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Truck orders still ‘hot,’ volume could continue into next year, analysts say

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Two organizations that report truck orders have said the latest data indicates that the new truck market is still strong.

ACT Research said its preliminary North America Class 8 net order data show the industry booked 35,600 units in May.

FTR reports that preliminary North American Class 8 orders for May continue to show exceptional strength, coming in at 35,200 units.

“Preliminary net order data indicate that demand for Class 8 trucks continued in robust fashion in May,” said Kenny Vieth, ACT’s president and senior analyst. “During the month, North American Class 8 net orders rose 2.5 percent from April, and May’s order volume more than doubled the year-ago take, rising 110 percent from last May.

“Seasonal adjustment begins to inflect positively this month. When adjusted, May’s Class 8 net order volume rises to 39,800 units.”

Seasonally adjusted and annualized, Class 8 orders have been booked at a 475,000 unit rate through year-to-date May.

FTR said the 35,200 units represented the third highest May on record.

Orders have averaged morethan 40,000 units for the past six months, volumes never seen before in the industry.

FTR said Class 8 orders exceeded expectations again as fleets order in huge numbers attempting to keep up with burgeoning freight demand. North American Class 8 orders for the past 12 months have now totaled 386,000 units.

“This is the tightest capacity crunch ever. Long-time veterans in this industry are saying this is the best freight market they have ever seen. Fleets cannot add capacity fast enough and as long as the economy and manufacturing are going great, this capacity crisis will continue,” said Don Ake FTR’s vice president of commercial vehicles. “There is a shortage of truck parts and components, so OEMs have been slow to deliver. This just exacerbates an already bad situation. Fleets are now grabbing every available build slot, hoping to get some more trucks by the end of the year. Some orders now are even spilling into the first quarter of next year. It is a red-hot market.”

In a related development, CFI, a North American full-truckload carrier and subsidiary of TFI International Inc., said it has increased its 2018 fleet purchase plan from 500 to 600 new Kenworth T680 over-the-road long-haul tractors. Delivery of the additional 100 tractors is expected by year end.

The additional new tractors represent the latest investment in a two-year modernization program, begun in 2017, that by the end of this year, will have replaced 65 percent of CFI’s North American power fleet with the new Kenworth tractors. CFI operates 1,897 company-owned power units and 7,365 53-foot dry-van trailers, and employs about 350 owner-operators.

“This investment is good news for our customers as well as our professional drivers,” said Greg Orr, CFI’s president. “We are accelerating our program to refresh and modernize our fleet with one of the most advanced power units on the market, which features excellent fuel economy and the latest safety systems.”

Orr noted that drivers will enjoy operating new equipment that has many of the most-requested driver comfort features available, as well as a reputation for reliability, minimizing downtime and maximizing driver miles and pay. For the customer, the new assets support CFI’s mission to provide superior service that is ultimately safe and reliable, consistently delivering shipments on-time, he said.

The company expects to begin taking delivery of the new tractors this summer and will concurrently retire older units as new ones enter the fleet through the end of the year.

 

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The Trucker Newspaper – February 15, 2020 – Digital Edition

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Fleet Focus: ELDs push drivers to find ways to remain ‘productive’

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trucks and cars in traffic
Prior to ELDs, two hours stuck in traffic went down as a half-hour driving and an hour-and-a-half break at the truck stop, or the start time was simply adjusted to show beginning the trip much later. (The Trucker File Photo)

The crescendo has passed, but the symphony of protest against electronic logging devices (ELDs) is far from over. Despite the objections and barring a legislative turnaround of epic proportions, ELDs are here to stay.

Whether the claims of enhanced safety provided by ELDs prove true, and so far they have not, carriers have a vital interest in protection against the “nuclear” verdicts being handed down in courtrooms. With paper logs, they had less control over the driver’s actions. Hours of Service infractions and falsifications that could potentially seal a verdict against the carrier might not be discovered until weeks afterward, when the logs were sent in. And, if the driver was good enough at “creative” logging, those infractions might not be discovered at all.

Full disclosure: during a driving career, the writer may or may not be responsible for years of near-perfect duty status records that may or may not have been routinely (and beautifully) falsified.

For most drivers, and especially owner-operators, it was important to “preserve” as many driving hours as possible in order to be productive (and profitable). So, two hours stuck in traffic went down as a half-hour driving and an hour-and-a-half break at the truck stop, or, the start time was simply adjusted to show beginning the trip much later. Recorded driving hours were calculated by dividing miles traveled by a reasonable “average” speed, usually five or so miles below the posted speed limit — but only when the result was fewer hours than actually spent driving that distance. Daily hours didn’t start until the truck was nearly loaded, foregoing the short drive from the truck stop and hours of waiting.

ELDs have greatly reduced infractions and falsifications, and made it easier for
carriers to identify those that still occur much sooner. Some will say that ELDs can still be falsified, but it’s also easier for both carriers and law enforcement to monitor.

What has happened is that ELDs have brought to the surface something that drivers have known for decades — industry abuse of the driver’s working time has been rampant and mostly ignored. It’s amazing how many carriers suddenly became concerned about driver “productivity” when ELDs made it more difficult for drivers to “hide” non-productive hours. Dispatchers are no longer able to give wink-and-nod direction to “just do the best you can,” trusting
the driver to make the paper logs look right.

With ELDs in place, drivers and owner-operators need to find other ways to remain productive. That action might include becoming much more assertive when it comes to control of those available hours.

Refusing dispatch, for example, is a legal descriptor of being an independent owner or contractor. Drivers should consider more than just miles and compensation rates when a load is offered. For example, loads traveling shorter distances are often less productive, especially when there’s a pickup and a delivery on the same day. The rate per mile offered should be greater than for longer loads.

Potential traffic should be considered, too. A pickup scheduled for 8 a.m. in the center of a large metropolitan area virtually guarantees waiting in traffic congestion, whereas a pickup in a suburb, or in a smaller city, might get the driver in and out much faster.

Customers who routinely take excessive amounts of time to load or unload can and should be avoided. Even if the customer or carrier pays for detention time, the amount is often far less than the driver earns during hours spent driving down the highway.

In a world where compensation is usually calculated by the mile, drivers are often unaware of how their settlements equate to hourly pay. They shouldn’t be. Owners should keep a record of the total time spent on a load as well as compensation received. A load with 10 hours of driving that is loaded in an hour and unloaded in an hour means 12 hours invested. Make it four hours to load and four more to unload, and the time investment becomes 20 hours. Divide the revenue received by the time spent (12 hours or 20) and the resulting earnings per hour may differ greatly. The answer may be good to know the next time that load is offered.

Managing a trucking business, even a one-truck outfit, is often a series of trade-offs. Owners must sometimes accept a not-so-good load to get in position for a better one or to get to needed maintenance (or a visit home). Even so, every load offered should be examined for its productivity potential.

The impact of ELDs on productivity is real. Owners of small trucking businesses can minimize that impact by considering potential productivity on every load offered and by exercising the power of NO when necessary.

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$225 million purchase enables C.H. Robinson to acquire Prime Distribution Services

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CH Robinson acquires Prime from Roadrunner
Roadrunner Transportation Services has sold its subsidiary, Prime Distribution, to C.H. Robinson for $225 million

Late last month, C.H. Robinson Worldwide Inc. announced its acquisition of the Prime Distribution Services business from Roadrunner Transportation Systems Inc. C.H. Robinson paid $225 million to acquire the carrier and incorporate it into its distribution network.

Prime, of Plainfield, Ind., offers retail consolidation service, including distribution, fulfillment and inventory management to approximately 140 customers. The company was founded in 1990 and manages five fulfillment centers across the country, including 270 employees and 2.6 million square feet of distribution facilities. Prime’s 2019 revenue was $108.7 million.

C.H. Robinson CEO Bob Biesterfeld stated in a press release, “Prime Distribution Services is a high-quality growth company that brings scale and value-added warehouse capabilities to our retail consolidation platform, adding to our global suite of services.”

From Roadrunner Transportation System’s perspective, the sale of Prime will allow the company to move forward with financial confidence. “The divestiture of Prime Distribution Services is a unique opportunity for us to significantly improve our balance sheet,” Roadrunner CEO Curt Stoelting said. “We believe we are well-positioned to execute our strategy of simplifying our portfolio by investing in our remaining Ascent Global Logistics, Active On-Demand and asset-light less-than-truckload segments.”

C.H. Robinson, based in Eden Prairie, Minn., has over $20 billion of freight under its management and processes 18 million shipments annually.

The sale is not Roadrunner’s only effort to change its business model in light of a 2017 accounting scandal and weakening freight demand in 2019. In December, Roadrunner sold its flatbed business unit for $30 million in cash to an undisclosed buyer. A month prior, the company announced the sale of its intermodal business to Universal Logistics Holdings for $51.25 million in cash.

Biesterfeld, in his comments on the acquisition, said, “Prime has an outstanding track record of success, a talented and experienced team and a focus on delivering great value to its customers and carriers.” The acquisition will integrate Prime into C.H. Robinson’s North American Surface Transportation division following the sale’s closing, expected by March 31.

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