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Price of gallon of on-highway diesel declines one-half a penny



The average price nationally is 27.7 cents a gallon lower than the comparable week last year. (The Trucker file photo)

WASHINGTON — The average on-highway price of a gallon of diesel declined half a cent to $2.971 for the week ending September 9, according to the Energy Information Administration of the Department of Energy.

It marked the ninth consecutive week the price has declined, according to EIA data.

The largest decline was 1.7 cents in the Central Atlantic states (New York, Pennsylvania, Maryland, Delaware and New Jersey) followed by a one cent a gallon drop in the Midwest (North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Missouri, Iowa, Minnesota, Wisconsin, Illinois, Tennessee, Kentucky, Ohio, Indiana and Michigan).

Only the Rocky Mountain States (Colorado, Utah, Wyoming, Idaho and Montana) at nine-tenths of a cent and the Gulf Coast (New Mexico, Texas, Arkansas, Louisiana, Mississippi and Alabama) at half a cent posted an increase.

The average price nationally is 27.7 cents a gallon lower than the comparable week last year.

For complete prices by region for the past three weeks, click here.


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Freight Transportation Service Index up 1.3% in October, BTS says



From October 2018 to October 2019, the Freight Transportation Services Index rose 0.5% compared to a rise of 6.8% from October 2017 to October 2018. (The Trucker file photo)

WASHINGTON — The Freight Transportation Services Index (TSI) that is based on the amount of freight carried by the for-hire transportation industry, rose 1.3% in October from September, up after a one-month decline, according to the Department of Transportation’s Bureau of Transportation Statistics’ (BTS).

From October 2018 to October 2019, the index rose 0.5% compared to a rise of 6.8% from October 2017 to October 2018.

The level of for-hire freight shipments in October at 138.6 was exceeded by three previous months and was 1% below the all-time high level of 140.0 in August 2019. Records date back to 2000.

The September index was revised to 136.8 from 136.6 in last month’s release.  Monthly numbers for June through August were revised down slightly.

The Freight TSI measures the month-to-month changes in for-hire freight shipments by mode of transportation in tons and ton-miles, which are combined into one index. The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight. The TSI is seasonally adjusted to remove regular seasons from month-to-month comparisons.

The October TSI was broad based with increases in trucking, water, pipeline and air freight. Both rail carloads and rail intermodal declined.

The TSI increase took place against a background of mixed results for other indicators. The Federal Reserve Board Industrial Production Index declined in October, reflecting decreases in all major industry groups. Personal income increased by less than 0.1%, while housing starts increased by 3.8%. The Institute for Supply Management Manufacturing index increased 0.5 points to 48.3, indicating contraction in the manufacturing sector but not as much contraction as in September.

The Freight Index’s 1.3% increase in October was the largest one-month Freight TSI increase since September 2018. Following a decrease of 2.3% in October, TSI was 1.0% below its record high of 140.0 in August. However, it remained above any level it had reached before the high of November 2018 and in all but one month prior to January 2019. The Freight TSI rose 15.8% from 120 in March 2016 to a level of 139.0 in November 2018, but has been essentially stable (declining by 0.3 %) since then. The October 2019 index was 46.2% above the April 2009 low during the most recent recession.

For-hire freight shipments measured by the index were up 1.9% in October compared to the end of 2018.

As for the long-term trend, for-hire freight shipments are up 13.3% in the five years from October 2014 and are up 40.4% in the 10 years from October 2009.

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ACT Research: Likelihood of heavy vehicle market recovery in 2020 tempered



ACT Research President and Senior Analyst Kenny Vieth said broadly, there are three components to the forecast cuts for 2020 and 2021: Supply, demand, and timing. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. —  According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, expectations for the Class 8 and trailer production volumes have been trimmed for 2020, and expectations of a recovery starting in 2021 have been tempered.

Meanwhile, ACT’s December installment of the ACT Freight Forecast, U.S. Rate and Volume OUTLOOK report covering the truckload, intermodal, LTL and last mile sectors came with this headline: “Freight forecast: Lowering truckload spot rate forecasts on freight demand; what could drive rates up in 2020?”

As for the tempered Class 8 outlook, ACT President and Senior Analyst Kenny Vieth pointed to three factors.

“Broadly, there are three components to the forecast cuts for 2020 and 2021: Supply, demand, and timing,” Vieth said. “Some, like overcapacity, have been on the radar for a long time. Others, like the growing weakness in manufacturing and the broader economy, have come on slowly and inexorably over several months. The past six months have been marked by a continued loss of traction in manufacturing. Despite the GM-impacted payroll increase in November, most recent evidence from the sector suggests that recovery is likely to come later, rather than sooner.”

The North American Commercial Vehicle OUTLOOK is a robust report that forecasts the future of the industry, looking at the next 1-5 years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides a complete overview of the North American markets, as well as takes a deep dive into relevant, current market activity to highlight orders, production, and backlogs, shedding light on the forecast. Information included in this report covers forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.

As for the freight forecast, Tim Denoyer, ACT Research’s vice president and senior analyst, said, “This is the largest year-over-year drop in container imports since the Great Recession, aside from holiday timing. While partly because of the comparison against pre-tariff inventory building last year, we see evidence that trade issues will continue to drag the freight cycle through the mud. We’ve been forecasting a lengthy freight recession, but October imports, down 8% year-over-year, and fourth quarter rail volumes, down 7% year-over-year, are missing low expectations. In addition to a turn for the worse in our Spot Leading Indicator, this led us to modestly lower our spot rate forecasts for the first half of 2020.”

ACT Research also lowered Class 8 tractor sales forecasts today, supporting the beginning of the bottoming process for truckload rates, and this month’s report provides analysis of the factors that could pull forward the eventual rate recovery, from both a spot and a contract perspective.

“We expect capacity to rebalance over the course of 2020, but we caution not to jump to the conclusion that capacity is tightening because of carrier failures,” Denover said. “While our thoughts go out to the affected employees, even the largest bankruptcy in truckload history this week accounts for just 0.2% of the active fleet, or about 3% of the Class 8 tractor capacity that was added over the past year, and the equipment will be remarketed.”

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California AB5 rule could spread to other states, executive warns



California AB5 denies California-based owner operators the ability to work as independent self-employed drivers who profit from their own vehicles and set their own schedules. (The Trucker file photo)

ST. PETERSBURG, Fla. — The CEO of a company that designs and manufactures virtual simulators for driver training says to watch out — other states will likely follow California’s lead and pass legislation that would limit companies’ ability to classify workers as independent contractors rather than employees.

For the trucking industry, said John Kearney, CEO of Advanced Training Systems, that means that the law, known as AB5, denies California-based owner operators the ability to work as independent self-employed drivers who profit from their own vehicles and set their own schedules.

“This legislation is well-meaning,” Kearney said. “It addresses some real issues in today’s labor economy, but applying it to the trucking industry, however, would be neither useful nor helpful.”

The law takes effect January 1, 2020.

Other states, Kearney warned, are also considering measures aimed at worker reclassification.

A bill pending in the New Jersey legislature would reclassify virtually all workers in the state as regular employees.

A coalition of labor groups is pursuing similar legislation in New York, and California’s example could encourage the revival of failed attempts in Washington State and Oregon. New York City adopted a minimum wage for ride-hail drivers working for companies like Lyft and Uber but did not classify them as employees.

The new California law specifies an “ABC” test to determine a worker’s status. Workers will be classified as employees if they:

(A) Perform tasks under a company’s control;

(B) Do something integral to the company’s business;

(C) Do not operate an independent business in that trade;

As such, Kearney said, he or she is entitled to the area’s prevailing minimum wage, worker’s compensation, unemployment insurance, expense reimbursement, paid sick leave and paid family leave. In addition, the employer is required to pay half of the employee’s Social Security tax.

The California Trucking Association and two California independent owner-operator truck drivers Tuesday filed an amended complaint with the U.S. Southern District Court seeking declaratory and injunctive relief against AB5, which was passed by the California Legislature and signed into law on September 11 by Gov. Gavin Newsom.

The trucking industry, Kearney said, is structured in such a way as to make the ABC test a poor fit. The U.S. has approximately 3.5 million truck drivers, the vast majority of whom are local and short-haul drivers already classified as employees.

There are also, however, approximately 350,000 independent business persons who own and operate their own trucks and whose businesses are based on contracting — usually with trucking companies — to make long-haul, full-truckload runs.

As plaintiffs in the AB5 case have pointed out, about 70,000 of these people are based in California and have made it clear that they do not want their businesses disrupted, Kearney said. He said the California law, if applied to truck drivers, may be in violation of the Federal Aviation Administration Authorization Act of 1994, which bars states from enacting or enforcing laws affecting the transportation of property by motor carrier.

“Trucking,” says Kearney, “is essential to the U.S. economy — it’s how we move over 70 percent of all goods sold. The industry is currently struggling with a severe shortage of drivers, especially drivers willing and able to make the long-haul runs that keep American commerce functioning. To attract and retain the new drivers we need, the industry is changing rapidly. Issues of employment status and compensation are of course arising as part of these changes, and are being addressed; shotgun legislation like California’s AB5 would simply be a distraction from that effort. What trucking needs today are solutions, not more problems.”


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