Welcome to the WHAT THE TRUCK?!? Newsletter. In this issue, load board fraud rises, freight recession, dangerous states for truckers and kids crawling under trains.
Freight recession and the MSM
Deterioration — Produce season is a bust, the ports continue to slump, and a new batch of earnings reports reveals just how dire the freight market has become. C.H. Robinson, still on the hunt for a new CEO, reported total revenues down 32%, gross profits down 24.7% and income from operations down 53%. Last week, J.B. Hunt’s Shelley Simpson posted on LinkedIn that this freight recession is even worse than 2009.
Book him, Jim Cramer — Broughton Capital’s Donald Broughton has been a skeptic of the freight recession, despite what we’re all seeing on the ground and in the financials. In fact, just three weeks ago he told a CNBC audience that “Recovery in freight is already well underway.”
His reasoning? “Freight flows.” The problem with that? It completely ignores the other part of the equation: capacity. We’re pouring a 12-ounce beer in a 24-ounce stein.
About those freight flows. Lori Ann LaRocco appears to be looking at the right numbers. She reports, “Ocean freight orders are down 50% year over year and it is impacting both rail and road transportation, which a trucking executive recently called a ‘freight recession.’”
Good news? — Yahoo! Finance reports, “The slowdown in deliveries comes as diesel prices have dropped by roughly half since last year.” C.H. Robinson CFO Mike Zechmeister told an analyst that new carrier signups are down about 15% year over year and about a third sequentially from the fourth quarter. Of course that other side of capacity exiting the market is that carriers and drivers are getting purged.
Recovery roadblock — FreightWaves’ Thomas Wasson brings up a great point about upcoming student loan payments. With the average loan hovering around $299 a month, that’s yet another bite out of the consumer’s pie.
Fraud and double brokers
Erosion of trust — If you attended the meeting of the Transportation Intermediaries Association, talk freight on social media or use a load board, you know firsthand about the disturbing escalation in load board fraud and double brokering. A freight recession has brought bad actors to the surface like worms in a downpour. The WSJ reports, “Carrier-payments platform TriumphPay, a division of Dallas-based TBK Bank SSB, estimates at least $500 million to $700 million of shippers’ and brokers’ freight payments are going to double brokers annually.”
“How can a shipper trust either a carrier or a broker if they’re not sure their shipment is going to get to where it’s going to go?” — Anne Reinke at TIA
I caught up with Truckstop’s Brent Hutto on Wednesday at FreightWaves’ Small Fleet & Owner-Operator Summit. He talked about the company’s BlackOps division dedicated to fraud. He said, “In down markets … more fraud is in those times because carriers get googly eyes at high rates.” According to Truckstop data, in the fourth quarter of 2022 there was a 400% increase in reports of double brokering and fraud.
The impact of that becomes even clearer in the company’s latest report, which notes that 78% of victims lost time resolving issues, 65% lost money and 24% faced legal implications.
“Our partnership with Highway will significantly strengthen our efforts to combat double-brokering fraud in the freight industry, which we estimate affects $500-700M worth of freight annually.” — Melissa Forman, president at TriumphPay.
Truckstop isn’t the only one fighting back. Earlier this month TriumphPay announced a new partnership with Highway hell-bent on curbing bad actors.
Have you been a victim of load board fraud? Email me your story.
Wyoming named least safe state in the US for truck drivers
Cowboy state — Simplex just released its latest road safety report, with Wyoming coming out on top as the least safe place to drive a semi. Using data from the National Highway Traffic Safety Administration, Simplex measured the percentage of large trucks involved in fatal crashes in 2020. Little-known fact: In the 1880s, Cheyenne was the wealthiest city per capita in the world. What a difference 140 years makes.
Barrier to education: trains
“So when trains aren’t derailing every 2 mins, they’re blocking kids from going from getting an education…we’ve rly got our priorities straight these days” — James Fishback
Crossing guard — The rail is making being born on the wrong side of the tracks a reality for students trying to get to school in Hammond, Indiana. In that community, Norfolk Southern trains can stretch a mile long and across multiple intersections. ProPublica reports, “[We] witnessed dozens of students do the same in Hammond, climbing over, squeezing between and crawling under train cars with ‘Frozen’ and ‘Space Jam’ backpacks.”
Mayor Thomas McDermott Jr. and local school Superintendent Scott E. Miller both claim that their concerns about students climbing over and under tracks have fallen on deaf ears at NS. Miller says that requests for train schedules, so they can plan around blockages, have also been disregarded.
When shown footage of children crawling under trains, Transportation Secretary Pete Buttigieg told ProPublica, “Nobody, can look at a video with a child having to climb over or under a railroad car to get to school and think that everything is OK.” The U.S. Department of Transportation is putting $3 billion into a rail blockage program over the next five years. Let’s hope some of that funding makes it to Hammond.
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WTT Friday
How NASA’s supply chain works — On Friday’s episode of WHAT THE TRUCK?!?, I’m talking to NASA’s Katie Rogers about the logistics of NASA. We’ll learn all about how the agency’s supply chain works both on Earth and up in orbit.
Lucas Systems’ Ken Ramoutar talks about how both a change in culture and tech are reshaping warehouses.
Fleetworthy Solutions’ Mike Precia explains the art of compliance and the importance of a single source of truth.
Plus, news, weirdness and more.
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Freight recession, port report and the art of supply chain
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Don’t be a stranger,
Dooner