capacity product, which launched in 2017. The webinar, titled Capacity Management 2.0, featured a speaker panel which included Prasad Gollapalli, Founder/CEO of Trucker Tools, Tom Curee, VP of Logistics at Kingsgate Logistics, and Diana Bullington, IT Director at Syfan Logistics. The panel discussed how new disruptive technology like Smart Capacity can enable freight brokers to drive new productivity while cutting costs and increasing profits.
Prasad Gollapalli spoke about the current state of the trucking industry, focusing on the major inefficiencies facing brokers. The first inefficiency was ?one load wonders?: drivers who leave a broker?s platform after only making one shipment. The next problem was that multiple sources of information in the freight market prevent accurate and real-time data from being accessed by brokers. The final inefficiency was that brokers will often be forced to make many calls to cover a load, often thirty to forty. Prasad goes on to address the various tools and methods Smart Capacity?s Dashboard uses to rectify each inefficiency.
One of the ways Smart Capacity will increase efficiency will be to automate manual tasks by implementing new technologies such as email phrasing, natural language and artificial intelligence. The primary goal will be to match available carriers to loads and identify previously obscure freight movement opportunities. Brokers will be able to cover their load, track it to its destination, validate the shipment and reload the truck. ?We want our customers to think like an asset-based company,? Prasad clarified.
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Tom Curee and Diana Bullington explained how Smart Capacity has benefited their businesses. Bullington talked about how having new technology is enabling Syfan Logistics to attract new talent for the freight industry. ?To make people want to work for a logistics company, we have to be on the cutting edge of technology?otherwise they don?t want to come to work for us.? Tom Curee said that Smart Capacity is needed to address the market inefficiency of matching shippers with carriers: ?Imagine going through the process to buy a new car every time you need to drive to work.?
The panel concluded the webinar with a Q and A session involving the audience. At of the end of 2018, Smart Capacity has already established a strong presence in the logistics industry. Over five hundred thousand drivers have downloaded the Trucker Tools App among 115,000 carriers. Technology like Smart Capacity that is geared to improve efficiency and relationships will continue to enhance the trucking logistics market into 2019 and beyond.Want more content like this? Click here to Subscribe
QuickTSI is your one-stop-shop for everything you need to run your transportation and freight logistics business. Our website allows you to post load or find trucks, post trucks or find loads, look up carrier profiles, view trucking companies, find truck driving jobs, and DOT medical examniers.
Quick Transport Solutions, Inc.
11501 Dublin Blvd. Suite 200
Dublin, CA 94568