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Before Dorian, strong demand lifts spot truckload rates

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This graph shows the four-week trend for van, flatbed and reefer rates. (Courtesy: DAT SOLUTIONS)

PORTLAND, Ore. — Demand for capacity lifted spot truckload freight volumes and rates to monthly highs in the last week of August, said DAT Solutions, which operates the industry’s largest network of load boards. The number of posted van, refrigerated, and flatbed loads from August 26 to Sept. 1 increased 7% compared to the previous week while available capacity dipped 2.4% heading into Labor Day weekend.

National average spot rates, August 2019, include:

  • Van: $1.81 per mile, 3 cents lower than the July average
  • Flatbed: $2.20 per mile, 7 cents lower than July
  • Reefer: $2.15 per mile, 5 cents lower than July

The September rolling average reflects just one day of activity, Sunday, September 1, but shows how much higher spot rates are to start the month compared to August:

  • Van: $2.11 per mile
  • Flatbed: $2.39 per mile
  • Reefer: $2.23 per mile

Van Trends

Van load-to-truck ratios were notably strong and hit 3.0 as a national average on Wednesday, August 28. Van rates tend to rise when the ratio exceeds 2.5, which is where the average settled for the week.

Dorian’s effects on supply chains came late in the week and had little impact on national trendlines during the reporting period. Rates on 73 of DAT’s Top 100 biggest van lanes by volume were higher, 17 lanes declined, and 10 were neutral compared to the previous week.

While every major market east of the Mississippi River reflected stronger volumes last week, Memphis stood out with a 15% gain in available loads and an average outbound rate of $2.15 per mile, up 4 cents.

Reefer Trends

The national reefer load-to-truck ratio rose from 4.4 to 4.8 last week on the strength of apples and other tree harvests in the Pacific Northwest and Upper Midwest. Load-to-truck ratios jumped sharply in the Pendleton market (Yakima, Washington) and hit 23 on Friday, August 30, while Spokane, Washington, which includes Wenatchee, topped 34. The numbers are more stark at the ZIP code level: 988XX — Wenatchee— had 544 loads posted and just five trucks, while 989XX —Yakima—had 851 loads posted and 56 available trucks.

One indication of advance planning for Hurricane Dorian: Lakeland, Florida, outbound reefer volume was up 14% and the average outbound rate jumped 8 cents to $1.39 per mile. Lakeland to Atlanta increased 18 cents to an average of $1.38 per mile.

Key takeaways

  • Spot freight volumes and rates were strong prior to any storm-related disruptions.
  • It’s true that national average spot van rates in August were less than they were in July, but they were higher than both April ($1.80 per mile) and May ($1.79 per mile). Diesel fuel is 12 to 16 cents a gallon less than it was back then (spot rates factor a fuel surcharge calculation into the overall rate). Lower fuel costs are good news, especially for smaller carriers.
  • If you have logistics resources to offer during hurricane recovery efforts, consider the American Logistics Aid Network. ALAN is a volunteer non-profit organization with a web portal where freight brokers, warehouses, and truck fleets can post available resources and aid organizations can post their needs. alanaid.org

DAT Trendlines is a weekly snapshot of month-to-date national average rates from DAT RateView, which provides real-time reports on spot market and contract rates, as well as historical rate and capacity trends. The RateView database is comprised of more than $65 billion in annualized freight payments. DAT load boards average 1.2 million load searches per business day. For the latest spot market loads and rate information, visit dat.com/trendlines and follow @LoadBoards on Twitter.

 

 

 

 

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Schneider now offers rail dray intermodal service

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Expanding its strength of intermodal expertise to include Rail Dray ensures that the carrier is continuing to meet the demands of a changing industry, a Schneider official said. (Courtesy: SCHNEIDER)

GREEN BAY, Wis. — Schneider, a provider of trucking, intermodal and logistics services, has added a new service to its lineup of intermodal solutions. Schneider Rail Dray focuses on the initial and end moves of intermodal transportation, getting freight from shipper to ramp and ramp to receiver — safely and seamlessly.

“Expanding our strength of intermodal expertise to include Rail Dray ensures that we’re continuing to meet the demands of a changing industry,” said Jim Filter, Schneider’s senior vice president and general manager of intermodal. “The new service provides capacity and control to reliably move dray freight without the inconveniences typically associated with rail moves.”

Schneider Rail Dray is optimal for:

  • Railroad providers needing to move shipper freight.
  • Third-party logistics providers lacking driver capacity.
  • Direct shippers using their own intermodal containers.

Filter said with one call, Schneider provides premium support and visibility needed for rail dray freight:

  • Scale: Conducting over 1 million drays a year, Schneider has the scale to expertly dray freight across an entire network.
  • Visibility: Satellite-tracking technology enables real-time visibility of dray freight and early notification of delays.
  • Risk Mitigation: Schneider’s professionally trained, uniformed drivers operate newer company equipment that is maintained to the highest standard to safeguard against delays and minimize safety and regulatory exposure.
  • Optimization: Schneider has the resources and know-how to efficiently optimize an entire dray network.

To learn more about how Schneider Rail Dray avoids costly hang-ups and keeps rail freight moving, visit Schneider.com.

Schneider’s services include regional and long-haul truckload, expedited, dedicated, bulk, intermodal, brokerage, warehousing, supply chain management and port logistics.

 

 

 

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ACT Research says freight markets still weak, data still trending negative

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This chart shows the net orders on a 12-month average versus the build rate. Only recently has the build rate been better than the order average. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — According to ACT Research’s (ACT) latest State of the Industry: Classes 5-8 Report, economic reports over the past month have more often risen above consensus than fallen below it, but it is premature to declare an end to freight market weakness.

“Data points indicating increased economic activity represent the essential first steps in the process of increasing demand to rebalance the heavy freight markets. However, as in any commodity market, it is not just demand, but supply, and until the supply-side of the market is addressed, the disequilibrium story will continue to weigh on freight rates and by extension the heavy vehicle industry,” said Kenny Vieth, ACT Research president and senior analyst. “While the data are starting to suggest ‘less bad,’ reports suggesting recovery are premature, as key freight metrics continues to trend negative in the latest round of data releases.”

Speaking about the Class 8 market, Vieth said that in concert with weak/deteriorating freight volumes and rates, forward-looking demand indicators continue to erode, even as mid and downstream data points remain robust.

“Ultimately, the current situation of weak orders and strong build is unsustainable,” he said.

Regarding the medium duty markets, Vieth said medium-duty demand metrics remain in better balance, but there are signs of modest fraying on weak net orders, relative build strength and excessive inventories.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Navistar to build new Class 6-8 manufacturing plant in San Antonio area

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Navistar’s new manufacturing plant will have the flexibility to build Class 6-8 vehicles, complementing the company’s existing assembly manufacturing footprint, which includes truck assembly plants in Springfield, Ohio, and Escobedo, Mexico. The plant will have the flexibility to build Class 6-8 trucks. Pictured is the International LT Series farm model. (Courtesy: NAVISTAR)

LISLE, Ill. — Navistar, a maker of commercial trucks and buses, said Thursday it will be making a capital investment of more than $250 million to build a new manufacturing facility in Texas.

The investment, which is contingent on finalization of various incentive packages, will bring approximately 600 jobs to the San Antonio area.

“Over the last five years, Navistar has made significant investments to improve our position in the market,” said Troy Clarke, Navistar chairman, president and chief executive officer. “This investment will create a benchmark assembly facility to improve quality, lower costs and provide capacity to support anticipated industry growth, as well as market share gains.”

The new manufacturing plant will have the flexibility to build Class 6-8 vehicles, complementing Navistar’s existing assembly manufacturing footprint, which includes truck assembly plants in Springfield, Ohio, and Escobedo, Mexico.

Navistar’s trucks are manufactured under the brand name International.

The announcement of the new Texas plant was part of Navistar’s Investor Day, where company executives presented their 2020-24 strategy “Navistar 4.0” that includes a plan to increase its EBITA margins to 12%.

Clarke said “Navistar 4.0” includes the following elements:

  • Improve EBITDA margins to 10% by 2022 and 12% by 2024.
  • Grow market share and become the number one choice of the customer through new product offerings and customer segmentation.
  • Implement a single platform strategy to optimize use of R&D resources and commonization of parts and tooling.
  • Increase modular design resulting in customer benefits, speed to market and lower product costs.
  • Build a new truck assembly facility in San Antonio, Texas, reducing logistics and manufacturing costs.
  • Use the TRATON alliance to provide significant procurement savings, more efficient research and development spend and new integrated power train offerings for customers.
  • Grow aftersales revenues with an expanding distribution network, growing private label sales and e-commerce initiatives.
  • Improve financial results allowing the company to invest in growth initiatives, de-lever the balance sheet and fully fund its defined benefit pension plans by 2025.

Building on the major advances achieved in the last five years, including gains from an alliance with TRATON Group, Navistar 4.0 lays out a clear path for the company’s ongoing transformation, Clarke said.

“Navistar is committed to building on the gains of the past five years to improve financial returns to shareholders,” he said. “Navistar 4.0 establishes a clear road map to grow EBITDA margins to 12%, while also winning in the marketplace.”

The new Texas investment builds on Navistar’s recently announced plans to invest $125 million in the Huntsville, Alabama, engine plant to produce next-generation, big-bore powertrains developed as part of the alliance with TRATON, a subsidiary of Volkswagen AG and a global commercial vehicle manufacturer worldwide.

The Texas site is located on a critical corridor along Interstate 35, which links Navistar’s southern United States and Mexico supply bases, allowing for significant logistic improvements, resulting in lower cost and enhanced profitability.

“This investment by Navistar is paramount to Texas’ success in growing our diverse and highly skilled manufacturing workforce,” said Texas Gov. Greg Abbott. “The Lone Star State is the new frontier in innovation, and I am confident that this partnership will usher in even greater economic prosperity for our state.”

“We are so proud to have a company like Navistar, a leader in vehicle innovation, in San Antonio,” said San Antonio Mayor Ron Nirenberg. “It shows that our strategy to grow our advanced manufacturing sector is working.”

“The county has, for many years, been touting the strength of our Texas-Mexico region as a platform for vehicle production,” said Judge Nelson Wolff. “Navistar’s decision to locate their newest facility here is just the latest affirmation that our community is uniquely situated to host world-class companies in advanced manufacturing industries. We are thrilled to have them in Bexar County.”

Navistar plans to break ground on the property later this year and anticipates production to begin approximately 24 months later.

In its presentation Thursday, Navistar also provided industry and company financial guidance for 2020, including:

  • Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be between 335,000 and 365,000 units.
  • Revenues are expected to be between $10.0 billion and $10.5 billion.
  • Adjusted EBITDA is expected to be $775 million to $825 million.
  • Manufacturing free cash flow is expected to be break-even excluding changes in working capital.

For more information, visit www.navistar.com.

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