Business

BLOOMINGTON, Ind. — Broker-posted spot rates in the Truckstop system increased for all equipment types during the week ended Dec. 1 (week 48) as dry van rates rose substantially for a second straight week. The increase of more than 17 cents in two weeks puts dry van spot rates at their highest level since early February. Spot rate increases for other equipment types were far more subdued. Total spot volume more than doubled to the strongest level since September following the sharp drop during Thanksgiving week. Total loads Total load activity surged 113.1% after plunging more than 44% during the holiday week. Volume was 12% below the same 2022 week and more than 14% below the five-year average for the week. Truck postings rose 12.7%, and the total Market Demand Index – the ratio of loads to trucks – jumped to its highest level since late May after falling to its lowest level since May 2020 during the previous week. MDI swings of that scope around Thanksgiving are not common, but this year’s shifts resembled the 2022 dynamic during the same period. Total rates The total broker-posted rate increased just over 2 cents after rising just over 1 cent in the previous week. Total rates saw their first back-to-back increases since Labor Day week. Total rates typically decline during the week following Thanksgiving, although they were marginally above flat week over week during the same 2022 week. Rates, which were at their highest level since mid-October, were almost 10% below the same 2022 week and about 5% below the five-year average. Dry van Dry van spot rates rose just over 8 cents to the highest level since week five. Rate increases of that scope during the week following Thanksgiving are unusual; rates often decline during the week. However, dry van experienced weaker rate moves during the run-up to Thanksgiving than typical. Rates were about 7% below the same week last year and more than 9% below the five-year average. Dry van loads soared 126.3% after falling more than 38% during the holiday week. Volume was about 13% below the same 2022 week and nearly 11% below the five-year average for the week. Refrigerated Refrigerated spot rates increased 1.6 cents after falling more than 9 cents during the previous week. Refrigerated rate changes frequently are weaker during the week after Thanksgiving than they were last week. Rates were more than 10% below both the same 2022 week and the five-year average. Refrigerated loads jumped 63.5% after falling about 46% during the holiday week. Volume was almost 22% below both the same week last year and the five-year average for the week. Flatbed  Flatbed spot rates increased more than 1 cent, which was the same increase as the prior week. Although the gains have not been large, flatbed has seen increases for three straight weeks for the first time since late April. Rates were more than 11% below the same 2022 week and 0.7% below the five-year average, which is the strongest comparison since early June. Flatbed loads surged 127.9% after dropping more than 49% during the holiday week. Volume was nearly 6% below the same 2022 week and almost 23% below the five-year average for the week.

OMAHA, Neb. — An attorney for the billionaire Haslam family called bribery allegations leveled by Warren Buffett’s company a “wild invention.” But a judge didn’t decide immediately whether those allegations will be resolved at a January trial that should help determine the multibillion-dollar price Berkshire Hathaway might have to pay the Haslams for the rest of the Pilot truck stop chain. The Haslams and Buffett’s company are accusing each other of manipulating Pilot’s earnings this year to affect the price Berkshire would have to pay for the Haslams’ remaining 20% stake in the company if the family decides to sell. The Haslam family — which includes Cleveland Browns owner Jimmy Haslam and former Tennessee governor Bill Haslam — accused Berkshire last month of trying to understate Pilot’s earnings this year by changing its accounting practices. Berkshire responded this week with a lawsuit of its own accusing Jimmy Haslam of trying to bribe key Pilot executives with payments several times their annual salaries to inflate the company’s profits. “We called Berkshire’s allegations wild inventions in our opposition brief,” attorney Anitha Reddy, who represents the Haslams, said Thursday. “I don’t think we could have been clearer that we dispute them. And if there is any doubt in Berkshire’s mind, we think they’re false and we intend to defeat them on whatever schedule the court orders.” The judge promised to rule by Friday whether Berkshire’s lawsuit can be heard at the same time a trial on Pilot’s original lawsuit is scheduled in January. Berkshire wants the court to prevent the Haslams from exercising their option to sell the rest of the company to Berkshire next year because it says there are so many doubts about the accuracy of Pilot’s 2023 earnings. Even if the judge agrees, the Haslams would still have the option to sell in future years under the agreement they signed back in 2017. Berkshire’s attorney Craig Lavoie argued that it’s crucial to block a sale next year because it will be hard to determine just how much Pilot’s earnings have been effected by the alleged bribes. He said Berkshire believes at least 28 executives — many of whom are involved in buying and selling fuel for the nation’s largest truck stop chain — were offered bribes. Berkshire said in its lawsuit that it just learned a couple weeks ago about the Haslams’ attempts to bribe executives who used to work for the family at the company Jim Haslam — Jimmy and Bill Haslam’s father — founded before Berkshire became the majority owner at the start of this year. A senior executive who had been promised a bonus revealed that to the current Pilot CEO, according to Berkshire. Lavoie said it’s difficult for Berkshire to sort out what short-term decisions those executives might have made because of the bonuses. “Mr. Haslam’s side promises have forced the company to investigate and interrogate many of the key employees it relies on today to operate the company,” Lavoie said. When Berkshire bought its initial 38.6% stake in Pilot in 2017 it paid $2.758 billion. This year, it paid another $8.2 billion to give it control of 80% of the company, and it went on to install a new CEO and chief financial officer. Buffett told Berkshire shareholders this spring that he wishes he could have bought the entire company at once because the price was better in 2017, but the Haslams wouldn’t sell it all then. Pilot’s chain of more than 850 locations and roughly 30,000 employees in the United States and Canada has already provided a meaningful boost to Berkshire’s revenue and profits this year. The Haslams said Berkshire’s decision to shift to something called “pushdown accounting” this year forced Pilot to take on higher depreciation and amortization costs and that resulted in lower net income. The Haslams were outvoted on that change at Pilot board meetings. In addition to Pilot, Berkshire owns an eclectic assortment of other businesses including Geico insurance, BNSF railroad and several major utilities along with a number of smaller manufacturing and retail businesses. It also holds a sizeable stock portfolio with big stakes in Apple, Coca-Cola, American Express and Bank of America among other holdings.

OMAHA, Neb.  — Warren Buffett’s Berkshire Hathaway says the billionaire Haslam family tried to bribe at least 15 executives at the Pilot truck stop chain with millions of dollars to get them to inflate the company’s profits this year because that would force Berkshire to pay more for the Haslams’ remaining 20% stake in the company. The Berkshire claim in a counter lawsuit filed this week comes after the Haslam family — which includes Cleveland Browns owner Jimmy Haslam and former Tennessee governor Bill Haslam — accused Berkshire of trying to understate Pilot’s earnings this year by changing its accounting practices. A hearing on Berkshire’s counter lawsuit is planned for Thursday, Nov. 30. The Haslams’ lawyers and a representative for the family didn’t immediately respond to requests for comment. Berkshire said in a court filing that it only became aware this month of the Haslams’ attempts to bribe executives who used to work for the family at the company Jim Haslam — Jimmy and Bill Haslam’s father — founded before Berkshire became the majority owner at the start of this year. A senior executive who had been promised a bonus revealed that to the current Pilot CEO, who Berkshire appointed after it took over, according to the filing. Berkshire said Jimmy Haslam offered to personally pay bonuses to the executives that would far exceed their annual salaries based on the price the family received for its remaining stake. Berkshire redacted the number of employees it believes agreed to accept bonuses, but it said Haslam made the offer to about 15 employees at a country club dinner in Knoxville, Tennessee, in March and repeated that offer to at least four other high-level executives. Pilot’s former CEO also extended the offer of under-the-table payments to at least 10 other executives in April, according to Berkshire’s filing. It’s not clear exactly how much money is at stake because some of the figures in the lawsuits have also been redacted, but the Haslams said their 20% stake in Pilot was believed to be worth $3.2 billion before the accounting change Berkshire made. The price Berkshire will eventually pay when the Haslams decide to sell their remaining stake is determined by a formula based on Pilot’s reported earnings that Buffett and the family agreed to in 2017. Berkshire initially bought 38.6% of Pilot back then for $2.758 billion before more than doubling that to 80% this year for an additional $8.2 billion. Buffett told Berkshire shareholders this spring that he wishes he could have bought the entire company at once because the price was better in 2017, but the Haslams wouldn’t sell it all then. Pilot is the nation’s largest network of truck stops with more than 850 locations and roughly 30,000 employees in the United States and Canada. It has already provided a meaningful boost to Berkshire’s revenue and profits this year. The Haslams said Berkshire’s decision to shift to something called “pushdown accounting” this year forced Pilot to take on higher depreciation and amortization costs and that resulted in lower net income. The Haslams were outvoted on that change at Pilot board meetings. Berkshire said it’s impossible to calculate how much Pilot’s profits may have been inflated this year because of decisions executives who were promised bonuses made. It said some recommendations to sell off assets or abandon valuable hedge positions to boost short-term profits were rejected but other decisions likely went undetected. Berkshire is asking for a January trial date so its claims can be judged alongside the Haslam’s initial lawsuit to help determine the proper value of Pilot and whether the Haslams should be allowed to sell their stake in 2024 when there are so many questions about whether the company’s 2023 earnings are proper. Besides the truck stops, Berkshire owns dozens of other businesses including Geico insurance, BNSF railroad and several major utilities along with an assortment of smaller manufacturing and retail businesses. It also holds a sizeable stock portfolio with big stakes in Apple, Coca-Cola, American Express and Bank of America among other holdings.

DALLAS — The government’s handling of the COVID pandemic reshaped the freight market, causing a record number of new carrier registrations and spot rates to surge. Avery Vise, vice president of trucking at FTR Transportation Intelligence, explained the details and offered analysis of the current state of the trucking industry at the Women in Trucking Association’s conference, held Nov. 5-8 in Dallas. “People received stimulus checks,” he said. “Since so many things were shut down, they couldn’t take vacations, so they bought stuff. The spot market went crazy.” Vise also spoke about the difficulty in finding drivers to deliver goods during the pandemic. “The overall market, however, is that there is no shortage of drivers,” he noted, referring to the record numbers of new carrier registrations reported by the U.S. Department of Transportation (DOT) during the pandemic years. In pre-pandemic 2019, the DOT reported an average of 27,779 new carriers added per quarter. That average jumped to 35,159 per quarter in 2020 with the third quarter seeing 42,412 new carriers. By the second quarter of 2021, new carrier registrations reached 62,578, slightly topping that number in the third quarter. The reason? Company drivers were buying their own trucks and registering as carriers to take advantage of record-setting high spot market rates. There were as many trucks on the road as before, but more of them ran under their own authority. Spot rates peaked early in 2022 and then began falling. By mid-2022, trucking companies were going out of business in record numbers. The DOT reported new records in carrier revocations. Those can happen for safety reasons, but two of the biggest reasons a carrier’s authority is revoked is failure to maintain required liability insurance and failure to file required forms. Both of those events are frequently connected to a business closing. That doesn’t mean there are fewer trucks, however. Owners who surrendered their authority can choose to lease their trucks to other carriers and continue running them. Or, they can sell their trucks and become company drivers again. Either way, the number of working trucks remains the same. Vise pointed out that, despite being low, freight rates aren’t really that bad. “We’re still running well above 2018 levels,” he said. “The problem is, everything else is more expensive.” Diesel fuel averaged $3.18 per gallon in 2018, according to the U.S. Energy Information Administration. That’s up to an average of $4.19 in 2023, a 32% increase. Prices for new, Class 8 trucks have increased 22.5% in the same time period, according to the Consumer Price Index, U.S. Bureau of Labor Statistics. The cost of fluids, filters, tires and parts have all risen dramatically, too. Federal Reserve efforts to curb inflation have resulted in higher credit costs, too. The interest rates on equipment loans have grown. So, how did we get to a “freight recession?” Vise cautioned that the term isn’t accurate. “When we say ‘freight recession,’ I think we really mean ‘freight rate recession,’” he said, explaining in terms of utilization. “Utilization is very much an indicator of what’s going to happen. Utilization of 92% is not very strong.” According to the slide shown during the presentation, utilization is “the number of seated trucks that are actually hauling freight.” When empty trucks must travel farther to pick up loads or are unable to reload after delivery, utilization goes down. The slide showed that 92% utilization is the industry’s 10-year average. Utilization hovered between 98% and 100% for 2021 and the first quarter of 2022 before dropping. It reached a low of 88% in the second quarter of 2023 and has been slowly climbing since, but is expected to remain below average through 2024. Simply put, there are too many trucks for the amount of freight being offered. Improving that ratio entails more freight, produced by an expanding economy, or fewer trucks, or a combination of both. Vise made it clear that it’s not the economy. “The economy looks pretty good, frankly. We had a really strong third quarter with 4.9% annualized growth,” he explained. New trucks have been built and delivered at a pace that, as of Oct. 31, was still 10.7% ahead of the 2022 pace. August was the first 2023 month in which new U.S. truck sales were lower than the corresponding month in 2022. Sales are trending downward, but total 2023 sales will still exceed sales in 2022. Eventually, the pendulum will swing the other way, Vise said. Truck numbers will decrease, freight levels will rise and rates will increase, but it won’t happen overnight. FTR predicts a flat 2024 rate outlook for all trucking segments. It will take time to remove the excess capacity from the market, while the economy in terms of Real GDP is expected to grow at a rate under 2% for 2024.

OAKLAND, Calif. — Forum Mobility, a freight electrification provider, has announced plans to construct a heavy-duty truck charging depot at the Port of Long Beach in California. The depot will provide high-speed charging infrastructure for hundreds of drayage trucks per day, supporting the transition of the state’s drayage fleet to zero-emission, according to a news release. “Forum is building dedicated infrastructure for heavy-duty trucks to transition from diesel to electricity. With the support of the Port of Long Beach, the FM Harbor depot will provide drayage truckers a turn-key solution to comply with California Air Resource Board regulations. At Forum Mobility facilities like this one, fleets can make the transition simply and without using their own capital,” said Matt LeDucq, CEO and co-founder of Forum Mobility. “Forum is building a network of charging depots at the ports, along freight corridors and near distribution centers to serve owner-operators and carriers of all sizes. We make it easy to go electric.” Talon Logistics Inc., a national drayage carrier based in Chino, California, has already secured dedicated charging at FM Harbor. “Talon Logistics prides itself in being a trendset leader and Forum is our trusted infrastructure partner. Securing fully-staffed and dedicated charging inside the port makes us pioneers in the space, which puts us ahead of the competition,” said Emmanuel Carrillo, Talon’s chief executive officer. “FM Harbor couldn’t be more convenient — 7,000 trucks a day go into the Port of Long Beach, and our fleet will be one of the few able to charge right next to the terminals. Forum’s turnkey charging solution allows me to focus on growing my business and serving my customers.” Forum’s Port of Long Beach charging depot will offer 19 dual-port 360 kW chargers and six 360 kW single-dispenser chargers, which will be able to charge 44 trucks simultaneously, with the ability to charge an electric Class-8 truck in about 90 minutes, depending on battery size, the news release notes. The depot will be fully staffed and is scheduled to be online fall of 2024. At full capacity, it will serve over 200 trucks a day, the company says. The site is located at 260 Pico Street, adjacent to the Long Beach Container Terminal. Elemental Excelerator provided supportive funding. Forum Mobility’s first tranche of eight charging depots, with capacity to charge about 600 trucks simultaneously, is scheduled to come online over the next 10-20 months, company officials say. “It is encouraging to see Forum Mobility investing in crucial charging infrastructure to help drayage carriers meet zero emissions mandates coming from the State of California. We appreciate their dedicated engagement with the Harbor Trucking community and are proud to have them as members of our organization,” said Matt Schrap, CEO of the Harbor Trucking Association. The California Air Resources Board is requiring all of California’s drayage fleet — approximately 33,000 class 8 trucks — to be zero-emission by 2035. Charging infrastructure is a key ingredient for success: the California Energy Commission estimates that to comply with the Advanced Clean Fleet and other regulations, California will need 157,000 medium and heavy-duty chargers by 2030.