Welcome to the WHAT THE TRUCK?!? newsletter sponsored by Legend Transportation Inc. In this issue, spot rates stay near record high, West Coast Port Crisis ‘21, Canada’s ELD mandate, more.
A Penny Saved is a Penny Earned
Near historic highs — Dry van spot rates dropped a penny this week to $3.31/mile inclusive of fuel. This would be the highest level in the series’ history if it weren’t for last week’s record of $3.32/mile. With volumes holding steady and more than 1 in 4 contracted loads getting rejected, we don’t expect to see a decline in rates this week. What makes this market particularly hairy is that any event that removes capacity (storms, port congestion, civil unrest) will have profound impacts on rates as supply is already tight and imbalanced.
“The bull market for freight is alive and well; the question is how long it will last. At this point, our answer is longer than we previously thought.” — FreightWaves Passport Research Team
Fear the reefer — As Zach Strickland reported in his Chart of the Week, spot rates for produce from Los Angeles to Dallas were at $4,700 all-in the week of February 10. That same lane averaged over $6,200 per load last week, more than 60% higher than each of the previous three years’ values. The bad news? Produce season is only just getting started.
Congestion Claritin can’t fix
West Coast Port Crisis ’15 — I still wake up with freightmares from having to deal with the West Coast Port Crisis of 2015. Anyone who had to contend with ocean sales and operations remembers the angry phone calls from shippers looking for freight, the tremendous backlog of customs entries, high demurrage fees, lost inventory and ruined relationships. It seemed to go on forever; however, as Capt. Kip Louttit, executive director of the Marine Exchange, noted, congestion at the port was cleared just six weeks after the peak.
West Coast Port Crisis ’21 — It’s worse. Much worse. This year, on any given day there are 30-plus ships at anchor in San Pedro Bay (a number never reached in ’15.) Making matters worse is that there is no relief in site as congestion has persisted at higher levels and has sustained those elevations for months longer. The ships are bigger too. In ’15 the majority of vessels had a capacity of under 10,000 twenty-foot equivalent units (TEUs). As Greg Miller reported, “As of Sunday, there were 29 container ships at anchor. Eleven were over 10,000 TEUs. Five of those boasted capacity of 14,000-15,000 TEU. One, the CMA CGM Marco Polo, topped 16,000 TEU.”
“We just paid $6,000 to $7,000. This is the highest freight rate that I have seen in 45 years in the business.” — Peter Baum of Baum-Essex to The New York Times
Stuffed in a locker — On its most recent earnings call, Foot Locker spoke to the impacts of the port crisis. Lauren Peters, the company’s executive vice president and chief financial officer, said, “Our comp sales declined 2.7%. This was largely due to COVID-related store closures and backlog at the U.S. ports, along with traffic declines in our largest global tourist markets.” The retailer reported a 23.6% decline in inventory in Q4, which it attributes to the port crisis.
No end in sight — The port crisis is fueled by consumer spending, and with another slate of stimulus checks soon to hit the mail, the problem may only grow worse. Not to mention, retailers are still desperate to restock inventories. As Andrew Cox wrote, “ Retailers have quarterly results to report, and dragging inventories are not applauded by Wall Street.”
ELD compliance coming to Canada
Mark your calendars — Love ’em or hate ’em, the ELD mandate takes effect in Canada on June 12. Although, it won’t be enforced … at first. In fact, initial enforcement measures, according to the Canadian government, will consist of “education and awareness.”
What’s different than in the US? — While many of the rules are the same, as the majority of Canadian trucking companies do cross-border business in the U.S., there are some key differences. As Nate Tabak reported, “Third-party certification is the single most important difference. In contrast to the U.S., where manufacturers self-certify.” Although U.S.-based trucks only make up 20% of cross-border business, they will also need certified ELDs to operate north of the border. Third-party certification could be a pretty big deal as it isn’t something any ELD company has had to pass yet.
“There are devices on the market that will allow you to manipulate your HOS far too easily.” — Steve Laskowski, president of the Canadian Trucking Alliance
What about KeepTruckin? — As I wrote about last week in the newsletter, the NTSB recommended that KeepTruckin’s ELDs be removed from the FMCSA’s list of self-certified providers. KeepTruckin told FreightWaves it expects its ELDs to be certified for use in Canada.
Check out these checkout bots
Roll out — Albertsons Cos. have partnered with Tortoise, a last-mile logistics company, to pilot remote zero-emissions delivery robots in NorCal. The robocart is powered by a remote operator using both cameras and speakers (though a human will accompany it during testing.) According to Tortoise, the use of a robot within a 2-mile range can save $6 per delivery.
“We are willing to quickly test, learn and implement winning innovations that ensure we are offering the easiest and most convenient shopping experience in the entire industry.” — Chris Rupp, executive vice president and chief customer and digital officer for Albertsons
Slow and steady — True to its name, the bot is both strong and slow. It can carry 120 pounds of groceries and travels at 3 mph. As a child of the ’80s, this is the future we were promised.
This week in bad marketing
BK king sizes royal controversy — Not to be outdone by the royal family, Burger King got itself into hot water on International Women’s Day when it tweeted, “Women belong in the kitchen.” We talked about this briefly on WHAT THE TRUCK?!? Since that episode, the burger brand admitted to its whooper while saying it was just trying to bring awareness to the lack of professional chefs in the U.K. who are women. Can you imagine being a fly on the wall during that social media managers strategy meeting?
Is everything OK in OK?
Sasquatch watch — Time to Put That Coffee Down and get Kevin Hill in the camper because his home state is offering big bucks for Bigfoot. The state’s bounty on the beast now tops $2.1 million. According to Komonews, “State tourism officials are now developing a Bigfoot promotional campaign that includes license plates, decals, an annual commemorative tracking license and “Bigfoot checkout stations.” In addition, businesses along State Highway 259A will be able to sell Bigfoot tracking permits.
That’s what they want you to believe — In 1976 the FBI investigated the existence of Bigfoot based on a hair sample; it turned out to be a deer. Want to begin your search for the OK Bigfoot now? Take a look at the FBI’s file on the creature.
WTT?!? this week
Wednesday at Evolve — Digital Wildcatters presents Evolve, a one-of-a-kind virtual event for oil and gas professionals. Be among the first to hear about cutting-edge technologies, innovative startups and disruptive strategies. WHAT THE TRUCK?!? will be there doing a shortened 20-minute set with special guest Ryan Hunt, CEO and founder of RigCallOut. Register now for Evolve!
Friday — We’ll wrap up the week in freight and have a SONAR-powered breakdown of the market plus special guests: Jason Gillespie, senior director of continuous improvement and innovation, DHL Supply Chain; Graig Morin, president, Brown Dog Carriers; Mitch Hixon, vice president of business development, TriumphPay; Derek Staples, sales manager, DueDili.
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.
Now on demand
Adapt or Die: From tech to hiring, building a successful future-proof freight biz
How hyperloop will move freight with Virgin Hyperloop CEO/co-founder Josh Giegel
Texas ports two weeks later, how’re they holding up?
How hyperloop works
F’n magnets, how do they work? — Virgin Hyperloop CEO/co-founder Josh Giegel explains how his company is able to shoot people and cargo through tubes at 750 mph.
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Dooner