Quick Transport Solutions Inc.




20 Jun 2018 at 12:00am
One bill halfway through the statehouse is intended to deter shippers from using port drayage motor carriers who have unpaid wage, tax, and worker?s compensation liabilities. The bill would require joint and several liability for customers who contract with such port drayage carriers.

20 Jun 2018 at 12:00am
Taking aim at conflicting hours-of-service requirements with varying on-duty time allowed, a national association of concrete pumping operations is seeking an exemption to extend on-duty time to 14 hours.

20 Jun 2018 at 12:00am
New York City officials are discussing a plan to raise parking fines, particularly for double-parked trucks. John Bendel looks back on his time as a trucker in the Big Apple to see whether history will repeat itself.

20 Jun 2018 at 12:00am
Two former executives of Roadrunner Transportation Systems have been charged for their alleged role in a major accounting scheme that cost shareholders $245 million, federal court documents reveal.

20 Jun 2018 at 12:00am
Volvo Trucks has begun production of two fully electric commercial vehicles for European markets in 2019, and dealers and media got a chance to see them and get behind the wheel of one of them June 20.

20 Jun 2018 at 12:00am
The next stop for Jon Osburn, skipper of OOIDA?s touring tractor-trailer the Spirit of the American Trucker, is in his home stomping grounds in Boise, Idaho.

20 Jun 2018 at 12:00am
A former warehouse manager of an Ohio-based manufacturer and distributor of smoking accessories and ?alternative lifestyle products? has been sentenced for illegally transporting hazardous material, according to federal court documents. The company was fined earlier this year.

20 Jun 2018 at 12:00am
The Federal Motor Carrier Safety Administration has issued an interim final rule that delays several provisions of the medical examiner?s certification integration final rule from June 22, 2018 until June 22, 2021.

20 Jun 2018 at 12:00am
A decision by the Wyoming Supreme Court means CRST International must stand trial in connection with a wrongful death suit involving a motorist who died in 2014 after crashing into a parked truck in Utah.

20 Jun 2018 at 12:00am
The U.S. Equal Employment Opportunity Commission has filed a lawsuit against New Prime Trucking, alleging that the Springfield, Mo.-based trucking company failed to take adequate steps to prevent the sexual harassment of a female truck driver



20 Jun 2018 at 8:18pm

(Photo: Shutterstock)

There are ultimately no winners in a trade war, as FreightWaves has been reporting for the past several months, ever since mid-February when Trump first began considering raising tariffs. Open markets are good for everyone. If the current tactics are meant to negotiate fair trade deals, it can make sense. Raising tariffs in a vacuum, however, hurts everyone when it ends up suppressing supply.

As chief market strategist, Donald Broughton wrote for FreightWaves on March 2, ?Open markets and deregulated transportation have been a powerful force in the creation of a thriving economy and some of the most productive transportation companies in the world.?

The United States is the world?s largest importer, and the economy is humming along in virtually all sectors. The top five importers in the U.S. are Walmart, Target, Home Depot, Lowe?s, and Dole, respectively. Combined, in 2017 those five alone accounted for 2,360,800 TEUs imported, according to JOC, SFG research. TEU stands for Twenty-Foot Equivalent Unit, which can be used to measure a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard 20? shipping container. 20 feet long, 8 feet tall. Usually 9-11 pallets are able to fit in one TEU. That is a lot of cargo, and 24 weeks into 2018, capacity remains tight.

The song of 2018 remains the same?and tariffs or no tariffs, it projects to remain so even as infrastructure on the rails and ports expand. Part of the explanation comes from the type of goods so far under siege: the current proposed tariffs are centered on goods of relatively low value and high density. The manufacturing process of goods as raw materials moves ?downstream.? When they are processed into finished products, cost increases of the original materials are often filtered out of the final product price.

Also, intense competition in some markets will actually keep consumers from feeling the pinch?at least at first. With increased competition between companies, it may turn out that companies in these markets would rather absorb the costs themselves rather than passing on increased costs to customers.

Another factor is timing. There?s a lag between the increased price of metals and when manufacturers and producers of goods will actually pay for new steel and aluminum. Meanwhile, some companies have responded to higher prices of aluminum and steel by ramping up U.S. domestic production, such as a near-doubling of planned solar panel capacity.

So long as the tariffs on aluminum will only add an additional one to two cents to the cost of canned beer the issue is ?measurable, but still relatively minor,? as John Mothersole, director of research in IHS Markit?s pricing and purchasing service, said to the L.A. Times.

Encouragingly, recent international ocean and airfreight volumes aren't showing signs of a trade-fear related slowdown, as we move bravely toward July.

According to SIG Susquehanna analyst Bascome Majors, the sample of May container volumes of top global ports were up in the low-to-mid single digits Year over Year, and also ahead of historic Month over Month seasonality. Majors' team views May's seasonal outperformance as notable given: May to July is typically the ?set-up? for the August to October peak season, with trade velocity over the former period a good directional indicator for peak strength/weakness, and 2) the trade dispute between the U.S. and China remains fluid (e.g., last Friday?s 25% levy on $50B worth of Chinese imports met with a similar measure on U.S. exports). They look to ?hard? port (and airport) data for evidence of a trade related slowdown, and they aren't seeing it. Not yet at least.

For Asian Ports, total container volumes rose 3.4% Year over Year in May (vs. a +10.9% comp), slightly below April?s +4.3% (which was off an easier +6.5% comp), though above March?s +2.4%. Sequentially, volumes were up 4.9% Month over Month, ~200bps above the average Month over Month trend of +2.9% for the last 5 years (range of +1.2% to +5.8%).

For West Coast Ports, total container volumes were up 4.0% Year over Year in May (vs. a flat comp), slightly below April?s +4.5%, though above March?s CNY-impacted -7.8%. On the import side, volumes were up 3.1% Year over Year (vs. a +2.4% comp), up from April?s +1.7% and above March?s -12.1% (also CNY-impacted). Sequentially, volumes rose 13.7% Month over Month, fully ~450bps better than the average Month over Month trend of +9.2% for the last 5 years (range of +1.1% to +20.9%).

Meanwhile, Maersk, the world?s largest container shipper, announced on June 5 they are raising their rates on Freight of All Kinds (FAK), focused especially on the corridors between the Mediterranean and Far East Asia. They specifically said, ?These rates are unaffected by, and do not affect, any tariff notified, published or filed in accordance with local regulatory requirements.? Supply is high across the globe, and for now the trade war talk remains rhetoric.

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20 Jun 2018 at 7:50pm

Hapag-Lloyd's Boston Express transits the Panama Canal. (Photo: Hapag-Lloyd)

Eastbound containers and westbound LNG driving record volumes

Growing container traffic to the East Coast of the United States and a new liquefied natural gas export business to Asia are driving record volumes through the Panama Canal. In May, a total of 38.1M tons went through the canal, according to the Panama Canal Universal Measurement System. Last month was the third time the Panama Canal has set a tonnage record since work finished on its expansion in 2016. 

Jorge Quijano, the Panama Canal?s administrator, told the Wall Street Journal that he expects container volumes crossing the canal to rise an average 5% annually over the next few years. 

The containership segment broke its own monthly record in May as well, on 13.8M tons transited by 229 ships. The Ports of New York and New Jersey have not yet released their May numbers, but April?s loaded TEUs were up 8.8% year over year. Savannah set a May record, and the 361K TEUs the port handled made May the second-busiest month ever.

?The Georgia Ports Authority is on track to have the most successful year in its history, on a number of fronts,? said GPA Board Chairman Jimmy Allgood in a statement. The dredging of the Savannah harbor, allowing Neopanamax ships access, has already been completed, and dredging further upriver is proceeding on schedule. The Georgia Ports Authority is also in the process of constructing up to five ?inland ports?, drayage facilities linked by CSX rail to the port, across the state. 

In May, truckloads outbound from Atlanta were rejected by carriers at a rapidly accelerating rate (SONAR code: otri.atl), which created volatility in the spot market for trucks. Elevated turndowns and prices in the Atlanta market added evidence to our hypothesis that port-related surges in demand will create opportunities for trucking carriers with exposure to the spot market.

We?ve seen evidence that maritime carriers are already shifting capacity to take advantage of the new canal. The total weekly TEU capacity deployed to the Asia-U.S. East Coast rose to 162.3K this month, representing a 10.6% increase from June 2017. Meanwhile, the 2M shipping alliance (Maersk and Mediterranean Shipping Company) announced that they were suspending their transpacific TP1/Eagle service, which stopped at Vancouver and Seattle, probably to firm up rates. 

LNG and LPG (i.e., propane and butane) are becoming nearly as important to the canal as the container trade: so far this fiscal year, 37% of the Neopanamax ships that transited the canal carried those oil and gas derivatives, while containerships accounted for 49% of Neopanamaxes.

The growth in LNG and LPG volume is being fueled by the shale oil boom in the United States. Conventional oil plays are essentially just giant underground lakes of crude oil, but in unconventional shale plays, tiny bubbles of various hydrocarbons are locked inside the rock. When the shale is fractured, both oil and natural gas can be recovered. 

As American oil production swells, so does the country?s production of natural gas, which has caused the price of natural gas in the United States to decrease more than 25% in the past five years, and, more importantly, caused US spot prices for LNG, quoted at the Henry Hub pipeline in Louisiana, to diverge significantly from prices in Asia. Today, the Henry Hub spot price for LNG is $2.99 per million BTUs, while last week spot prices for July delivery in North Asia were settling at $11.60 per million BTUs. At this point, US-based refiners of natural gas who can export to Asia are essentially printing money. There are two LNG terminals exporting through the Panama Canal now, Cheniere?s Sabine Pass in Louisiana and Dominion Energy Cove Point in Maryland, and three more in Louisiana, Georgia, and Texas, will begin operation next year.

China?s threat to impose a 25% tariff on US commodities could complicate things. LNG would still be priced competitively after the tariff, but West Texas Intermediate crude oil would be more expensive than Brent. China has bought an average of 330K barrels per day this year, barrels that would have to find a new home in the event of a tariff. U.S. oil exports to China represent about 16% of all oil exported by the US, but only 3.5% of Chinese imported oil. 

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20 Jun 2018 at 3:21pm

The Ford Transit van is a global commercial success. Now, Ford and Volkswagen will be teaming up to develop new commercial vehicles.

Ford Motor Co. and Volkswagen AG announced the signing of a Memorandum of Understanding (MOU) to potentially develop commercial vehicles as part of a strategic alliance.

The exact nature of the work and the type of vehicles to be developed was not detailed, but the companies said they are ?exploring potential projects across a number of areas ? including developing a range of commercial vehicles together to better serve the evolving needs of customers.? No equity or cross-ownership stakes would be part of the deal.

?Ford is committed to improving our fitness as a business and leveraging adaptive business models ? which include working with partners to improve our effectiveness and efficiency,? said Jim Farley, Ford?s president of Global Markets. ?This potential alliance with the Volkswagen Group is another example of how we can become more fit as a business, while creating a winning global product portfolio and extending our capabilities.

?We look forward to exploring with the Volkswagen team in the days ahead how we might work together to better serve the evolving needs of commercial vehicle customers ? and much more,? Farley added.

Ford already has a significant global presence, especially in Europe and North America, with its Transit and Transit Connect vans, which are increasingly becoming popular as last-mile delivery vehicles.

Volkswagen also has a significant global presence in commercial vehicles with heavy-duty vans and trucks offered in Europe and a growing stake in North American truck maker Navistar. The company also owns Volkswagen Commercial Vehicles, MAN and Scania.

?Markets and customer demand are changing at an incredible speed,? said Thomas Sedran, head of Volkswagen Group Strategy. ?Both companies have strong and complementary positions in different commercial vehicle segments already. To adapt to the challenging environment, it is of utmost importance to gain flexibility through alliances. This is a core element of our Volkswagen Group Strategy 2025. The potential industrial cooperation with Ford is seen as an opportunity to improve competitiveness of both companies globally.?

Reports suggest the arrangement may be more geared toward creating economies of scale, but it also dovetails with Ford?s recent announcement that it would stop producing new car models and focus on trucks, SUVs and commercial vehicles going forward.

The company currently offers a Ford F-750 model with a tractor configuration that several beverage haulers are now using.

Volkswagen has been increasing its ownership stake in Navistar over the past two years and currently holds nearly 17% of that company?s stock. Increased ownership is possible in the future, giving Volkswagen a foothold in the North American commercial vehicle market. Navistar and Volkswagen are increasingly collaborating on projects, including a global engine platform.

Last fall, at a Navistar press conference at the North American Commercial Vehicle Show inside the Georgia World Congress Center in Atlanta, Andreas Renschler, member of the Executive Board of Volkswagen AG responsible for commercial vehicles, did not rule out Volkswagen taking a larger stake of Navistar in the future. ?On our way to being a global champion, all options are open,? he said in response to a question on the subject.

Renschler also hinted at a possible commercial van at some point for International. ?We are looking to see if there are certain products or opportunities on the commercial side,? he said about Volkswagen?s van plans.

On the topic of collaboration Troy Clark, Navistar president & CEO, said the two companies will work on a next-generation of fully integrated big bore powertrains, with a likely launch in 2021. The powertrain is expected to take advantage of a new Joint Procurement program that is designed to secure components and parts from suppliers for all the global truck brands under the companies? portfolios.

The alliance will also produce a new connected vehicle program, joining Navistar?s OnCommand system with Volkswagen?s Rio system.

A partnership with Ford and closer collaboration ? or outright ownership of Navistar eventually - could potentially provide Volkswagen with a complete commercial vehicle lineup, from Class 1 through Class 8, in North America. For Ford, the collaboration could help its transition to its truck, SUV and commercial vehicle future quicker and at less cost.

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20 Jun 2018 at 2:26pm

Good day,

United Parcel Service Inc. is aggressively growing its fleet of alternative-fuel trucks as the delivery behemoth pushes to reduce fuel costs and vehicle emissions. Fuel is historically one of the biggest fixed costs for transportation companies. While diesel prices dipped in 2015 and 2016, the cost is climbing again. Over the past four weeks, the average on-highway price hovered between $3.239 to $3.288 a gallon, according to the U.S. Energy Information Administration. 

While alternative-fuel vehicles account for a slim portion of the overall truck market, many companies are actively exploring new strategies in the face of rising costs. About 11% of carriers said they have vehicles that use a fuel other than diesel or biodiesel blends, according to a 2016 survey by ATRI.

By contrast, by 2020 UPS aims to have one in four new vehicles to be an alternative fuel or advanced technology vehicle, such as a hybrid truck or one incorporating lightweight materials that improve fuel efficiency. It also wants to swap out 40% of all fuel for its ground operations with sources other than conventional gasoline and diesel. According to the company, between 2008 and 2018 UPS will have invested more than $1 billion in alternative-fuel and advanced-technology vehicles and fueling stations.

Did you know?

Companies spent a record of nearly $1.5 trillion on shipping costs last year, according to a report by the Council of Supply Chain Management Professionals, as demand for transportation surged on economic expansion, while rising fuel costs and a limited supply of trucks drove up freight rates.

Quotable:

?The competitive threat from digital startups is overplayed, in our view. Echo has been investing heavily in technology, and has the benefit of better data, the right personnel to service customers, network scale, and an understanding of shipper pinch points. These attributes take substantial time and investment to build, in our view, and give the company a competitive advantage that is often overlooked by investors in the excitement for digital change.?

?Stifel analyst, J. Bruce Chan

In other news:

Trump?s Trade War Spooks Markets as White House Waits for China to Blink

President Trump is threatening to impose tariffs on $450 billion of Chinese goods in order to force Beijing to change what he has called ?unacceptable? trade practices. Markets fell Tuesday in response. (New York Times)

Canada passes legislation legalizing marijuana, sales expected within 12 weeks

Canadian lawmakers passed sweeping cannabis legalization on Tuesday that will legalize recreational use of marijuana by adults. (USA Today)

Companies Spent a Record $1.5 Trillion on Shipping Costs in 2017

Logistics report finds U.S. firms are spending more on transportation costs, and that?s not likely to change anytime soon. (WSJ)

JetBlue Founder David Neeleman Planning A New U.S. Airline With A Curious Strategy

David Neeleman?s new Moxy airlines is seeking $100 million in start up costs. The strategy will focus on providing point-to-point service primarily to and from secondary airports. (Forbes)

The Future of Production Intralogistics: The Final Frontier For Manufacturing Optimization

Gain better control of materials inventory and movement in manufacturing. (SupplyChain247)

Final Thoughts:

As noted throughout its earnings results, FedEx was able to benefit from growth in industrial production, which it expects to rise 3.8% this year. Consumer spending will increase 2.7%, Subramaniam said. The CMCO also noted that the company?s U.S. domestic package business increased 4% and international package volume grew 10%.

Among its operating segments, FedEx Express posted revenues for fiscal 2018 of $9.6 billion and an operating margin of 10.3%. Operating income was up 11% year-over-year to $990 million. The results included a 9% increase due to higher yields and favorable net impact of fuel and currency exchanges, the company said.

FedEx Ground said higher daily package volume of 6% and higher base rates leading to a 12% increase in revenue and 18% increase in operating income. Fiscal 2018 income was $832 million on revenue of $4.80 billion. The company did not that higher purchased transportation costs offset the revenue growth and ongoing cost management efforts. It also increased staffing in the division.

Within FedEx Freight, a 35% climb in operating income from $130 million to $175 million was the result of an 8% increase in both daily shipping and revenue per shipment. Revenue for the unit was $1.86 billion, up 16% from $1.60 billion.

Hammer down everyone!

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20 Jun 2018 at 1:52pm

Epes Transport Systems handles several dedicated accounts, including Family Dollar. (Photo: Truckstockimages.com)

Penske Logistics has reached agreement in principle to acquire Epes Transport Systems, of Greensboro, NC. The deal, expected to be finalized in the next few weeks, will add over 1,200 units to Penske Logistics.

According to a Penske Logistics spokesperson, Penske ?views the acquisition as a growth opportunity as the services Epes provides will enhance its existing portfolio of transportation and logistics solutions.?

Epes employees were told of the pending acquisition on May 8. Terms of the deal were not disclosed. The spokesperson said that Penske will maintain the current leadership team of Epes.

Epes, a regional dry-van truckload carrier, traces its history to 1931 in Blackstone, Va. It was family owned for over 55 years before being acquired by a new holding company called Epes Carriers in September 1987, owned by A.M. Bodford. It is the largest private trucking company in North Carolina, it says on its website.

According to the Journal of Commerce, Epes generates between $300 and $400 million in revenue per year hauling for such clients as Proctor & Gamble and Family Dollar.

Epes has operating authority in the 48 contiguous states, operating its dry van regional division primarily in southeast, southwest, midwest, northeast and Texas. It also has a dedicated division with over 50 operations in the southeast and Gulf Coast. The company operates terminals in Charlotte N.C.; Rockwall, Texas; Chester, Va.; Morristown, Tenn.; and, Valdosta, Ga., in addition to several drop yard locations. 

Earlier this year, Andy Moses, senior vice president of global products for Penske Logistics, talked to FreightWaves about the growth of dedicated operations in an environment with tight capacity and high rates.

?The market is hot,? he said. ?You have an improving economy, so you have increasing freight volumes [so] you have limited capacity.?

That limited capacity is also being driven by a lack of drivers, and as a result, Penske Logistics is seeing more shippers inquire about dedicated transportation. Moses explained that dedicated operations can provide more capacity and rate certainty, another issue many shippers are facing.

?Shippers are probably experiencing less reliability in getting freight off their docks,? he said. ?It puts us in a position where a lot of shippers are reaching out to us.?

Penske Logistics is a wholly owned subsidiary of Penske Truck Leasing with operations in North America, South America, Europe and Asia. The company provides supply chain management and logistics services.

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20 Jun 2018 at 12:55pm

Shrugging off any potential disruption due to trade war, FedEx Corp. executives were upbeat about the outlook for 2019 for both the general economy and FedEx?s operating units during its fiscal 2018 fourth-quarter and year-end earnings call on Tuesday.

?We remain concerned about the threats to free trade,? Fred Smith, chairman & CEO, said in his opening statements. ?Trade is a two-way street and FedEx supports lowering trade barriers for all our customers.?

David Bronczek, president & COO, added that he was confident that even if a trade war develops, FedEx?s business model and flexibility would allow it to adjust accordingly.

Smith noted that industrial strength continues to drive higher fright margins as FedEx Corp. (NYSE: FDX) benefited from higher base rates and volume increases across its networks in posting fourth-quarter revenue of $17.3 billion and net income of $1.13 billion, up from $1.02 billion a year ago. For full-year fiscal 2018 (June 1, 2017 to May 31, 2018), FedEx posted net income of $4.57 billion on revenues of $65.5 billion, up from $3.0 billion and $60.3 billion in 2017.

According to Thomson Reuters, analysts were expecting fourth-quarter revenue of $17.25 billion compared with $15.78 billion a year ago. The company reported adjusted EPS of $4.15 a share, versus $3.75 in last year?s fourth quarter. Adjusted earnings were $1.60 billion, or $5.91 per share, up 41% year-over-year, said Alan Graf Jr., CFO. Full-year adjusted EPS was $15.31, up 27%.

Graf added that fiscal year 2019 should return adjusted earnings of between $17.00 and $17.60 per share. It?s effective tax rate will rise slightly over 2018 to about 25% because of one-time adjustments available in 2018.

In its earnings, FedEx said that due to new pension accounting rules that will be in effect for fiscal 2019, it could not provide an accurate operating margin forecast for 2019. The rule changes will not affect net income or earnings per share, it said. For 2019, FedEx expects revenue growth of 9% and an operating margin of about 7.9% and capital spending of $5.6 billion.

?Our fiscal 2019 results will benefit from our continued focus on revenue quality as well as from synergy realization as we make progress in combining TNT Express with FedEx Express,? said Graf. ?We expect improved earnings, cash flows and returns this fiscal year and remain committed to improving operating income at the FedEx Express segment by $1.2 to $1.5 billion in fiscal 2020 versus fiscal 2017.?

FedEx stock closed down $5.26 yesterday at $258.39. The earnings were announced after the markets closed.

The company said that higher salaries for hourly employees offset some of the benefits from higher rates and volumes, but it also benefited from $2.1 billion tax benefits, including a $1.6 billion benefit from the Tax Cuts and Jobs Act (TCJA), which has three primary components: ?

 A provisional benefit of $1.15 billion ($4.22 per diluted share) from the remeasurement of the company?s net U.S. deferred tax liability for lower tax rates; ? A benefit of approximately $200 million ($0.75 per diluted share) from an incremental pension contribution made in the third quarter and deductible against the company?s prior year taxes at 35%; and ? A benefit of approximately $265 million ($0.97 per diluted share) attributable to the phase-in of the reduced tax rate applied to the company?s earnings.

  • A net benefit of $255 million ($0.94 per diluted share) from corporate structuring transactions as part of the ongoing integration of FedEx Express and TNT Express; and
  • A benefit of $225 million ($0.83 per diluted share) from foreign tax credits associated with distributions to the U.S. from the company?s offshore operations.

Capital spending for fiscal 2018 was $5.7 billion, about 8.7% of revenues. That will drop to about 8% of revenue in 2019, the company said.

Rajesh Subramaniam, executive vice president, chief marketing and communications officer, said the company is expecting U.S. GDP to finish 2018 at 2.9% and dip slightly to 2.7% in 2019. Globally, it will also dip, but only from 3.2% to 3.1%.

As noted throughout its earnings results, FedEx was able to benefit from growth in industrial production, which it expects to rise 3.8% this year. Consumer spending will increase 2.7%, Subramaniam said. The CMCO also noted that the company?s U.S. domestic package business increased 4% and international package volume grew 10%.

Among its operating segments, FedEx Express posted revenues for fiscal 2018 of $9.6 billion and an operating margin of 10.3%. Operating income was up 11% year-over-year to $990 million. The results included a 9% increase due to higher yields and favorable net impact of fuel and currency exchanges, the company said.

FedEx Ground said higher daily package volume of 6% and higher base rates leading to a 12% increase in revenue and 18% increase in operating income. Fiscal 2018 income was $832 million on revenue of $4.80 billion. The company did not that higher purchased transportation costs offset the revenue growth and ongoing cost management efforts. It also increased staffing in the division.

Within FedEx Freight, a 35% climb in operating income from $130 million to $175 million was the result of an 8% increase in both daily shipping and revenue per shipment. Revenue for the unit was $1.86 billion, up 16% from $1.60 billion.








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20 Jun 2018 at 11:30am

(Photo: Shutterstock)

Monday morning, Stifel?s J. Bruce Chan announced that the bank was resuming its coverage of a group of large, publicly-traded 3PLs, including CH Robinson (CHRW - Nasdaq), XPO (XPO - NYSE), Echo Global Logistics (ECHO - Nasdaq), Landstar (LSTR - Nasdaq), and Universal Logistics Holdings (ULH - Nasdaq), with a flurry of research notes on each of the companies.

A common theme in Stifel?s notes was the historically tight capacity environment that U.S. freight markets are currently experiencing: in the reports, Chan characterized capacity tightness as ?secular? and ?structural?, implying that for the foreseeable future, shippers will be forced to rely on brokers to source capacity. 

Stifel rated CH Robinson a ?buy? with a price target of $101 (20x estimated 2019 earnings per share), XPO a ?hold? with a price target of $118 (27x estimated 2019 EPS), Echo a ?buy? with a price target of $34 (18x estimated 2019 EPS), Landstar a ?hold? with a price target of $123 (17.8x estimated 2019 EPS), and Universal Logistics a ?hold? with a price target of $27 (16x estimated 2019 EPS).

Chan appeared to be particularly excited by XPO Logistics? growth outlook, even though Stifel gave the 3PL a ?hold? rating. Chan explained that CEO Brad Jacobs announced in the company?s Q3 2017 earnings call that XPO would re-enter the acquisitions market with an $8B war chest after a year long break, and that top-line revenue growth from a potential large deal was already priced into XPO stock. Still, management has given guidance for 5-8% organic revenue growth over the next few years, and Stifel believes that if the current freight environment holds, that target could prove to be conservative. 

One of the keys to XPO?s success is its CEO Brad Jacobs, who previously consolidated waste management and equipment rental businesses into multi-billion dollar enterprises. In his narrative of XPO?s history to date, Chan recounted the story of XPO and how it started as a pure truckload brokerage. Jacobs quickly realized that there were other large, heavily technologized competitors in the space like CH Robinson and Echo, making it difficult to find acquisitions while maintaining his strict valuation discipline. So XPO pivoted to other kinds of services, including contract logistics, value-added warehousing and LTL, trying to find market share by offering a broader range of services.

CH Robinson, though, is still the largest North American provider of freight brokerage by a factor of three. Chan wrote, ?scale matters, in our view, in terms of providing a rich network with density of freight and capacity.? Particularly impressive was CH Robinson?s Navisphere operating platform, which Chan detailed.

?Ostensibly, Navisphere is used to match customer needs with supplier capabilities, to collaborate with other offices, and to utilize centralized support resources to complete all facets of the transaction,? wrote Chan. ?But the system goes much deeper, linking customers, employees, and service providers with powerful algorithms, artificial intelligence, and machine learning to produce real time analytics, order and route optimization (factoring things like traffic, news, and weather to anticipate potential delays), purchase order management, full supply chain visibility across multiple modes, automated route guidance, freight payment and auditing, and inventory management, among other functions, through online web portals, mobile access, or electronic integration (via Electronic Data Interchange/EDI or Application Programming Interface/API connectivity) into the users? own systems,? Chan wrote.

Beyond its technological prowess, CH Robinson executives believe that the current stage of the transportation supply/demand cycle favors their margins. As freight markets around the country began heating back up in May, brokers? margins were squeezed because spot rates were outrunning their contracts with shippers. In other words, CH Robinson was buying loads from shippers at one price but being forced to buy capacity from carriers at a higher price. Now, though, CH Robinson says it has been able to reprice its contract freight and get back out ahead of spot rates, protecting its margins once again.

CH Robinson?s digital investments are paying off, but Stifel still regards Echo Logistics as the ?OG Disruptor,? the first big brokerage founded by tech veterans in early 2005. Still, Chan writes that the next wave of digital brokerages?companies like Convoy, Transfix, FR8, Load Express, and Freight Rover?will not be able to dislodge Echo.

?The competitive threat from digital startups is overplayed, in our view. Echo has been investing heavily in technology, and has the benefit of better data, the right personnel to service customers, network scale, and an understanding of shipper pinch points,? wrote Chan. ?These attributes take substantial time and investment to build, in our view, and give the company a competitive advantage that is often overlooked by investors in the excitement for digital change,? Chan wrote.

Other positives for Echo include its completed integration of Command Transportation, an acquisition that gave Echo a much enhanced ability to broker truckload freight in addition to its LTL core business. Chan wrote that ?Command? is rarely heard nowadays in Echo?s Chicago headquarters, suggesting that the company has been totally absorbed and management has resumed its focus on smaller M&A to supplement organic growth.

Finally, Chan wrote that Echo?s ?team of experienced sales representatives, valued for their ability to solve customer problems and speed and facilitate transactions, is extremely difficult to replicate, in our view.? The average sales rep at Echo now has a tenure of nearly 34 months, up from about 20 months at the beginning of 2015. As the sales team gains experience, they become more valuable?Stifel published a chart built from data provided by Echo that shows that gross profit per rep grows sharply, even exponentially, as they gain experience, from about $250K per month at 24 months to $500K per month at 36 months, and $1M at 60 months.

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20 Jun 2018 at 11:00am

Photo: Shutterstock

With the last truck inspection of Roadcheck 2018 barely in the books, it's going to soon be time--July 15-21, to be precise--for Operation Safe Driver Week.  

There are similarities between the two, the largest being that they are both under the direction of the Commercial Vehicle Safety Alliance (CVSA). The CVSA is an alliance of several North American regulatory agencies, including the Federal Motor Carrier Safety Administration, the Canadian Council of Motor Transport Administrators, Transport Canada, and the Secretariat of Communications and Transportation (Mexico).

But there are also significant differences between Roadcheck 2018 and Safe Driver Week. For example, Roadcheck was targeted at trucks and buses, with enforcement of the ELD mandate a key part of this year's initiative. Operation Safe Driver Week is a broader-based initiative, with trucks and cars both in its scope, but with the interaction between the two as the central focus. After all, it is the Commercial Vehicle Safety Alliance. 

Jill Schultz, the editor for transportation safety at the safety-focused firm of J.J. Keller, said last year's Safe Driver Week took place in October. It racked up approximately 8,000 citations for commercial vehicles, and 12,000 for passenger vehicles, according to Schultz.

"The CVSA does this at least one week per year," Schultz said. "What they are looking at is education and enforcement for safe driving behind the wheel for everyone, not just trucks and buses.  It's a focused effort, and they're looking for things like moving violations and speeding, and making sure people aren't using mobile devices while driving."

"The primary difference is that this is about driving behaviors," Scott Hernandez, CVSA Director of Crash Standards and Analysis Scott Hernandez, said in an interview with FreightWaves.  And much of the focus will be on the behaviors that can create safety issues in the interaction between commercial vehicles and passenger cars.

But law enforcement is on the road every day. What's happening here that's different? As Hernandez said, no matter what your line of work is, "everyone gets busy in everyday life." So policing behaviors that can often lead to incidents between trucks and cars may not always be the focus of state police officers who are doing a wide range of other activities.

"There are agencies in the country that are working toward this effort, and have assigned people specifically for this," Hernandez said. "They are not necessarily doing it every other day of the year."

With Operation Safe Driver Week focused on driver behaviors, it?s imperative that fleets look at programs that change driver behavior throughout the year so drivers are not impacted during this week. One of the most effective programs is video-based safety, like that offered by SmartDrive.

According to AAA Foundation for Traffic Safety, video-based onboard safety monitoring systems can prevent as many as 63,000 crashes, 17,733 injuries and 293 deaths each year. As noted by Cypress Truck Lines (?We?ve seen results where we?ve been able to improve driver behavior.?) and Golden State Foods (?It?s a tool that can make drivers great. And great drivers even better.?) and hundreds of other fleets, video-based safety changes driver behavior so fleet managers can relax during Operation Safe Driver Week, and every other week of the year.

There is no firm list of things that states are supposed to do during Safe Driver Week. Hernandez said some states "could dive a little deeper into this." Individually, state authorities could choose particular corridors that are accident-prone and look to police the behaviors that appear to be causing higher than normal numbers.

Hernandez stressed that whatever efforts are ongoing are not strictly targeted at commercial vehicles. "Some incidents are more often caused by passenger vehicles, so whatever occurs out there on given days is what the officers will enforce," Hernandez said.

When it's over, Hernandez said that data from around the country and other parts of North America will be gathered and compared to prior years, "and we'll see what the trends are." It will be reviewed at CVSA's annual meeting in Kansas City in September. 

Operation Safe Driver doesn't just involve one week. It also has two focused educational programs. Teens and Trucks is aimed at trying to ensure teenage drivers understand what they're up against when they're driving in the vicinity of a truck, like its blind spots and how long it takes a truck to stop. A second, Defeat Distracted Driving, aims to educate on truck drivers and that issue.  

The CVSA is not done in 2018 with its "weeks." Brake Safety Week is coming up in September.

Both Schultz and Hernandez said that unlike Roadcheck week, when there are stories of independent owner operators staying home to avoid the enforcement activities, Safe Driver Week has not had that reputation.

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19 Jun 2018 at 3:30pm

(Photo: Ryder)

As alternative energy continues to make headlines, companies are adding more electric vehicles their fleets. Both Ryder and UPS announced significant EV additions earlier this month.

Ryder reserved 500 new Chanje Energy medium-duty electric panel vans with the intention of growing its North American electric commercial truck rental fleet. These vehicles will join the existing 125 Chanje EVs in Ryder?s fleet.

This month?s larger reservation came on the heels of increased demand for EVs and positive feedback from the company?s existing EV customers, according to Ryder Fleet Management Solutions Chief Technology Officer Mel Kirk.

?Our early experience with [EVs] from Chanje has helped us frame the appropriate application for this vehicle type,? Kirk said. ?We have gained valuable feedback from customers who have driven the unit and experienced the quality of the vehicle to evaluate its fit for their business. We continue to see broadening interest in EVs, especially in the parcel, final mile and beverage delivery space, which led us to execute this reservation agreement.?

The Chanje vans can haul up to 6,000 pounds and up to 580 cubic feet of cargo with zero vehicle exhaust emissions and a 100-mile range per charge, according to a Ryder media release.

The increased fuel efficiency of EVs is a big draw for many Ryder customers.

?Our customers look to Ryder to help them configure and order vehicles that fit their specific duty cycle and use case. One of the predominant factors that drives a customer?s vehicle selection is fuel efficiency,? Kirk said. ?EVs, with their increasing battery density and performance, can be considered in any evaluation for customers who drive defined routes between 40 and 100 miles per day and return to base in the evening potentially for charging.?

Ryder?s new round of EVs will be deployed as lease agreements with the company?s customers are finalized.

The company has equipped maintenance facilities across the major California markets, Chicago and New York to meet the service and charging requirements of these vehicles, according to the release.

Ryder is not the only company expanding its EV profile. Workhorse recently announced a binding agreement with UPS to buy 950 additional N-GEN plug-in electric delivery vehicles.

The Ohio-based transportation technology company worked with UPS to build the vehicles from the ground up. A 50 vehicle test fleet deployed earlier this year.

The company?s ability to use the vehicles for deliveries during the day and recharge overnight without losing any working time puts them in the position to ?work with partners, communities and customers to transform freight transportation,? according to UPS Global Fleet Maintenance and Engineering President Carlton Rose in a media release.

?Electric vehicle technology is rapidly improving with battery, charging and smart grid advances that allow us to specify our delivery vehicles to eliminate emissions, noise and dependence on diesel and gasoline,? Rose said in the release. ?UPS Global Fleet Maintenance and Engineering President Carlton Rose said in a media release. ?With our scale and real-world duty cycles, these new electric trucks will be a quantum leap forward for the purpose-built UPS delivery fleet.?

Workhorse claims the N-GEN plug-in EVs provide nearly 400 percent fuel efficiency improvement, in addition to optimum energy efficiency, vehicle performance and a better driver experience.

Like the Chanje vans, the Workhorse delivery vehicles can go about 100 miles per charge and boast zero vehicle exhaust emissions.

The Workhorse vehicles are comparable in acquisition cost to conventional-fueled vehicles without any subsidies, according to the company.

"This innovation is the result of Workhorse working closely with UPS over the last four years refining our electric vehicles with hard fought lessons from millions of road miles and thousands of packages delivered,? Workhorse CEO Steve Burns said in a media release. ?Our goal is to make it easy for UPS and others to go electric by removing prior roadblocks to large scale acceptance such as cost.?

UPS has been on the forefront of the electric vehicle scene for awhile, with 300 electric vehicles deployed in Europe and the U.S. and nearly 700 hybrid electric vehicles in play, according to the release.

The company has also preordered 125 electric Semi trucks from Tesla and was the first commercial customer to begin using Daimler?s eCanter electric light-duty truck last year.



19 Jun 2018 at 3:25pm

(Photo: Shutterstock)

One of the main challenges for freight brokers is developing and maintaining a reliable carrier base. Overall, that is one of the primary takeaways from UBS?s most recent report, which looks at the trend in app downloads over the past several years comparing the share of downloads across a group of conventional brokers, new tech-focused brokers, and load boards.

The data supports what FreightWaves has reported over the past several months now, that digital broker apps are still not gaining significant industry traction. This doesn?t mean, however, that scale is not achievable. It just might take a little longer than some in the technology space might expect. This is due to several complicating factors, not the least of which is the sheer size of the incumbents, and their ability to also play in the technology sector.

While C.H. Robinson?s scale and reach remain unmatched, a number of competitors have realized strong growth and have achieved significant scale over the past ten years. Total Quality Logistics (Cincinnati) was formed in 1997, and has become the third largest with nearly $3 billion in gross revenue. Coyote was founded in 2006 and it also followed a sharp growth trajectory rising to over $2 billion in gross revenue in 2014 (Coyote was acquired and is currently part of UPS's Supply Chain and Logistics segment).

The report shows the development of TQL, Coyote, and other competitors such as J.B. Hunt's ICS business drove increased competition for C.H. Robinson over the past eight years with a notable effect between 2011?2013. They suggest that the addition of new competitors such as Uber Freight and Convoy could very well prove to achieve similar results.

The report also measures downloads, even if they are not specifically attached to revenue share in the sector. Downloads are important for a number of reasons. The most significant is that they show how well brokers and other transport service companies are connecting with the broader fleet of trucking companies and individual truckers. The connection with trucking companies and truckers is important as it provides visibility into finding available capacity which is a key value add for brokers.

The UBS Evidence Lab estimates that owner operators account for roughly 20%-30% of capacity in the for-hire trucking market, but a large portion of the owner operators are associated with trucking companies; Swift owner operators who are dispatched by Swift for instance.

Independent owners operators likely account for only 5%-10% of industry capacity. This brings up a point that FreightWaves analyst Zach Strickland has pointed out before: The fragmented nature of the transportation industry is a root cause for why digital apps may be focused on the wrong audience. From our CarrierLists data, we?re still seeing that carriers report load boards have only accounted for 12% of the volume of total loads sourced. Roughly 88% of the loads are coming through contact with shippers and brokers.

Within the app analysis one name stands out as showing remarkable traction in terms of downloads but an apparent lack of commercial success based on our conversations with multiple companies in the brokerage industry. Trucker Path and the Truckloads app realized the largest share of downloads in 2016 and 2017, and it shows up in second place in 2018. As a private company detailed financial information is not readily available for Trucker Path, but conversations with multiple industry contacts indicate that strong downloads likely have not translated to significant revenue from the parking availability feature while usage of the load board functionality is also in question. In December 2017, Renren Inc. acquired 100% ownership of Trucker Path, as previously reported by FreightWaves.

Based on UBS?s conversations with a variety of small, medium and large truck brokers, there is little evidence of a disruptive effect from the new technology focused truck brokers Uber Freight and Convoy. They estimate that Uber Freight is running at a pace of about $200 million in annual revenue, which makes it about 20% of the size of Hub Group's truck brokerage activity and 2% of the size of C.H. Robinson. While the new competitors are focused on leveraging technology to drive efficiency, there is evidence that the new players also rely on important tools of a conventional broker such as the use of Truckstop.com and DAT in order to source capacity.

C.H. Robinson's app, Navisphere, has consistently held a meaningful share of downloads in the range of 7% to 17% from 2015 ? 2018 to date. The third and fourth largest truck brokers are Total Quality Logistics (TQL) and Coyote. Both TQL and Coyote show consistent traction in app downloads with share of 3% to 14% from 2015 ? 2018 to date.

DAT and Truckstop.com remain central hubs for accessing capacity and loads and appear to be gaining traction, rather than losing it. While other players have load board functionality, the pure size and scale of their networks give them incredible moat. As the new entrants disrupt (or attempt to) disrupt the old guard, it forces carriers to rethink their load sourcing strategy and no one has as rich of a source of loads as the load-board duopoly. In UBS' report, DAT ranked 3rd in downloads and Truckstop ranked 7th. According to sources at DAT, they continue to break internal records by nearly all metrics. The number 2 player, Trucker Path's Truckloads' growth has slowed down and is declining by over 50% each year, hinting that DAT will soon be the second largest downloaded freight app. Don Thornton commented that mobile only tells part of the story. Because of the richness of their online toolset, users that have the mobile version still visit the browser version on a regular basis. 

 The value of incumbency and scale is significant and this principle also applies to the brokers. There is considerable value in the networks of large brokers in terms of both the strong flow of freight through their systems and the broad access to capacity through a large network of carriers. Strickland has detailed as much in a recent discussion about CarrierLists merging with SaferWatch.

Overall, the analysis shows there is competition among brokers to get carriers/drivers to download their app, which can provide visibility and a connection with sources of capacity. The report concludes there is no evidence yet of disruption in brokerage and concludes that performance of brokers is likely to be driven by the cycle and their own execution.

New players (Uber, Convoy) have traction, but so do the incumbents. Uber Freight has realized traction in app downloads with a share of 19% and 21% in 2017 and 2018 to date (Convoy at 5% & 6%), but the conventional brokers also show traction with C.H. Robinson in a range of 7%-17% of downloads over the past four years and TQL and Coyote in the 3%-14% range from 2015 ? 2018. They note that the app connection with drivers is most meaningful with independent owner operators who have potential to book freight. This group, however, is only 5%-10% of the for hire market.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

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20 Jun 2018 at 10:00pm
It?s been six months since the electronic logging device mandate went into effect. So now?s a good time to ask: How Have ELDs Changed Trucking? Our June 27 LiveOnWeb program will answer that question.

20 Jun 2018 at 9:45pm
WASHINGTON ? Public outreach efforts can dispel misconceptions about miles-based user fee (MBUF) programs, according to Mike Warren, principal consultant at WSP USA.

20 Jun 2018 at 9:30pm
WASHINGTON ? Senators on the Finance Committee questioned the Trump administration?s national security argument for pursuing steel and aluminum tariffs, a move Commerce Secretary Wilbur Ross staunchly defended at a hearing June 20.

20 Jun 2018 at 9:00pm
The world on the cusp of a trade war has spooked investors, and few companies are feeling the fright more than Caterpillar Inc.

20 Jun 2018 at 8:45pm
The U.S. economy is booming this quarter as tax cuts power consumers and businesses. Yet risks are mounting that the high will be short-lived.

20 Jun 2018 at 8:30pm
Although they drive trucks only one to six times a year, drivers for American Pyrotechnics Association members face unique challenges related to federal transportation safety regulation.

20 Jun 2018 at 7:00pm
WASHINGTON ? Road user charges, manifested in the form of a miles-based user fee (MBUF), are the best alternative for sustainable infrastructure funding, according to Rep. Earl Blumenauer (D-Ore.).

20 Jun 2018 at 6:15pm
Commerce Secretary Wilbur Ross made a trade betting that the stock in a shipping company with Russian-government ties would fall, a transaction coming just days after he learned of a possible negative news story about his investment in the company.

20 Jun 2018 at 6:15pm
Volkswagen Truck & Bus announced it will rename itself Traton Group to further increase its independence from parent company Volkswagen AG and toward ?capital market readiness? in preparation for a potential IPO by the unit.

20 Jun 2018 at 5:45pm
The latest round of face-to-face labor negotiations between UPS Inc. and the International Brotherhood of Teamsters was slated for the week of June 18, with the threat of a strike looming over the talks if no agreement can be reached before the current five-year contract expires Aug. 1.



20 Jun 2018 at 6:01pm
The ATA?s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index rose 0.7%, to 113.8 (2015=100), from April to May, following a 2.7% (upwardly revised from an original reading of 2.2%) March to April increase.

20 Jun 2018 at 3:36pm
Convey, an Austin, Texas-based provider of cloud-based technology that helps shippers connect disparate data and processes to improve the last mile customer experience, announced this week that it has received an additional $10 million in venture capital funding, which brings its total raised capital to $25.75 million.

20 Jun 2018 at 1:08pm
Global logistics and transportation bellwether FedEx announced strong Fiscal Year and fourth quarter 2018 earnings results, which it announced late yesterday. Earnings per share for the fiscal fourth quarter, at $5.91, were up 41% annually, with fiscal year EPS up 27% at $15.31. The quarterly EPS topped Wall Street expectations of $5.68-$5.71 per share, as well as fiscal year expectations, which were estimated to come in at $15.05-$15.13 per share.

19 Jun 2018 at 1:39pm
The diesel average fell 2.2 cents to $3.244 per gallon, following declines of 1.9 cents and 0.3 cents, respectively, over the previous two weeks.

19 Jun 2018 at 1:22pm
As most shippers can tell from their rising freight bills, carriers have taken advantage of a seller?s market in transportation as the confluence of a strong economy, surging demand and labor and capacity shortages is causing multiple pain points for logisticians. That?s the conclusion of the 29th annual State of Logistics report produced by A.T. Kearney in partnership with the Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics.

18 Jun 2018 at 6:14pm
The 638,000 square-foot DC, which XPO described as ?a warehouse of the future," is located at the new SEGRO East Midlands Gateway Logistics Park in Leicestershire and will mainly be occupied by Nestlé for its consumer packaged goods, such as Kit Kat, Maggi, and Nescafe. The DC will also be used as a testbed environment for XPO technology prototypes, XPO said.

18 Jun 2018 at 4:05pm
POLA said it processed 768,804 Twenty-Foot Equivalent Units (TEU) in May, which is down 3% annually compared to May 2017?s record of 796,216 TEU. POLB May volumes shined, with the port saying its 687,427 TEU represents its highest-volume May ever recorded in the port?s history.

18 Jun 2018 at 3:31pm
The most recent edition of the Cass Freight Index Report from Cass Information Systems pointed to an ongoing thesis describing the state of the United States freight economy as ?extraordinarily strong,? given the ongoing gains in freight shipments and expenditures.

18 Jun 2018 at 2:15pm
End-to-end visibility into your supply chain is more important now than ever. It can help improve operations and prevent loss.

15 Jun 2018 at 10:01pm
In a move signaling the long-term confidence of the Port of Oakland?s strategic plan, SSA Terminals has signed an agreement to maintain its operaions there well past the current lease expiring in 2027.

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