Hot Takes
Turning and burning, these wheels don’t quit moving. Stuck trying to get a carrier to go to a certain market but you have another shipper within about 100 miles from there? I smell a continuous move in your future. Continuous moves are a result of stringing multiple loads from one or more shippers together, which allows you to negotiate a slightly better rate.
For example, if you have a shipper that has a load from Bardstown, Kentucky, to Fayetteville, Arkansas, and another shipment from Bentonville to Dallas, the individual rate might be $1.80 per mile. If you combine them for a rate of $2, you can get one driver to do both loads and save some money.
The amount of miles between Fayetteville and Bentonville is small enough that you won’t have that driver driving about 200 miles of deadhead. Ending the carrier in Dallas is a solid choice because it shouldn’t have much of a problem getting a load out of Dallas.
By creatively utilizing continuous moves you keep the freight circulating, get drivers to markets that have shortages and make more efficient use of fuel and labor. Now if you have a healthy portfolio of customers and shipping locations, it would take one person a week to route out one day’s worth of shipments, which might seem cost prohibitive, but doing something to combine loads versus nothing can save an average of 10% or more.
Some TMSes can take the work out of manual planning to reduce the amount of time and resources an individual would waste on manually mapping everything out. JDA, SAP and McLeod are all touting the ability to handle continuous move planning and auditing.
While implementing continuous moves throughout the entire network might be a big hassle, you can start with like shippers. Got a couple of automotive customers? Great, they’re about to become best friends.
Automotive schedules are pretty consistent and any plant will know about how many cars they intend to produce. If you have a supplier that makes headlights and a supplier that makes steering wheels, taking those loads and delivering them to the warehouse that feeds the final assembly is a piece of cake. When you deliver the parts to the warehouse and then the warehouse shipment to the final assembly plant, you can then take the empty packaging or returned/defective parts back to the supplier. Rinse and repeat.
It’s a small but hopefully big impact you can have on your customer. If you find one carrier to run those loads, get a contract rate established and, boom, you’ve saved your customers a little on transportation costs while also providing the level of service they know and love.
Quick Hits
Oil Can – Not even the Tin Man could swing a free pump of oil from Dorothy in this market. Spot rates aren’t dropping off and fuel is partly to blame. Diesel fuel has risen almost 24% since Aug. 23. The average retail price of fuel has increased 31 cents a mile over the past month. Since most carriers use a fuel-plus-cost rate model, and the spot market has taken a small decrease in rates, we are kind of heading into the calm before the storm.
With the lowest tender rejection rates we’ve seen in the last year, as we talked about last week, I dare say contract rates are making their move — for now. We are about to enter peak season and with everyone scurrying to get their freight out of the ports and into the stores, I think we’re bound to see some crazy rates and no decrease in fuel prices.
I’m just a bill — West Coast ports have got 99 problems, but teenagers aren’t one of them. The Santa 18 Act introduced in Congress would allow drivers under the age of 21 to move cargo in and out of the congested ports. Currently no one under 21 can drive cargo across state lines, however the new infrastructure bill expected to be signed by the president this week could change that.
This legislation introduced by U.S. Rep. Brian Mast, R-Fla., is hoping that by allowing those younger drivers under 21 into the ports, which is classified as interstate transportation even if the port is in the same state as the destination, we can end the backlog and get the ports cleared. Should this act pass, it would create an apprenticeship training program for drivers 18 to 20 years old.
Market Check
Savannah, Georgia, has got more than just peaches right now. Savannah’s outbound tender volume is a little more than 13% higher than it has been over the course of this year. The past week’s outbound tender levels haven’t been this high since the end of July. While everyone’s attention has been focused on the ports of LA/Long Beach, poor Savannah has become inundated with cargo ships.
I don’t expect volumes to decline anytime soon, but if you have shippers that have freight there, for the love of all things holy, get them picked up.
How’d the Lemonade Stand Do?
They’re not so mellow now. Yellow reported earnings of 16 cents a share for the first time since Q1 of 2020. The main thing credited with the success of the last quarter? Cutting the less profitable freight. Rebranding all of its former carriers (New Penn Motor Express, Holland, YRC, Reddaway and HNRY logistics) as simply Yellow is HOPING to improve the network efficiency. We’ll have to see if Yellow has “improved efficiency” next year.
XPO has a slightly different story to tell. Its brokerage and non-LTL services were the MVP, posting $2.26 billion in revenue and operating income nearly doubling to $58 million. Its LTL segment took a bit of a hit. Operating income fell $21 million year-over-year to $149 million. The operating ratio increased more than 4% to 83.9, meaning it is spending more for each dollar it gets revenue. While it has excess capacity of 15% across the network, it’s not evenly distributed, meaning some areas have little to no capacity and others are plentiful.