Spot rates hit record high – WHAT THE TRUCK?!? [newsletter]

Timothy Dooner

4 years ago

Welcome to the WHAT THE TRUCK?!? newsletter sponsored by Legend Transportation Inc. In this issue, spot rates hit record high; KeepTruckin caught up in crash fallout; Workhorse loses contract; and who has handled port congestion better: Amazon or Walmart?

History is made

Up and to the right — What do a Michael Jordan Fleer rookie card and spot rates have in common? Spot rates have set a record high, hitting $3.32 for the first time in the history of the index in SONAR. Routing guides are still being disrupted in many major markets, forcing shippers to compete for capacity. Rejections remain near historic highs as more than 1-in-4 contracted loads are being denied. Volumes are also elevated this week, while capacity hasn’t come back online at pace with demand. Right now, pricing power is firmly in place with the carriers as our DHL Supply Chain Pricing Power Index ended last week at an 80 but is almost certain to tick up again this week.

Underneath it all — Why have spot rates surged these past two weeks? As Zach Strickland wrote in his chart of the week, “the underlying fundamentals of the market are showing signs of moving slowly back toward a more stable scenario and spot rates may be unable to paint the full picture.” Watch out for pricing managers and brokers that can keep rates elevated for longer than conditions suggest they should.

“The Michael Jordan Fleer rookie card is the modern Mona Lisa.” — Gary Vaynerchuk during Global Supply Chain Week

About that rookie card — A Michael Jordan Fleer rookie card that would have sold for $32,000 in December of 2019 sold on Jan. 30 for $738,000 through Goldin Auctions. Trading card sales are booming during the pandemic and now may be a good time to sell some in order to pay for these spot rates!

An infuriating sequence of events

The accident — On June 21, 2019, Westfield Transport Inc. driver Volodymyr Zhukovskyy was high on heroin and cocaine while driving a 2016 Ram 2500 Tradesman crew-cab. A charity ride turned deadly in Randolph, New Hampshire, when Zhukovskyy crashed into and killed seven motorcyclists from the Jarheads Motorcycle Club who were on their way to a charity event at the local American Legion. The fallout from this incident may see KeepTruckin ELDs decertified by the FMCSA.

The driver — Just three weeks prior to the crash, Zhukovskyy was a driver for FBI Express when he was involved in a one-vehicle rollover crash in his tractor-trailer in Baytown, Texas. Although he wasn’t cited for the incident, FBI Express fired him for not submitting to a drug test. Clarissa Hawes reports that, just a month prior to the crash, Zhukovskyy was arrested by an officer with the Connecticut State Police after he failed a field sobriety test and refused to submit to a urine drug test. In February 2019, he was arrested at a Denny’s and found with a crack pipe. That arrest was captured on this body cam footage.

The carrier — The now defunct Westfield Transport was indicted on Friday for falsifying driver logs. In fact, the NTSB found that 23 of 150 driver logs had been falsified. During the investigation, an unnamed manager reportedly showed how the company would “tamper with the KeepTruckin device, preventing it from accurately recording HOS.” The carrier failed to pull Zhukovskyy’s driving and employment records prior to hiring him.

A failure in Mass — Although the Connecticut DMV forwarded the Massachusetts RMV its info on Zhukovskyy’s arrest, the Massachusetts agency failed to process the notification, which would have suspended his CDL. The former head of the RMV, Erin Deveney, resigned after admitting that her agency hadn’t processed out-of-state notifications dating all the way back to 2008.

“The findings really are erroneous based on their lack of understanding, and that makes their recommendation baseless.” — David J. Osiecki, president of Scopelitis Transportation and Consulting

StopTruckin — In the fallout from this investigation, the NTSB recommended that KeepTruckin’s ELDs be removed from the FMCSA’s list of self-certified providers. KeepTruckin claims that investigators conflated the carrier’s use of KeepTruckin’s AOBRD with KeepTruckin’s ELDs and that the same rules don’t apply to each technology.

Duck, duck, postal truck

Front runnin’ horses — Workhorse was shocked Feb. 23 when the Postal Service awarded a 10-year contract worth an initial $482 million to defense contractor Oshkosh Truck Co. for its next generation of mail delivery vehicles, Alan Adler reported. Workhorse Group isn’t going down without a fight, as it plans to meet face-to-face with the U.S. Postal Service on Wednesday.

“This is not the result we had anticipated or hoped for,” Workhorse CEO Duane Hughes said on the company’s Q4 earnings call Monday.

Oshkosh vs. Workhorse — Biden signed an executive order Jan. 25 requiring the nation’s 645,000-vehicle fleet to convert to electric vehicles. The Postal Service accounts for about 35% of those. However, Workhorse Group was the only finalist for the postal contract that submitted a fully battery electric vehicle. Oshkosh’s duck-billed prototype is a gas-powered hybrid.

All hat no cattle — Workhorse CEO Duane Hughes said, “We are the most competent EV maker in the last-mile delivery space.” However, Adler reports that “Workhorse built just seven trucks in the fourth quarter as its underdeveloped production systems and supply chain issues continued to hold down the electric maker’s progress.” Even Hughes called its full-year goal of producing 1,800 trucks a stretch. The company’s stock is down 54.71% over the past month.

AMZ vs WMT

Who’s winning the port battle? — Eric Kulisch reports in the battle between retail giants, Walmart is doing a much better job than Amazon in avoiding U.S. port congestion and import delays, according to data compiled by Import Genius. While Amazon has kept a steady concentration of freight from Asia at the ports of Los Angeles and Long Beach, Walmart has spread its imports out across the country.

Holiday holdup — With two-thirds of Easter-related freight directed toward the West Coast and 47 ships currently at anchor, it’s beyond necessary for importers to consider diversifying their freight across other ports. To Amazon’s credit, it is adjusting to the disruptions by sending more containers to the Port of Baltimore. One curious piece of information from Import Genius’ data is roughly 20% of the shipments handled by Beijing Century Joyo – Amazon’s NVOCC – since 2018 have been on behalf of freight forwarders.

Where’s my freight?

Kangaroo run — Braxton Basinger of B and H Livestock says he lost track of a kangaroo he was delivering while making a stop at his property in Winfield, Alabama. The roo, which was being transported from Mississippi to Tennessee, hopped off into the unknown when one of Basinger’s employees let it out of a trailer. Facebook user Tiffany Perry gave chase and caught it on camera. However, in the cold light of day, the jack proved to be too much for her to handle.

“This joker is running dead at me and I jumped out the way. I’m not squaring up against one. I saw my life flash before my eyes.” — Tiffany Perry

Lost and found — CBS42 reports that “there is no information on the kangaroo’s whereabouts. Anyone who knows where it is is encouraged to contact Basinger at 901-488-0888.”

Facts and figures — This does not change the fact that in Australia there are 48 million kangaroos and in Uruguay there are 3,457,380 inhabitants. So if the kangaroos decide to invade Uruguay, each Uruguayan will have to fight 14 kangaroos.

Would you rather have a 401k or bitcoin?

FreightWaves Insiders is back — With a little extra time now that we decided not to renew our radio contract with SiriusXM, I’ve decided to bring back FreightWaves Insiders on Thursdays. FreightWaves Insiders is an “Inside the Actors Studio” of freight in which I have one-on-one (or two) conversations with industry leaders and personalities about career journeys and major issues in business.

Last week — On this episode I’m joined by angel investor Charley Dehoney and BasisBlock co-founder/CEO Taylor Monks for a talk about the meme stock movement, cryptocurrency, Robinhood’s behavior, whether freight employees should be paid in bitcoin and where the venture capital is flowing in ’21. Should startups put their seed rounds in bitcoin? Listen in here.

This Thursday — FreightWaves Detroit Bureau Chief Alan Adler jumps in the hot seat to talk about if Workhorse Group got hosed on the postal contract, what’s up with Nikola, battery tech charging up and the explosive growth of the trading card industry. Subscribe to FreightWaves Insiders on your favorite podcast player and never miss an episode.

WTT?!? Wednesdays

Final day! — Global Supply Chain Week has been an eight-day excursion into the issues facing all sides and modes of freight. It seems like we just started, but here we are at the end of the line as we conclude our coverage on WHAT THE TRUCK?!? live from the show on Wednesday. We’re heading out with a bang as we not only have more prizes to give away (register for those here) but we have three more amazing guests.

Patrick Maher, VP of business development, Gulf Winds International — We’ll learn about the impact the storm in Texas had on the ports and with delays. Is more trouble on the horizon?

Juan-Jose Ruiz, head of strategy and business development, TradeLens — What’s the state of blockchain at sea? Learn why adoption is increasing and how blockchain isn’t just for cryptocurrency and digital art NFTs.

Jenna Bryant, co-founder, CEO, general partner, Embedded Ventures — Embedded Ventures primarily invests in pre-seed/seed-stage startups solving complex problems. We’ll hear all about what Bryant FreightTech at sea they think is worth investing in this year.

Don’t miss Hyperloop Friday on the show and special guests Josh Giegel, CTO and co-founder, Virgin Hyperloop; Trucking TikTok superstar Chace Barber; and Gregory Paterek, owner, Dispatch 77.

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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Shippers shocked by high prices, poor service