Good day,
On last week’s second quarter earnings call, executives from Hub Group said that they expected a very strong peak shipping season this fall, that it would arrive early, and have a long tail. The shape of the peak surge has been evolving in recent years because of e-commerce. Hub Group executives said that five years ago, intermodal business out of the West Coast ports would die off after Thanksgiving, but because consumers are demanding shorter and shorter delivery times, Asian shippers move high volumes into Los Angeles and Long Beach through the whole month of December.
Did you know?
Container rates on the Freightos Baltic Index for the China – US West Coast lane jumped 18% last week, to $1,901 per box.
Quotable:
“This Emergency Declaration provides for regulatory relief for commercial motor vehicle operations while providing direct assistance supporting emergency relief efforts transporting supplies, equipment, fuel and persons into and from the Affected States or providing other assistance in the form of emergency services during the emergency in the Affected States from extreme dry heat and wildfires.”
-the Federal Motor Carrier Safety Administration, waiving HOS regs for trucks providing relief for the fires in western states
In other news:
Chief financial officer John Hardig to quit XPO Logistics
The company said Hardig had taken the decision to spend more time with his family. Chief executive Bradley Jacobs expressed “immense gratitude” for the work Hardig had undertaken, helping the company reach annual revenues of $15B. (The LoadStar)
Prices rising on China-US routes says Freightos report
July saw several price rises on the China-US lanes: start of month and mid-month General Rate Increases (GRI), emergency bunker surcharges and peak season surcharges. And, somewhat surprisingly, rates have held. (Hellenic Shipping News)
VIDEO: Trucking SpaceX rockets
Oversize loads indeed! (CDL Life)
Canadian National publishes ‘Grain Plan’ for next crop year
CN has posted on its website a plan for servicing the 2018-19 grain crop. The report is what the Class I is calling a first annual public Grain Plan, developed after “extensive consultation with key stakeholders,” according to the website. (Progressive Railroading)
Waymo’s self-driving cars are near: meet the teen who rides one every day
For the past year, Kyla Jackson has been one of the only teenagers in the world who gets a ride to high school from a robot. When she’s ready to start her day, Kyla summons a self-driving car using the Waymo app on her phone. (Bloomberg)
Final Thoughts:
Over the weekend, we wrote about why Wall Street was wrong about trucking. If you recall, immediately following Werner Enterprise’s earnings beat, the carrier’s stock tanked because equities traders thought that the freight market was peaking for the year. At some level, it makes sense to take profits when a stock is trading at inflated multiples. But historical data over the past five years shows a fall peak season spike exceeding the June highs, and we expect the back half of 2018 to be an exceptionally strong rate environment. We’ve seen nothing in the macroeconomic data to indicate a falling off of demand, and the capacity situation is largely unchanged, despite the record number of new trucks ordered in July. Due to OEM backlogs, almost none of those trucks will be delivered until 2019.
Hammer down everyone!
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