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Strong freight markets drive commercial vehicle build rates, forecasts higher, says ACT

The Trucker News Staff - January 15, 2021

COLUMBUS, Ind. — According to ACT Research’s latest release of the North American Commercial Vehicle Outlook, greater-than-expected build rates in November (the latest available data) continued to apply upward pressure to the forecasts, resulting in an across-the-board rise in ACT analysts’ commercial vehicle demand expectations. “If you don’t work in a consumer facing economic sector, there is much to like about the current U.S. economic outlook,” said Tim Denoyer, vice president and senior analyst for ACT. “In a nutshell, the sectors that are propelling the economy forward are those with the greatest contribution to freight, and many of those sectors are just starting to ramp into multiyear growth cycles.” ACT’s report forecasts the future of the industry, looking at the next one to five 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, and takes a deep dive into relevant, current market activity to highlight orders, production and backlogs. Information included in the report covers forecasts and current market conditions for medium- and heavy-duty trucks/tractors and trailers; the macroeconomies of the U.S., Canada and Mexico; publicly traded carrier information; oil and fuel price impacts; freight and intermodal considerations; and regulatory environment impacts. “A favorite ACT axiom is, ‘Fleets buy equipment when they make money,’ and we think truckers will generate record profits in 2021,” Denoyer said. “That said, the list of known unknown risks has grown longer recently, including the post-holiday rise in COVID cases, a slower-than-expected roll out of the vaccine, supply chain shortages in steel and microchips, and even the peaceful transfer of power.”

Spot truckload activity starts 2021 at quick pace, according to DAT

The Trucker News Staff - January 13, 2021

BEAVERTON, Ore. — Spot truckload activity during the first full week of 2021 picked up where it left off at the end of 2020, with big increases in load and truck posts as shippers worked through freight that was backlogged during the holidays, according to DAT Freight & Analytics, which operates the industry’s largest load board network and freight data analytics service. Compared to the previous week, the number of freight postings during the week ending Jan. 10 increased 46% and available trucks on DAT load boards jumped 59%. Load-to-truck ratios dipped as a result, and spot pricing fell slightly compared to the previous week, although national average rates are considerably higher than December averages. National Average Rates, January Van: $2.53 per mile, 7 cents higher than the December average. Flatbed: $2.48 per mile, 1 cent higher than December. Refrigerated: $2.79 per mile, 11 cents higher than December. These are national average spot rates for the month through Jan. 10; averages are based on actual transactions negotiated between the carrier and the broker or shipper. Trendlines Van volumes swing higher to start the year: The number of loads moved on DAT’s Top 100 van lanes by volume jumped 16% the week ending Jan. 10 compared to the previous week on the strength of retail restocking and ecommerce. The average spot truckload rate fell on 59 of those 100 lanes, was neutral on 18 lanes and increased on 23 lanes. The average outbound spot van rate declined in major West Coast markets, particularly in California, where port congestion continues, and load availability has fallen dramatically compared to four weeks ago: Los Angeles: $3.13 a mile, down 14 cents on a 4% increase in volume compared to the previous week. Stockton, California: $2.63 a mile, down 4 cents on a 16% increase in volume. Seattle: $2.05 a mile, down 6 cents on a 4.5% increase in volume. Shippers have been diverting containerized volume from southern California markets and Gulf Coast ports have been the beneficiaries. Houston container volumes are up 28% year over year. Produce markets start to grow: Nationally, the average refrigerated load-to-truck ratio dropped from 15.6 to 12.3 the week ending Jan. 10 as food shipments slowed after post-holiday restocking. The number of loads moved on DAT’s top 72 reefer lanes by volume fell 10.4% week over week and is down 20.4% over the last four weeks. The average rate was higher on 48 of those lanes, however, compared to the previous week. The top-risers were seasonal produce lanes as harvests continue in Arizona and California and imports hit port markets in the Northeast and Mexican border: Tucson, Arizona, to Chicago: $3.02 a mile, up 46 cents. Tucson, Arizona, to Dallas: $3.32 a mile, up 43 cents. Elizabeth, New Jersey, to Chicago: $2.24 a mile, up 20 cents. McAllen, Texas, to Elizabeth, New Jersey: $3.57 a mile, up 28 cents. Flatbed demand remains strong: The national average flatbed load-to-truck ratio declined from 52.7 to 50.3 during the same week, well ahead of the monthly average of 40.2 in December and 13.3 in December 2019. Pricing on DAT’s top 78 flatbed lanes was higher on 27 lanes, lower on 21 lanes, and neutral on 30 lanes. Volume on these lanes fell 7.8% compared to the previous week. The flatbed market experienced a boost from better-than-expected manufacturing data, with the U.S. manufacturing index rising slightly in December. National average rates are derived from DAT RateView.

Atlanta tops DAT’s list of Top 10 markets for spot truckload freight in 2020

The Trucker News Staff - January 12, 2021

BEAVERTON, Ore. — Atlanta was the hottest place to find spot van and refrigerated truckload freight in 2020, according to DAT Freight & Analytics, which operates the largest electronic marketplace for spot truckload freight. A spot load is transactional freight not under contract that a shipper or broker makes available on the DAT network of load boards. Atlanta topped the list as the market with the most available spot van and refrigerated loads, while Houston was the No. 1 market for flatbed freight posts. The rankings are based on an analysis of more than 126 million freight matches and a database of $126 billion in transactions on the DAT network last year. Because spot freight is unscheduled and not under contract, it is seen as a dynamic indicator of changes in the economy. The COVID-19 pandemic led to an explosion of spot market activity in 2020. In a normal year, 12% to 15% of all truckload shipments are transacted on the spot market. In 2020, that figure was nearly 23% as spot rates climbed to all-time highs. Below are the top 10 markets for outbound truckload freight by equipment type in 2020. These calculations are based on spot market truckload shipments with lengths of haul of 250 miles or more. Van markets Atlanta Dallas Ontario, California Houston Los Angeles Columbus, Ohio Charlotte, North Carolina Memphis, Tennessee Chicago Joliet, Illinois Refrigerated markets Atlanta Fresno, California Ontario, California San Francisco Philadelphia Los Angeles Dallas Joliet, Illinois Elizabeth, New Jersey Chicago Flatbed markets Houston Cleveland Dallas Fort Worth, Texas Atlanta Los Angeles Pittsburgh Oklahoma City Chicago Memphis, Tennessee

Freight levels and pricing continue to climb, but hazards exist

Cliff Abbott - January 11, 2021

November freight levels remained strong as 2020 entered its final month. The American Trucking Associations (ATA) reported that its For-Hire Trucking Index increased 3.7% in November, earning back some of the 5% loss in October. The November index of 112.2 was 3.8% lower than November 2019, but was strong, nonetheless. “The 2020 seesaw pattern continued in November, as typical seasonality is not holding this year,” explained Bob Costello, chief economist for ATA. “It was a nice gain, but the rebound was not enough to make up for October’s drop.” ATA’s numbers are compiled from data submitted by members of the organization, which tend to be larger carriers with a high percentage of contract freight from manufacturing customers. In an economy where shipments of retail goods have been higher than normal while manufactured goods haven’t fully recovered, carriers with a large percentage of manufacturing customers can experience sporadic freight levels. The Cass Freight Index for shipments, which tracks shipments in multiple modes of transportation, declined 2.2% in November from its October level. Compared to November 2019 however, shipments increased by 2.7%. The Cass Index includes shipments by rail, pipeline, ship and barge, trucking and other modes. In a statement announcing the decline, Cass noted that the November decline “followed five consecutive months of strong recovery averaging 5.0% sequential improvement (seasonally adjusted), and is likely due to the worsening pandemic numbers impacting the trajectory of the recovery in November.” Rising COVID-19 numbers might impact some shipping segments more than others. While people are quarantined at home, they can still be ordering retail goods online. The Cass statement noted that shipments in the less-than-truckload (LTL) sector increased for three consecutive months, including a 6.0% increase in November compared to November of 2019. Spot freight rates, which are more volatile than contract rates, tend to react quickly to market changes. Spot rates have been on the rise for months and set new records in November. Van rates rose to an average of $2.46 per mile, while flatbed rates averaged $2.47. Rates for refrigerated freight dropped a penny from October’s high, averaging $2.68 per mile. That’s more likely a seasonal impact, since refrigerated rates often rise and fall with the availability of fresh produce. Overall, spot rates continued strong into December, and both spot and contract rates are expected to strengthen into the new year. This time, however, there are more variables than usually faced by the industry. One of the largest variables is the COVID-19 pandemic. As November drew to a close, record numbers of positive COVID-19 tests were being reported, hospitals reported overcrowding, and pundits warned of still larger numbers of infections to come. At the same time, vaccinations became available in December, with medical personnel and first responders among the first to receive shots. It will undoubtedly take months to distribute the vaccine to everyone — and many people have expressed resistance to being vaccinated. The question of when the country will achieve “herd immunity” is up for debate, and scientists disagree on the percentage of the population that must be vaccinated to stop the virus. In the meantime, positive COVID-19 cases continue growing. President-elect Joe Biden has indicated that federally mandated restrictions, including a mask mandate, could be in store once he takes office Jan. 20. It may be deemed necessary to shut the economy down again while the vaccine that would allow reopening is being distributed. Another issue affecting freight levels is inventory. According to a Jan. 4 blog post by FTR’s Steve Graham, increases in sales have brought business inventories down, creating a need for more production. That’s good for trucking — but manufacturers that have been closed or slowed due to COVID-19 restrictions can’t produce at normal levels. Then there’s the capacity issue, exacerbated by a driver shortage. Currently, the amount of available freight is greater than the number of trucks available to haul it, causing freight rates to rise. Carriers are responding by purchasing more trucks, but finding drivers for those trucks is tougher than ever. A number of CDL schools have been closed or have downsized due to the pandemic, cutting back on the number of drivers who are entering the market. At the same time, experienced drivers who were laid off or furloughed during the pandemic aren’t coming back as planned; many of them have retired or moved to other occupations, including driving for local delivery services. The Federal Motor Carrier Safety Administration’s (FMCSA) Drug and Alcohol Clearinghouse, which became effective in January 2020, has resulted in the loss of thousands of drivers who have refused to complete a return-to-work program after testing positive or refusing to test. The FMCSA’s current consideration of allowing hair-follicle testing for drug use, pushed by trucking organizations, will undoubtedly increase the driver fallout. The legalization of marijuana in a growing number of jurisdictions is becoming the “elephant” in the drug-testing room as drivers question why the use of a legal product during their off-duty hours should be a condition of their employment. While economic forecasts for the trucking industry in 2021 have generally been favorable, there are enough potential negatives to impact the narrative. Stay tuned. 8

Canada’s Bison Transport under new ownership, but no changes to operations expected

The Trucker News Staff - January 8, 2021

WINNIPEG, Manitoba — Bison Transport Inc., one of Canada’s largest trucking companies, was acquired by James Richardson & Sons Limited (JRSL) on January 1. The acquisition includes Bison Transport Inc. and all of its affiliated companies. Bison is a Winnipeg-headquartered transportation company established in 1969 by Duncan M. Jessiman, which has grown to more than 3,700 employees and contractors operating a fleet of 2,100 tractors and 6,000 trailers throughout North America. Together with its affiliated companies, H.O. Wolding, Searcy Trucking and Britton Transport, Bison services a wide variety of multinational, national and local customers. “We are excited about the opportunity to acquire Bison, which has an outstanding reputation for customer service, dependability, employee relations and safety built over the past 51 years,” said Hartley T. Richardson, president and CEO of James Richardson & Sons, Limited. “We have been a long-time admirer of Bison Transport and we are very thankful to the Jessiman family for entrusting the future ownership of Bison to our family. Bison and JRSL share many of the same values and we are pleased that Bison’s senior management team have committed to continue to lead Bison and ensure that it continues to adhere to the same principles and standards of excellence and safety as it has under the ownership of Wescan and the Jessiman family.” Peter Jessiman, president and CEO of the Jessiman family’s holding company, Wescan Capital Inc., added that “Bison and its employees have been like members of our family since my father established the company in 1969. So, while we have mixed emotions, we are thrilled that we have found a buyer for Bison that shares our values of excellence and that cares for our employees and customers as much as we have over the past 51 years. I have no doubt whatsoever that Bison will continue to enjoy tremendous success in the future as part of the JRSL family.” The transfer of ownership from Wescan to JRSL will not result in any changes to Bison’s operations, nor to the well-respected Bison brand, and the company will continue to be headquartered in Winnipeg. “Today marks my 30th anniversary at Bison Transport,” said Rob Penner, Bison president and CEO. “As I take a moment to reflect, I take great pride in what we have accomplished here as a team on behalf of the Jessiman family. Having said that, I think that takes a second seat to the renewed energy and excitement I have for our future as part of the James Richardson & Sons group of companies. I feel great that the business I have had a part in building has secured its future with such a great organization.” Don Streuber, Bison’s Executive Chairman, describes the transaction as “a made in Manitoba, family-to-family transition of a great Canadian success story that has many future chapters yet to be written.” Last year, Bison Transport was recognized as one of the Safest Fleets by The Truckload Carriers Association for the tenth consecutive year. Financial details of the transaction will not be made public.

Tax-time tips for maximum deductions

Cliff Abbott - January 8, 2021

Everyone loves a tax deduction, and billions of dollars are spent each year making sure those deductions are maximized. When you own your own business, however, tax deductions can have a huge impact on your profit and loss statement. When you become an owner-operator, you’ve gone into business. You’ll pay income tax on the profit (the cash left over after your expenses are paid). You’ll pay another tax, too — the self-employment tax. When you work for someone else, 6.2% of your income is collected for Social Security tax and another 1.45% for Medicare tax. The total, 7.65% of your income, is only half the total tax. The other half is paid by your employer. When you’re self-employed, you pay both halves, or a total of 15.3%. That’s on top of the income tax, which starts at 10% and goes up. That’s more than a quarter of your profits gone to taxes — and it’s why deducting every business expense you can is vital to the bottom line of your business. Your goal is to show as little profit as possible on your taxes. If you’re paid on a Form 1099, you’re considered a contractor, not an employee, even if you are driving someone else’s truck. That makes you self-employed, too. The business deductions begin as soon as your business does. Any fees you pay for authority, registration, permits, tolls and other expenses are deductible. You’ll be paying for a variety of insurance policies, possibly including truck insurance such as liability, collision and comprehensive, etc. You’ll spend for a worker’s compensation or occupational accident policy. Personal health policies for you and your family may be deductible, too. Save every receipt. If you purchase something online, save that receipt, too. Receipts for fuel, repairs, and maintenance and truck items are a no-brainer, but drivers often overlook smaller expenses that add up. Products like cleaners and accessories for the truck — including bedding, air fresheners and other items — can be considered business expenses. Tools, flashlights and batteries, sunglasses and other items are business expenses that can be claimed if they’re used for the business. If you rent clothing or purchase items with your business logo, such as hats and shirts, you can most likely deduct those costs. Safety equipment, such as steel-toed shoes or boots, goggles, hard hats and gloves, are business expenses. Rain gear may be deductible, and the IRS allows a deduction for a percentage of phone and internet expense. Industry publications can also be business expenses, too, and dues to trucking unions or organizations such as the Owner-Operator Independent Drivers Association (OOIDA) are business expenses. You use both in your business, so take maximum advantage. If you claim the standard IRS deduction for meals and incidentals, your records should include documentation of the days you spend away from home. Copies of your records-of-duty status will do the trick, but if you’re using electronic logs you may need a printout for your records in case of an audit. Motels, parking fees and shower costs that aren’t reimbursed may be deductible. Don’t forget ATM or fuel card fees, and if your bank charges service fees for your business account, subtract those, too The timing of purchases can impact your business, too. Take steer tires, for example. A quality set can easily cost $1,000 including mounting and balancing. If the year is coming to an end and you’ve made a tidy profit that you’d like to reduce your taxes on, you’ll want to spend that $1,000 before the calendar runs out at the end of the year. That’s another $1,000 that you won’t have to pay the 25% or more tax on, since it’s no longer counted as profit. On the other hand, if you expect that your business will break even or even show a loss for the year, it might be better to hold off on that tire purchase until after Jan. 1, so the expense counts for the following tax year instead. You can make the same type of decision about needed repairs or other expenses, including the last fuel fill of the year. You may even be able to pay your insurance bill early so you can count the expense for the current calendar year — although paying that premium late is not an option. Don’t forget depreciation. Your truck, for example, loses value over time, and the IRS allows you to claim that loss against your earnings. Rather than claiming the purchase price as an expense in the year you bought it, you would spread that expense over the life of the asset, generally five years, so you would benefit from a tax deduction each year. Other types of property, such as phones, computers and even the garage you had built for the truck may be deductible. However, the rules can be complicated. Unless you’re a tax expert, it’s wise to get professional help (an added benefit is that the cost of tax service is deductible, too). Let’s clear up one common misconception. Deductions for expenses can lower your tax burden — but you’ve still spent the money. “Writing off” an expensive purchase may mean saving the tax you would have paid on the money used for the purchase, but the cash is still spent. It does NOT mean that the item was free. If you don’t already have a tax advisor, find one. Don’t wait until tax time. A good tax professional can provide business advice that can help you minimize your tax obligation. Make sure your advisor knows the trucking business. While there are similarities with other business types, there are some unique characteristics in trucking that impact your tax liability. Discuss your business plan with your tax professional as early as possible. As a self-employed individual, you may be subject to making quarterly payments of your estimated income tax. Your tax adviser can help keep you in good standing with the IRS while keeping the payments as small as possible. If you wait until tax time, you might easily find someone that can complete tax forms for you, but you need to be confident that your advisor knows the trucking business and is taking advantage of every opportunity to save you money. Owning your own trucking business can be a rewarding experience, but just how rewarding may depend on how well you manage your expenses and tax liability. Editor’s note: The advice offered in this article is not that of an accountant or tax attorney. The intent of this article is to offer helpful tips — not apply tax law and accounting processes to every situation.

DOL issues final rule clarifying definition of ‘independent contractor’

The Trucker News Staff - January 7, 2021

WASHINGTON — On Jan. 7, the U.S. Department of Labor (DOL) published a final rule in the Federal Register that clarifies the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). The rule, which will take effect March 8, defines “independent contractors” as people who are in fact in business for themselves and are not economically dependent on a single potential employer for work. “This rule brings long-needed clarity for American workers and employers,” said U.S. Secretary of Labor Eugene Scalia. “Sharpening the test to determine who is an independent contractor under the Fair Labor Standards Act makes it easier to identify employees covered by the act, while recognizing and respecting the entrepreneurial spirit of workers who choose to pursue the freedom associated with being an independent contractor.” The final rule, which can be viewed here, includes the following clarifications: Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee). Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself, notably 1) the nature and degree of control over the work, and 2) the worker’s opportunity for profit or loss based on initiative and/or investment. Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are 1) the amount of skill required for the work, 2) the degree of permanence of the working relationship between the worker and the potential employer and 3) whether the work is part of an integrated unit of production. The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible. Provides six fact-specific examples applying the factors. “Streamlining and clarifying the test to identify independent contractors will reduce worker misclassification, reduce litigation, increase efficiency, and increase job satisfaction and flexibility,” said Cheryl Stanton, administrator of the DOL’s wage and hour division. “The rule we announced today continues our work to simplify the compliance landscape for businesses and to improve conditions for workers. The real-life examples included in the rule provide even greater clarity for the workforce.”

Pennsylvania-based PGT Trucking celebrates 40 years in business

The Trucker News Staff - January 5, 2021

ALIQUIPPA, Penn. — PGT Trucking Inc. will reach a milestone this year, celebrating its 40th year in business. Originally based in Industry, Pennsylvania, PGT Trucking was founded in 1981 — with one tractor and two employees — by Patrick A. (“Pat”) Gallagher, who today serves as the company’s CEO. “From Day 1, PGT has focused on smart and strategic growth,” Gallagher said. “By networking with our customers and vendors, we quickly expanded to over 30 terminal locations across the U.S.” Over the past 40 years, PGT has grown into a state-of-the art flatbed transportation company serving the steel, building materials, machinery, oil and gas, raw materials, aluminum, and automotive industries in the U.S., Canada and Mexico. The following are a few of the milestones the company has celebrated along the way: 1981: In addition to founding PGT Trucking, Gallagher established a relationship with Jack Hill at O.S. Hill & Co. Inc. International in East Liverpool, Ohio. During the companies’ 40-year relationship, PGT has purchased thousands of trucks from Hill International. 1987: PGT opened Warehouse Distribution of Pittsburgh in Ambridge, Pennsylvania, a full-service warehousing complex designed to accommodate the steel and industrial goods industries. 1990: PGT headquarters moved from Industry, Pennsylvania, to Monaca, Pennsylvania, establishing a full campus setting for drivers and employees. 1991: Pittsburgh Logistics Systems, a third-party provider for international freight transportation, logistics and technology services was formed, later branching off into its own entity in 1993. 1995: PGT established a terminal in Laredo, Texas, opening the gateway to Mexico and expansion of transportation offerings. 2000: Southern Pines Trucking, a division of PGT, was founded to focus on cryogenic tanker moves for industrial and medical-grade gases, and hazardous materials, later expanding transportation offerings to oversize/overweight specialized commodities. 2006: PGT acquired Midwest Logistics in Champaign, Illinois, developing a van, refrigerated and Conestoga division. 2013: PGT acquired Liedtka Logistics in Trenton, New Jersey. 2014: PGT acquired Kelworth Trucking in Poteau, Oklahoma. 2016: PGT moved its headquarters from Monaca to Aliquippa, Pennsylvania, later acquiring property from Perfetti Trucking, and opening a new driver training facility and terminal in Blairsville, Pennsylvania. Today, PGT employs more than 1,030 drivers, mechanics, agents and support staff, and operates more than 1,000 power units and over 1,500 trailers nationwide. “Part of our success has been PGT’s ability to adapt and prosper in this ever-changing transportation industry,” said PGT President Gregg Troian, who joined the company in 1986. “In the last four decades, this sector has seen major changes to its regulations, economic highs and lows, and more recently, the addition of technology. And while many other trucking companies were not able to profit and grow, PGT has stood strong, rooted in our fundamental cornerstones of personal customer relationships, employee development, safety and profitability.” PGT has numerous 40th-anniversary festivities planned for the year, including hosting its annual million mile and safe driver celebration in May. For more news, events and highlights during PGT’s 40th year, click here. “I am so blessed to have such a great group of drivers and employees working here at PGT, many of whom started with the company in the 1980s and are still with us today,” Gallagher said. “In an industry that struggles with high turnover rates, I feel that this is a true testament of our principles and our mission. We are in the people business, not the trucking business. It is the drivers, the leadership, the support staff and the truck maintenance teams who have all contributed to the success of this organization over the last 40 years.”

More than a license: Endorsements can expand the possibilities of your driving career

Cliff Abbott - January 5, 2021

One of the most common mistakes new truck drivers make occurs before they even get their commercial driver’s license (CDL). New drivers often have a good idea of what job they will be taking once they have their license, and often obtain only the endorsements they’ll need for that job. An example is the driver who accepts a job while still in CDL school with a company that pulls dry van trailers. Aside from air brakes, no other endorsements are required. After months on the road, it becomes evident that the weeks away from home are putting a strain on family relationships — and the search is on for a local job that allows more time at home. One local job involves tankers pulling petroleum products. Another opportunity with great pay requires a doubles endorsement. The driver isn’t qualified for either job and will need to find a way to study — and then use up more valuable home time to take the exam for the required endorsements. The reality is that the trucking industry routinely reports an annual turnover rate approaching 100%. That means that, on the average, almost every driver makes a job change once per year. Of course, that’s only a statistical average; some drivers stay with one company for many years while others switch companies after only a few months. Still, new drivers are highly likely to have more than one job in their first year of employment. So, the question for every driver is this: Why wouldn’t you want to be as qualified as possible to accept any job in the industry? CDL manuals from nearly every state contain study sections for each endorsement, and CDL schools often cover those endorsements in the classroom curriculum. It’s usually easier to pass the state exams while the information is fresh. Available endorsements include the following: Air Brake It may seem like a given that you’ll need this endorsement, but it is possible to obtain a CDL without it. Some vehicles require a CDL because of weight or the cargo they haul, and when hooked to trailers may require a Class A license. Doubles-Triples Shorter “pup” trailers are often used by less-than-truckload (LTL) carriers, including package and parcel carriers. Some of the jobs LTL carriers offer are over the road, while many are “pedal” runs to and from the same terminal. Depending on the distance, the driver may get home every night, every other night, weekly or some other schedule. Most of these jobs are in demand, and turnover among them is generally low, meaning that drivers tend to stay. Some LTL jobs offer excellent pay and benefits. To pass the exam, you’ll need to know how to properly hook up multiple trailers and understand weight distribution and special driving techniques. Tanker These jobs can be local or long-haul, and many involve hazardous materials. Many people think of liquids when they think of tank trailers, but powdered or granular products are often hauled in “pneumatic” tankers that can be unloaded through a hose by trickling the product into a stream of air. Local jobs often deliver petroleum products to gas stations, airports, trucking terminals and other locations. Another common local job is concrete hauling; both the Class B mixer trucks and the Class A tractors pulling pneumatic tankers full of concrete powder require tanker endorsements. Over-the-road tanker drivers haul food-grade materials and other products anywhere there are roads. Food manufacturers and bakeries often buy products such as corn syrup, juices, flour, sugar and more a truckload at a time. Acids and other industrial products keep manufacturers running. In addition, the practice of fracking (hydraulic fracturing) requires tanker loads of sand and lubricants and has grown substantially in recent years, although it is currently slow. Passing the tanker exam will require knowledge of how liquids act and knowing terms like “surge” and “outage,” as well as construction and handling characteristics of a tanker. Passenger While it’s true that passenger-hauling trailers aren’t in common use in the U.S., buses are everywhere. Many communities provide local bus-driving jobs, some with excellent pay and benefits. Charter or tour buses provide long-haul opportunities with cargo that loads and unloads itself. Bus drivers are home often, and when they aren’t, they are often provided lodging where the bus passengers lodge; these lodgings can include resorts, casinos or other luxurious accommodations. Some drivers use their passenger endorsement in volunteer work at their church or other local organization. Passing the passenger exam requires knowledge of driving and passenger rules as well as driving characteristics. Hazardous Materials This is the one endorsement that requires periodic renewal as well as a second part — a background check through the Transportation Security Administration (TSA). Some carriers require the endorsement for hire, others have drivers with and without it, and some simply don’t haul cargo that requires the endorsement. The exam for the endorsement is straightforward and involves knowledge of the various classes of HAZMAT (hazardous materials), information about labeling and placarding, special driving rules, and which substances must be separated from one another in a trailer or can’t be hauled together at all. The background check isn’t cheap. The TSA currently charges a nonrefundable $86.50 for the background check, including fingerprinting, but the check is good for five years. A TSA background check is also required for the Transportation Workers Identification Card (TWIC), so if you have one, the fee for the HAZMAT check is reduced to $67. Some states require you to pass the background check before taking the exam; others provide the exam and keep the results on file until you pass the background check. It’s a good idea to pass the exam at least once, so you’ll know what to expect if you need to pass it again in the future. You may never need most of the CDL endorsements offered by your state, but obtaining as many as you can could pay off in the future when you need to make a job change. Trucking offers an incredible variety of jobs. Be qualified for as many of them as you can.

Truck sales data shows 2020 numbers likely to end on a high note

Cliff Abbott - December 25, 2020

Sales of new Class 8 trucks and trailers are poised to end 2020 on a strong note, reflecting buyer confidence in a growing economy. For the past 20 years, U.S. sales of new Class 8 trucks have averaged close to 190,000 per year. At the end of November, sales were already over 174,000, according to data received from ACT Research (actresearch.net). Kenny Vieth, president and senior analyst for ACT, said he was expecting a “huge” December. “Carriers will be investing profits in new equipment to avoid paying taxes on them,” he said. ACT reported U.S. sales of 18,092 Class 8 trucks in November. Although that number was down 4.9% from October sales and down 4.2% from November 2019 sales, it was still the fourth-best November in the past two decades. Of the Class 8 trucks sold, 13,711 (75.8%) were fifth-wheel equipped road tractors while 24.3% were destined for vocational uses such as dump, concrete and trash hauling. Those percentages are much closer to historic 3:1 road versus vocational numbers. During the second quarter of 2020, vocational tractors represented more sales, reaching 45.4% of Class 8 trucks sold on the U.S. market in May. While truck sales were strong, orders for more new trucks were approaching record-setting territory. “North American orders for Class 8 trucks were 52,104 in November,” Vieth said. “That’s the third-best in history.” Industry analysts at FTR (www.ftrintel.com) reported orders of 52,600 new trailers in a Dec. 2 release. “The huge November orders mean that Q4 will be a fabulous one, regardless of what comes in for December and that portends well for the expected increase in production early next year,” explained Don Ake, vice president of commercial vehicles at FTR. The increased orders are all about locking in build slots. Truck manufacturers typically build about 27,000 trucks per month, so it will take nearly two months to build the trucks ordered in November alone. According to Vieth, the backlog of trucks ordered but not yet built stood at 148,000 at the end of November. That’s a waiting list of five-and-a-half months, and it’s growing. “If you want a new Class 8 truck in 2021 but haven’t made the decision, I would recommend not waiting,” Vieth said. “The backlog isn’t getting smaller.” Money is driving the demand for new trucks. “Fleets are still trying to catch up with the jump in freight volumes resulting from the economic restart and the generous stimulus money which is being spent predominately on consumer goods and food,” Ake asserted. That jump in freight volumes has been accompanied by rising spot rates. How far have they risen? “We’ve had four months of record spot rates,” Vieth said. “Spot rates are up 47% year over year.” DAT Services (www.dat.com) reported national average spot rates of $2.45 per mile for dry van freight in November, 63 cents per mile higher than November 2019. Refrigerated rates were even better at $2.69 per mile, 51 cents higher than a year ago. Flatbed rates averaged $2.44 per mile, an increase of 34 cents over November 2019 rates. While rising spot rates are good news for truckers who get their loads from brokers, those who depend on contract rates for their revenue must wait a little longer to reap the benefits. “Contract rates typically lag behind spot rates by four or five months and are rising as we go into the new year,” Vieth noted. “If contract rates rise at just half the rate of spot rates, they’ll increase well over 20% in 2021.” Vieth said shippers are wary of getting locked in to contracts that could keep rates high when the market cycles downward. “A new term has been added to our vocabulary — the ‘mini-bid.’ Shippers have been offering higher contract rates to nail down capacity, but for a shorter contract period so they can avoid being locked in when rates fall again,” he explained. One industry problem that actually helps drive rates skyward is the shortage of available drivers. Claims of a driver shortage have been met with skepticism in the past, but several factors have combined to eliminate needed drivers from the available pool. One factor is the dearth of new drivers graduating from CDL schools that have restricted enrollment or have shut down entirely. Older drivers, on the other hand, are retiring rather than work with ELDs, in-cab video cameras and other industry changes that many feel are oppressive. The Federal Motor Carrier Safety Administration’s (FMCSA) Drug and Alcohol Clearinghouse is another factor, as the percentage of drivers that are tested annually has doubled to 50% and drivers with positive results choose to leave the industry rather than participate in return-to-work programs. The job market itself is a factor as the shift to mail order of goods creates more local delivery jobs that allow drivers to be home daily. As for truck sales in November, Daimler-owned companies were the only OEMs to increase sales over October numbers, according to data received from Wards Intelligence (wardsintelligence.com). Freightliner led the way with sales of 7,709, up 5.1% over 7,332 sold in October. November numbers even bested November 2019 sales of 7,673 by 0.5%. Western Star’s sales volume was only about 6.4% of Freightliner’s, but the 492 trucks sold in November topped October’s 484 by 1.7% and last November’s 471 by 4.5%. Peterbilt’s 2,679 units sold in November was only 20 trucks shy of the October mark, a decline of 0.7%. Compared to November 2019 sales of 3,444, deliveries declined by 22.2%. Kenworth reported sales of 2,588 for November, a decline of 9.5% from the 2,859 sold in October and 22.3% lower than the 3,332 sold in November a year ago. Newly acquired Traton OEM Navistar reported sales of 1,847 Class 8 International units, down 22.3% from 2,377 the previous month and 59.9% lower than November 2019 sales of 4,602 units. Volvo sales of 1,430 were 22.3% lower than October sales of 1,943 and down 36.4% from November 2019 sales of 2,248. Sibling Mack sold 1,057 in the month, down 1.9% from 1,077 in October and 13.6% fewer than the 1,224 sold in November a year earlier. On a year-to-date basis, truck sales are running 32.7% behind last year’s near-record pace. Freightliner still rules, capturing 37.9% of Class 8 truck sales. Peterbilt (15.2%) and Kenworth (14.6%) claim 29.8% of 2020 sales while Mack (7.2%) and Volvo (9.7%) make up another 16.9% of the market. International claims 12.3%, down 2% from last year’s market share, while Western Star gets 2.9%. Tiny Hino’s sales of 24 don’t move the meter, but sales are triple last year’s eight for the first 11 months of 2020. Tightened capacity means rising rates and truck buyers want power units to take advantage. “I’m predicting record trucking industry profits in 2021,” asserted Vieth. He’s not the only one.

ATA’s truck tonnage index rose 3.7% in November but still lagged 3.8% behind last year

The Trucker News Staff - December 24, 2020

ARLINGTON, Va. — The American Trucking Associations’ (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index increased 3.7% in November after falling 5% in October. In November, the index equaled 112.2 (2015=100) compared with 108.3 in October. “The 2020 seesaw pattern continued in November as typical seasonality is not holding this year,” said Bob Costello, chief economist for ATA. “It was a nice gain, but the rebound was not enough to make up for October’s drop. Robust retail freight, helped by consumer spending, especially e-commerce, and very lean inventories helped truck tonnage last month. Strong single-family housing starts are also aiding freight tonnage, but lackluster restaurant, manufacturing and energy sectors remain a drag. I expect these softer industries to benefit from widespread COVID-19 vaccinations in 2021.” October’s decrease was revised up to 5% from ATA’s preliminary figures released in late November. Compared with November 2019, the seasonally adjusted index contracted 3.8%, the eighth straight year-over-year decline. Year to date, compared with the same period in 2019, tonnage is down 3.8%. The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 110.5 in November, 4.7% below the October level of 116. In calculating the index, 100 represents 2015. ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight. ATA’s tonnage index is based on surveys from the association’s membership.

Arizona DOT converts to cashless permitting system for commercial trucks

The Trucker News Staff - December 22, 2020

PHOENIX — Effective Jan. 21, 2021, the Arizona Department of Transportation’s (ADOT) ports of entry will convert to a fully cashless system. The change comes after ADOT successfully implemented a pilot program, preparing trucking companies that currently pay with cash to make the move to a cashless system. According to a statement issued by ADOT, when commercial truckers purchase their permits for driving through Arizona online ahead of time or use a cashless method at the port of entry, they spend less time making payments and get on their way faster. The move to end the acceptance of cash and checks at ports of entry also supports recommendations by the U.S. Centers for Disease Control and Prevention (CDC) to curb the spread of COVID-19 through the exchange of currency. ADOT’s truck-permitting systems, ePro and Transport, have cashless features that are used by nearly 80% of truckers. To help trucks move through the ports more efficiently, ADOT’s Enforcement and Compliance Division used the pilot-program period to convince the remaining 20% to pay for permits online using Apple Pay, Android Pay or a credit card. “We have been getting a feel from the trucking industry on how much they would support this change, and the feedback has been positive,” said Lt. Jason Sloan, team lead for implementing the change. “This improvement will help eliminate waste and maximize resources available at ports of entry to process commercial traffic faster.” The move also allows more officers to be available for enforcement duties instead of having one or more of them make a long drive from a remote port of entry to a financial institution to deposit the cash and checks collected. ADOT is also working to develop a new commercial permitting system that will support the move to cashless and touchless that is expected to be operational by the end of 2021.

Truckload turnover rate hits double digits during 2020’s third quarter

The Trucker News Staff - December 17, 2020

ARLINGTON, Va. — The annualized turnover rate at both large and small truckload carriers rose by double-digit percentage points in the third quarter of 2020 as the industry began bouncing back from a COVID-19 induced slump, according to a statement released by the American Trucking Associations (ATA). “After a calamitous second quarter, trucking — along with the rest of the economy — began recovering in the third quarter, leading to a tightening of the driver market,” said Bob Costello, chief economist for ATA. “With a more robust freight market, we saw an increase in carriers seeking drivers, which led to increased turnover. Additionally, the driver pool has decreased this year for a host of reasons, including fewer new drivers coming into the industry as truck driver training schools train less drivers due to social distancing requirements.” In the third quarter, the turnover rate at truckload carriers with more than $30 million in annual revenue rose 10 percentage points to 92% on an annualized basis. The rate at smaller truckload carriers rose 14 points to 74%. Despite the increases, however, the 2020 average turnover rate is still running behind 2019. “Ironically, turnover bouncing back is a good sign for the economy and for trucking,” Costello said. “The second-quarter drop was almost entirely the result of COVID, and with scientific light at the end of the tunnel, it is possible we will see continued strong freight demand into 2021, and corresponding increases in demand for truck drivers. And, driver pay continues to rise as competition for drivers is intense.” The annualized turnover rate at less-than-truckload carriers was rose two points to 14% during the third quarter on an annualized basis.

J.B. Hunt’s Shipper 360 freight-matching platform now offers temperature-controlled services

The Trucker News Staff - December 15, 2020

LOWELL, Ark. — J.B. Hunt Transport Services Inc. has added enhancements to its technology platform, including the availability of temperature-controlled transportation services within Shipper 360 by J.B. Hunt, the company announced Dec. 14. More than 10,000 carriers utilizing J.B. Hunt 360 will now offer temperature-controlled delivery services. Shippers can select from a variety of temperature ranges when using Shipper 360 to create a shipment, which can be booked in the platform in as little as three minutes. “J.B. Hunt 360 has opened the marketplace for shippers and carriers to connect, and we continue to expand that by bringing new solutions, such as temperature-controlled, into the platform,” said Shelley Simpson, chief commercial officer and executive vice president of people and human resources at J.B. Hunt. “Shipper 360, specifically, enables businesses of all sizes to be more responsive in today’s dynamic freight market and match their capacity needs with the right truck at the right time.” The latest version of Shipper 360 provides customers of all sizes with flexible shipping windows, mode recommendations, real-time rates based on carrier demand, and access to a pool of more than 777,000 trucks. Using Shipper 360, customers can compare rates, schedule deliveries and create alerts. Customers can use the Shipper 360 mobile application, now available in the Google and Apple app stores, to track and trace current freight. J.B. Hunt 360 also helps shippers improve the efficiency of on-site facility management by gathering feedback from carriers on facility convenience, timeliness and accommodations. Carriers have submitted more than 830,0000 reviews, and the information is shared directly with customers in Shipper 360 for transparency.

ACT Research forecast shows freight market facing shortages, bottlenecks, imbalances

The Trucker News Staff - December 14, 2020

COLUMBUS, Ind. — According to the latest installment of ACT Research’s Freight Forecast, U.S. Rate and Volume Outlook report, the backlogs facing the nation’s freight industry could mean strong growth after the holidays. “Freight is typically not a backlog business, but in the holiday season of 2020, with imports at record levels, we have a flotilla of containerships off Southern California waiting to unload. This bottleneck suggests strong freight volume growth will continue even after the holiday season, as retailers restock inventories,” said Tim Denoyer, vice president and senior analyst for ACT Research. “The freight market imbalance of strong demand and tight driver capacity should begin to rebalance gradually after the holidays, as there is early evidence of initial easing in the driver shortage,” he continued. “But this month, we add a steel shortage to the list of the economic shocks emanating from COVID-19, which threatens to impact Q1’21 manufacturing activity.” ACT Research’s monthly 56-page Freight Forecast offers three-year projections for volumes and contract rates for the truckload, less-than-truckload and intermodal sectors of the transportation industry. For the truckload spot market, the report forecasts rates for the next 12 to 15 months.

Strong freight rates driving demand for new commercial vehicles, ACT analysts say

Linda Garner-Bunch - December 11, 2020

COLUMBUS, Ind. — The current strong demand for new commercial vehicles is a direct result of strength in freight rates, according to ACT Research’s latest release of the North American Commercial Vehicle Outlook. According to Kenny Vieth, ACT’s President and Senior Analyst, “This year started with a whimper, and in spite of the pandemic pause in Q2, is going out with a bang,” said Kenny Vieth, president and senior analyst for ACT. “Comparing October’s order rate to 12-month order totals generates some impressive comparisons and highlights the across-the-board order surge that began in September. Additionally, on a preliminary basis, November orders are at or above recent levels.” ACT’s report forecasts the future of the industry, looking at the next one to five years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan for future demand. The report provides a complete overview of the North American markets and takes a deep dive into relevant, current market activity to highlight orders, production and backlogs. Information included in the report covers forecasts and current market conditions for medium- and heavy-duty trucks/tractors and trailers; the macroeconomies of the U.S., Canada and Mexico; publicly traded carrier information; oil and fuel price impacts; freight and intermodal considerations; and regulatory environment impacts. “An ACT-favorite axiom is, ‘Fleets buy equipment when they make money,’ and truckers are going to make a lot of money in 2021,” Vieth predicted. “A strong freight pipeline and structural and regulatory challenges surrounding driver recruiting suggest an unprecedented level of intractability in the supply-demand balance. Barring an exogenous event, the data suggest strong carrier profits are likely to extend through 2021 and well into 2022,” he explained.

A little year-end preparation can help to start the new year right

Cliff Abbott - December 11, 2020

It’s that time of year again: The snow is falling in many parts of the country, and every truck owner’s dreams are filled with new steer tires, engine overhauls and chrome accessories. Hopefully, your dreams are more of the family type — spending the holidays with loved ones and sharing time, love and gifts. But the end of the year does bring some business options, too. Decisions made now can impact how much tax you’ll pay this year and next. Take steer tires, for example. A quality set can easily cost $1,000, including mounting and balancing. As a business expense, you won’t pay income tax on the cost of those tires. And, if you’ve had a great year and made a tidy profit on which you’d like to reduce your taxes, you’ll want to spend that $1,000 now, before the calendar runs out on 2020. On the other hand, if you expect your business to break even or even show a loss for the year, it might be better to hold off on that tire purchase until after Jan. 1 so the expense will count for the 2021 tax year. You can make the same decision about needed repairs or other expenses, including the last fuel fill of the year. You may even be able to pay your insurance bill early so you can count the expense in 2020, although paying it late is not an option. Don’t forget that the “income tax” you’ll pay on your profits will include self-employment tax. Self-employment tax is your Social Security tax of 6.2% plus Medicare tax of 1.45%, for a total of 7.65%, plus an identical share that would have been paid by your employer (if you had one). The grand total will be 15.3% on TOP of your income-tax liability. It’s obvious that you’ll want to take each deduction during the tax year that benefits you most. You won’t have a choice for many expenses, but for expenses in December you may have the option of waiting if doing so benefits your budget. December is a great time to gather up those receipts, too. Remember, every penny you can show was spent on the business is a penny you won’t have to pay income tax on. If you walk into your tax advisor’s office April 14 with a shoebox full of paper receipts, there’s a good chance your tax return will be late. Start preparing now. Receipts for fuel, repairs and maintenance, and truck items are a no-brainer, but drivers often overlook smaller expenses that add up as well. Products such as cleaners and accessories for the truck — including bedding, air fresheners and other items — are considered business expenses, provided they are used for the truck. Tools, flashlights and batteries, sunglasses and other items can also be business expenses. Industry publications can be business expenses too — but don’t try to claim your copy of The Trucker, since it’s free. Dues paid to trucking unions or organizations such as the Owner-Operator Independent Drivers Association (OOIDA) are business expenses. Clothing such as rain gear, gloves and steel-toed boots may be deductible. The IRS allows a deduction for a percentage of phone and internet expense. You use both in your business, so take maximum advantage. If you claim the standard IRS deduction for meals and incidentals, your records should include documentation of the days you spent away from home. Copies of your records of duty status will do the trick, but if you’re using electronic logs you may need a printout for your records in case of an audit. Motels, parking fees and shower costs that aren’t reimbursed may also be deductible. Don’t forget ATM or fuel card fees, and if your bank charges service fees for your business account; you can subtract those, too. If you purchase a laptop computer, a tablet or even a smartphone, you may be able to claim at least a portion of the cost as a business expense. If you don’t already have a tax advisor, now is a great time to find one. You might easily find someone to complete your tax forms, but you should be confident that your advisor is taking advantage of every opportunity to save you money. Another advantage that a tax professional who is familiar with trucking can offer is advice for next year. Finally, the end of the year is a great time to review your business practices. You should know your cost-per-mile of operation, including where the biggest areas for improvement are. You may decide, for example, that adding aerodynamic accessories to your equipment will help. Not only is the purchase cost a business expense you can deduct, but you’ll also get the fuel savings. You may find that your repair costs and down time are costing you more than the payment on newer equipment would. A good tax advisor can help with these types of decisions. As an owner-operator, you’ve got a business to run year-round. A little extra attention at year’s end, however, can help jump-start a better — and more profitable — new year.

California’s passage of Proposition 22 could influence classification of truckers under AB5

The Trucker News Staff - December 8, 2020

Proposition 22, which was designed to push back against AB5 in California for independent contractor drivers such as those at Uber or Lyft, passed comfortably in the Nov. 3 general election. The role of AB5 in trucking in California remains in the balance as a federal appeals court considers a challenge to an earlier and ongoing preliminary injunction that cited a 1990s-era federal law — the Federal Aviation Administration Authorization Act — as effectively blocking the provisions of AB5 in the trucking sector. Oral arguments in the appeal were heard in early September. The California proposition that was approved at the polls took ride-share drivers out of the state’s AB5 law. This should be a factor in deciding whether the trucking industry remains exempt from the law as well, according to a lawyer involved in key litigation. In a letter to the court, Andrew Tauber, an attorney for the California Trucking Association (CTA), which brought the original lawsuit, said the victory of Proposition 22 takes a further whack at the idea that AB5 is a law of “general applicability.” Tauber, an attorney with Mayer Brown, said AB5 was never a law of general applicability, which would cover a broad swath of economic activity. The CTA’s argument is that AB5 was always targeted toward trucking, as well as ridesharing, and is now even more so with the success of Proposition 22. Tauber noted that the original AB5 included several exemptions for various industries. That list of employee classifications grew with additional exemptions passed in September. “Now AB5 has been amended yet again and once again rendered even less generally applicable than before,” Tauber wrote in the letter to the court. “After passage of Proposition 22, AB5 is not a generally applicable law — not even in the transportation industry, much less more broadly.” According to published reports, in his arguments before the appeals court Tauber said the state of California — which is the CTA’s opponent in the case — had argued that AB5 can’t be preempted by F4A because it is a law of general applicability. In his arguments before the court, Tauber had described that statement as a “false characterization.” “AB5 is not a law of general applicability,” he argued. “It contains numerous exceptions for numerous industries and professions.” Further, he said, “It specifically targets the trucking industry.” This was Tauber’s second letter to the court about the matter. After the California legislature significantly widened the number of jobs performed by independent contractors that could be exempted from AB5, Tauber told the court, “Truck drivers are notably absent from the long list of professions exempt from the ABC test under California law.” That omission, he said, helped make the argument that AB5 is a targeted piece of legislation and is not a law of general applicability.

Freight availability outpaces truck capacity, continues to drive rates higher as market balance tightens

Cliff Abbott - December 8, 2020

Freight levels rose faster than the number of available trucks in October, driving prices higher. That’s the general consensus among several data sources viewed. ACT Research, for example, reported its For-Hire Trucking Volume Index at a seasonally adjusted 70.7. Under the ACT system, anything higher than 50 is growth in the market. At the same time, ACT’s Pricing Index dropped slightly to 69.2. Perhaps the most meaningful of the ACT indexes is its Supply-Demand Balance Index, which came in at 74.9. This means freight is far outpacing capacity or, more simply, there aren’t enough available trucks to haul everything being offered for shipment. An index of 50 would mean the amount of freight and number of trucks are in balance, but the index has topped 65 for five consecutive months. “As capacity tightened further, volume (demand) remained elevated, tightening the market balance even further from already tight levels in recent months,” said Tim Denoyer, ACT Research’s vice president and senior analyst in a late-November press release. Denoyer pointed out that new Class 8 truck sales have been robust and could increase capacity in the market, but the possibility of a steel shortage could slow production in coming months. The Cass Freight Index for shipments came in at 1.180, just 0.3% above September levels but 2.4% better than October 2019. It was the first month this year that shipment totals exceeded the same month of last year. It’s important to note that the Cass index shows shipment totals for a variety of modes of transportation including trucking, rail, pipeline, ship and air. The American Trucking Associations’ For-Hire Truck-Tonnage Index is exclusive to trucking, but it is restricted to reports from ATA members. The data provided mostly comes from larger carriers receiving contract rates and doesn’t always reflect what the entire trucking market is doing. October is a case in point. While other sources were reporting increased shipments in October, the ATA reported its index fell 6.3% from September numbers. In September, the ATA reported a 6.7% increase after being in negative territory for July and August, later revising the September gain downward to 5.7%. For comparison, the ATA index in October was 106.8. Since the index is based on 2015 numbers, the October index was 6.8% higher than October 2015. There are a couple of reasons for the difference in ATA’s numbers compared to other sources. The biggest is probably a customer base that includes a lot of manufacturers. Shipments of retail goods have been carrying the economy, while manufacturing has yet to return to its pre-pandemic level. Another reason is that large carriers are typically hit harder by driver shortages, a growing problem in the industry. Spot rates are generally much faster to respond to economic pressures, and they are currently reaching record levels. Van rates averaged $2.45 per mile nationally in November, a nickel higher than October and 8 cents higher than September. Refrigerated rates averaged $2.69 in another record month. Flatbed rates of $2.44 per mile declined by a penny per mile in November compared to October rates, ending months of increases. The decline is probably based more on seasonality than on economic conditions, since construction tends to slow as the weather cools. The impact of retail shipments continued to climb, and could grow even higher if current buying trends continue. In its “Monday Morning Blog” entry for Thanksgiving week, even before the Black Friday shopping holiday, FTR Intel led with the headline, “Holiday sales are already 11% above last December.” The blog quoted U.S. Census Bureau figures showing that U.S. industrial production increased by 1.1% in October, while manufacturing rose by a percentage point. Production of both durable and nondurable goods increased as well. Additionally, both existing home sales and permits for new home construction rose in October. All of these are indicators of a growing economy. The latest issue of ACT Research’s Transportation Digest described the down-and-then-up roller coaster ride the trucking industry has experienced this year. The report attributed online sales as having an impact on retail markets. “According to the Bureau of the Census, retail data show non-store sales, primarily e-commerce, from May to September were over 17% of retail activity, a material increase from a 14.5% average in 2019,” noted Kenny Vieth, ACT Research’s president and senior analyst. “Stating the obvious, e-retailing got a big boost when the shutdown drove households to do emergency shelf stocking and avoid brick-and-mortar retail locations.” The news, however, isn’t all rosy. COVID-19 infection rates have risen to new heights, and hospital wards across the country are overwhelmed with patients. In response, jurisdictions across the country have been implementing shut-down rules for businesses, along with mask mandates. Democrats that have called for a national shutdown may get their wish as President-elect Joe Biden takes office in January. Even without federal mandates, however, numerous states, as well as cities, have already implemented restrictions. Truck drivers are already experiencing difficulty finding open restaurants where they can obtain meals, and some fast-food locations are restricting hours or closing dining areas. On the flip side, legislators are still trying to hammer out a stimulus/relief plan that would provide supplemental unemployment payments and other benefits, possibly including cash payments, to Americans who are still suffering the economic effects of the pandemic. An added incentive could be the U.S. government budget, which expired Dec. 11. A stimulus bill could be tied to a new budget or a continuing resolution as a bargaining chip. Barring a complete shutdown, trucking is poised for a strong close to 2020 and a good start to the new year.

XPO Logistics announces plans to split company, spin off logistics and warehousing segment

The Trucker News Staff - December 4, 2020

GREENWICH, Conn. — XPO Logistics Inc., a worldwide freight transport, truck brokerage and logistics company, announced this week that the company will split its logistics and freight transportation segments into two independent companies. The announcement came after XPO’s board of directors unanimously approved a plan to spin off the logistics segment as a separate, publicly traded company. “By uncoupling our transportation and logistics segments, we intend to create two high-performing, pure-play companies to serve the best interests of all our stakeholders,” said Brad Jacobs, chairman and chief executive officer of XPO. “Both businesses will have greater flexibility to tailor strategic decision-making and capital allocations to their end-markets, with the benefit of strong positioning as customer-focused innovators. We currently believe that this spin-off is the most effective way to unlock significant value for our customers, employees and shareholders.” The two companies, as yet unnamed, have been dubbed “XPORemainCo” and “NewCo.” XPORemainCo will offer freight transportation services, primarily less-than-truckload, along with non-asset truck brokerage, and NewCo will offer contract logistics with approximately 200 million square feet of warehouse space. Jacobs is expected to continue to serve as chairman and CEO of XPORemainCo and become chairman of the NewCo board. Troy Cooper will continue to serve as XPORemainCo’s president, and the executives currently leading XPO’s global logistics segment will continue to serve in senior positions with NewCo. If all goes according to plan, the transaction is expected to be complete in the second half of 2021. XPO has retained Goldman Sachs & Co. LLC as its financial advisor and Wachtell, Lipton, Rosen & Katz as its legal advisor to assist with the spin-off process.