All salsa, no chips for trucking - WTT [newsletter]

Welcome to the WHAT THE TRUCK?!? newsletter. In this issue, chip shortages, crypto as a hedge against the freight market, mattresses stuffed with used medical masks and more.

Buy the dip?

No gain, for now — The good news for shippers is that the Truckstop.com 7 Day Dry Van Rate Per Mile has lost all of the gains it had made over the past month as it slid 5 cents this week to $3.13/mi inclusive of fuel. The bad news is that volumes are ticking upward and rates will likely follow. In addition, markets are still out of balance and an import surge driven by consumer spending could lead to the “hottest summer ever — for freight.”

Freight tsunami — FreightWaves’ Zach Strickland reports in his Chart of the Week that the Houston and Savannah, Georgia, markets have both seen trucking volumes swell over the past month and capacity tighten to record levels — tender rejection rates hit all-time highs in both markets over the past two weeks. This race to replenish inventories has inland twenty-foot equivalent unit bookings set to exceed the 2020 peak by 8% this week.

Tales from the crypto — If you invested $1 million of freight spend in bitcoin on Jan. 1, your investment would now be worth $1,734,500. Sounds pretty good, right? How about this: If you put $1 million of freight spend into dogecoin on Jan. 1, your investment would now be worth $9,000,000. Much wow!

Shipping stonks only go up?

Breaking the Suez and operating records — FreightWaves’ Greg Miller reports, “As the world fixated on the plight of the Ever Given in the Suez Canal, the liner company that operates the ship, Evergreen Marine Corp., was wrapping up the best quarter, revenue-wise, in its history.” In fact, Evergreen’s operating revenues are up 135% year-on-year and up 40% from Q4 2020. Unfortunately, shippers on the Ever Given are about to be handed a bill for the $1 billion it cost Egyptian authorities to free the vessel, as a general average has been declared.

“I’m pretty sure, [this is] the largest general average case that has ever arisen in terms of the number of different property interests.” — Jonathan Spencer, average adjuster, The Spencer Co.

COSCO beats 2020 in one quarter — Just how good was COSCO’s Q1? According to a securities disclosure on the Hong Kong Stock Exchange, pre-announced net income was $2.36 billion. As Miller notes, that’s 53 times the profit COSCO reported in Q1 2020. In fact, the steamship line’s Q1 profit estimate is 56% higher than the company earned all of last year!

Left holding the bill — Record profits for the SSLs are great, but shippers are the ones footing the bill. According to the Freightos Baltic Daily Index in SONAR, rates for forty-foot containers from China to the East and West coasts are $6238.58 and $5052.08, respectively. Does that mean you should buy high and lock in rates? Not according to Bolloré Logistics, which is advising customers to avoid long-term deals as current terms are far from favorable. They believe that rates will recede later in the year as consumption switches from goods to services. Drewry has advised the opposite as it expects port congestion and equipment shortages to persist through 2021. Maybe investing some of that freight spend in dogecoin isn’t such a gamble after all.

All salsa, no chips

The wrong call — No, there isn’t a semiconductor shortage because all of the chips were put into vaccines (calm down, Twitter) but the reason still has to do with COVID. Back in the early days of the pandemic, manufacturers cut chip production as they forecast lower demand. Demand did not lower and now that decision is coming back to haunt auto manufacturers.

Truck makers’ warning — FreightWaves’ John Gallagher reports that the world’s leading manufacturers of heavy-duty trucks and truck engines have warned the Biden administration that a severe shortage of semiconductors is hindering their ability to produce enough trucks to meet freight demand. The Truck and Engine Manufacturers Association (EMA) wants action now as component manufacturers are struggling to procure semiconductors against higher-volume, nonessential industries.

“It is critically important to ensure a sufficient supply of automotive grade semiconductors for medium- and heavy-duty trucks from a competitive global supply network, including the ability to source semiconductors from suppliers in the United States.” — EMA

Biden at the bat — On Monday, President Joe Biden attended a virtual CEO Summit on Semiconductor and Supply Chain Resilience to comment on strengthening domestic semiconductor supply chains. The president is asking for $50 billion of his $2.3 trillion infrastructure plan for the chip industry. “We’ve been falling behind on research and development and manufacturing, and, to put it bluntly, we have to step up our game,” Biden said at the summit.

Nightmare fuel

Sleep tight — What’s your preferred type of mattress? Innerspring, memory foam or discarded medical mask? Police in Jalgaon, India, busted a bedding factory for stuffing mattresses full of discarded surgical masks. The cops raided the factory after being tipped off about the unsanitary practices. “When the officials visited the premises of the factory in Kusumba village of MIDC, they found a mattress being stuffed with used masks. A case was registered against the factory owner, Amjad Ahmed Mansoori. The police are now probing the involvement of others in the racket,” Times Now News quoted Additional Superintendent of Police Chandrakant Gawali as saying.

Send me an angel

Gets his wings — On the morning of Feb. 8, veteran trucker Nick Still was heading down U.S. Highway 34 near Galesburg, Illinois, when he saw a pickup truck spin out of control and careen into a ditch. “Just as we were approaching an overpass, I watched him spin out. They spun around and rolled,” Still told the Truckload Carriers Association. “A big cloud of powdery snow went up, and when it settled, they were laying on the passenger side in the ditch.” Still pulled a couple in their 50s from the wreck and waited until authorities arrived. FreightWaves’ Nick Austin reports that for his bravery the TCA presented Still with a certificate, patch, lapel pin and truck decals. His employer has also received a certificate acknowledging its driver as a Highway Angel.

WTT?!? Wednesdays

LIVE MONDAY – WEDNESDAY – FRIDAY NOON ET on FreightWaves LinkedIn / Facebook / FWTV

Wednesday — We’re talking to David Applegate, founder of The Import Yeti, which gives you free insights into thousands of shipping records. Jeff Bermant, the founder and CEO of Cocoon, talks about a web browser that privatizes your online data. Brett Suma, chief executive officer at Loadsmith, speaks to industry growth. Plus, we’ll have insights from Tim Breckenridge, VP of business development, ITF Group.

Friday — Raghavender Sahdev, CEO at NuPort Robotics, joins the show to discuss his company’s automated heavy-duty truck partnership with Canadian Tire. Krenar Komoni, CEO at Tive, shows us Tive’s Open Visibility Network. Andrew Silver, CEO at MoLo, talks about expanding into Nashville, Tennessee. Sadie Church, director of recruiting at NFI, fills us in on how hard it is to fill truck seats in ’21.

Catch new shows live at noon ET Mondays, Fridays and Wednesdays on FreightWavesTV, FreightWaves LinkedIn and Facebook or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player.

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