Welcome aboard Evans Transportation's Weekly Newsletter, your go-to source for the latest developments, insights, and trends in the dynamic world of logistics. As your trusted partner in transportation solutions, we are thrilled to bring you a curated digest of industry updates, company news, and exclusive content designed to keep you informed and inspired.
Transportation Updates
???????????????? Journal of Commerce: February 26th
- In January, US less-than-truckload (LTL) rates rose by 2.6%, recovering from the previous month's 1.7% drop.
- Long-distance truckload pricing fell by 2.6% in January and experienced a 13.4% decline from the previous year.
- The disparity in pricing reflects different trajectories for LTL and truckload sectors in Q1 2024, driven by available capacity.
- LTL carriers are increasing capacity by reopening terminals acquired from bankrupt Yellow and building new ones to meet future demand.
- Truckload carriers are grappling with excess capacity as smaller carriers exit the market and larger ones cut back to 2018 levels.
?????????????????ACT Research: February 2024
- Volume Index increased to 50.0 in January, reflecting gradual recovery in freight demand, potentially influenced by a temporary cold snap.
- Pricing Index rose to 43.5, indicating a gradual rebalance in the freight market; spot rates improved, but contract rates still favor shippers.
- Capacity Index increased to 49.8, possibly due to cold weather affecting availability, but overall for-hire capacity has been contracting.
- Driver Availability Index rose to 55.4, potentially influenced by annual costs for owner-operators in January; challenges to driver availability persist.
- Supply-Demand Balance decreased to 50.2, marking the sixth consecutive month of positive balance, suggesting a tightening market in 2024.
?????????????????Journal of Commerce: March 4th
- LTL carriers rush for land, seeking industrial real estate, including Yellow's terminals from bankruptcy, shaping market success.
- Increased demand prompts LTL expansion, driving a need for land, especially in transloading containerized ocean freight near seaports.
- LTL terminals and land prices surge, rising 30-40%, impacting carriers and potentially leading to higher costs for shippers.
- Changing freight dynamics drive LTL carriers to adapt, expanding and renovating terminals, emphasizing taller and wider designs.
Jason Miller Post: Freight Recession ?????????????????LinkedIn: February 27th
- U.S. trucking industry linked to manufacturing, comprising 58% of demand, indicated by Commodity Flow Survey data.
- January 2024 manufacturing data disappoints, showing a 1.3% drop from January 2023 and a 0.6% decline from December 2023.
- Industrial production, excluding pharmaceuticals and hi-tech, weak in January across various sectors, including wood, paper, chemicals, plastics, nonmetallic minerals, primary metals, and machinery.
- Polar vortex partly contributes to the decline in manufacturing activity.
- Caution advised, suggesting the trucking market may not significantly shift in late Q1 2024, contrary to optimistic predictions.
???????????????? FreightWaves: February 27th
- Morgan Stanley cuts earnings estimates for transportation companies due to rising insurance costs, particularly impacting the truckload space.
- Large jury verdicts and prolonged high insurance costs contribute to bloated expenses, affecting carriers like J.B. Hunt and Schneider National.
- J.B. Hunt notes a 43-cent drag on Q4 earnings due to insurance costs, with premiums resetting 50-60% higher in 2024.
- Schneider National's 2024 earnings outlook is 11% lower than 2023, citing headwinds from higher insurance and claims expenses.
- Morgan Stanley analyst Ravi Shanker sees higher insurance costs potentially leading to industry consolidation and increased merger and acquisition opportunities.
?????????????????Transportation Topics: February 26th
- Traditional procurement strategies in transportation are insufficient due to market volatility, evolving consumer expectations, and supply chain disruptions.
- Shippers are adopting a more flexible and adaptable approach to network design and procurement, moving away from rigid long-term contracts.
- Mini-bids have emerged as strategic tools, allowing shippers to navigate market volatility by conducting frequent, targeted bidding events for specific lanes.
- Dynamic pricing, with preset rules based on market and lane-specific dynamics, offers flexibility in managing transportation spending and optimizing cost allocation.
- The future of transportation procurement involves collaboration, fostering strong relationships between shippers, brokers, and carriers, and leveraging AI, machine learning, and automation for transformative change.
Economic Updates
- Manufacturing sector contracts for the 16th consecutive month, with a February Manufacturing PMI? of 47.8, down from 49.1 in January.
- New Orders Index falls to 49.2, Production Index to 48.4, and Employment Index to 45.9, indicating contraction in these areas.
- Prices Index registers 52.5, showing moderate expansion in commodity-driven costs; Supplier Deliveries Index at 50.1 indicates slower deliveries.
- New Export Orders Index rises to 51.6, Imports Index to 53.0, suggesting recovery in demand and expansion of international trade.
- Three industries show growth in February: Fabricated Metal Products, Chemical Products, and Transportation Equipment; overall contraction continues.
?????????????????CNN Business: March 1st
- Anticipated economic softening in 2024 has postponed expected Fed rate cuts, with initial expectations of six cuts starting in March.
- Fed Chair Jerome Powell indicated uncertainty, leading some economists, including Torsten Slok, to believe there may be no rate cuts this year.
- Rising inflation and a robust economy challenge the likelihood of rate cuts; S&P 500 Global Ratings revised up GDP growth forecast.
- Inflation persists, impacting essentials like food prices, while small businesses and manufacturing show signs of ongoing price increases.
- Despite investor expectations for rate cuts, half expect a cut in June, but rising inflation may keep rates high.
???????????????? Talking Logistics: February 2024
- Supply chain skills are largely learned on the job, with universities providing a head start but practical experience being crucial.
- Company characteristics such as financial performance, growth, and the perceived importance of the supply chain influence labor issues.
- Strong financial performance and growth correlate with lower turnover and a positive view of supply chains as essential for competitive advantage.
- Companies valuing their supply chain, demonstrating strong performance, and fostering employee appreciation create a self-reinforcing loop for employee retention.
- The labor market dynamic for supply chain workers has shifted, with skilled workers now in control, demanding companies to become the "employer of choice" for retention.
Company-Specific
?????????????????Transportation Topics: February 28th
- Ritchie Bros. Auctioneers initiates the auction of Yellow Corp.'s assets, including trucks and trailers, starting at 8 a.m. EST on March 5.
- Yellow, ranked No. 13 on the Transport Topics Top 100, filed for bankruptcy, making its assets available for auction.
- The online auction features 3,171 items, including 715 truck tractors and 2,193 trailers, offering a variety of choices.
- Yellow, with an older fleet, presents newer models as well, including 101 model year 2022 and 2023 Volvo and Peterbilt day cabs.
- Auctions continue with the Yellow Corp. Central Regional Event on March 26, and further auctions are scheduled for April 16 and May 7.
???????????????? The Wall Street Journal: February 27th
- David Jackson steps down as CEO and board member at Knight-Swift Transportation, one of the largest U.S. trucking companies.
- Adam Miller, former CFO, becomes the new CEO, while Andrew Hess, previously SVP of M&A, is appointed CFO.
- Jackson served nearly 24 years, leading the company through rapid expansion, including the acquisition of Swift Transportation and U.S. Xpress.
- Tough market conditions, falling freight rates, and decreased shipping demand impact Knight-Swift's earnings, reporting a $10.9 million loss in Q4 2023.
- Analysts suggest the leadership change may signal a focus on expanding the less-than-truckload (LTL) business and improving financial performance.
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