Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Trucking volumes are flat and capacity is relatively ample, yet spot market truckload rates are rising.
This seeming paradox could be explained by the calendar. Barring a stay by a federal appeals court in Washington, D.C.,
the federal government will start enforcing new standards July 1 governing a driver's hours of service (HOS).
As the date nears without any court action, more observers are forecasting that the enforcement will begin as scheduled. As a result,
rates are rising as the marketplace anticipates fewer truck miles driven and reductions in driver productivity.
Bradley S. Jacobs,
chairman and CEO of XPO Logistics Inc., a Greenwich, Conn.-based truck broker, expedited transporter, and freight
forwarder, said truck volumes are neither rapidly accelerating nor precipitously declining, a trend that mirrors the
lackluster performance of the overall economy. Truck capacity remains abundant, as it has for months, he added.
Yet the rise in spot market rates reflects the belief of most carriers that they will need to boost prices to offset
the negative impact of the rules on driver productivity and the costs of replacing that lost productivity, he said. Jacobs
expects productivity levels to be affected from day one, rather than it having a phased-in effect. That's because he expects
everyone to obey the law from the start, with predictable consequences on truck miles driven.
The rules, implemented by the Federal Motor Carrier Safety Administration (FMCSA), a sub-agency of the Department of
Transportation, will reduce a driver's maximum weekly work hours from 82 to 70. For the first time ever, drivers will have
limits placed on their traditional 34-hour minimum restart period, requiring it to occur once every seven days and to include
two rest periods between 1 am and 5 am over two consecutive days. FMCSA left unchanged a key provision allowing 11 hours of
continuous drive time after a driver has spent 10 consecutive hours off duty.
Most shippers and carriers oppose the new rules as a safety hazard and an unnecessary disruption to their supply chains.
While estimates vary, the consensus is that the rules will result in a 3- to 5-percent decline in truck productivity.
Oral arguments on the matter were held March 15 in Washington. The FMCSA has already denied an industry request for a
three-month delay of the enforcement deadline.
VOLUMES FALL, BUT RATES STILL RISE
DAT, a Portland, Ore-based information consultancy,
said spot market rates in April rose over March levels for all
three equipment types: dry van, flatbed, and refrigerated, or "reefers." Yet spot volumes fell 5.8 percent over March
levels, according to the firm's freight index. The decline—which was surprising given that better weather in April
usually drives strong sequential traffic gains—was due in part to unusually inclement weather, such as floods in the
upper Midwest, DAT said.
Year-over-year volumes in April fell 16 percent from record levels in April 2012, DAT said.
Van and flatbed rates dropped, while reefer rates rose, it said.
About 20 percent of all truckload volumes move under spot rates, based on DAT's estimates. The balance moves under contract.
Lawrence Gross, a senior consultant for FTR, said that although FTR's estimate of the hit that HOS will have on
productivity is less than the consensus, "even a 3-percent decline will be sufficient to tip the balance of supply
and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth
levels seen recently."
Gross said HOS enforcement will "usher in an extended period of difficulty for shippers, as there is an array of new
regulations lined up behind the HOS change that will further impact trucking in the months and even years to come."
HOS is the latest, but not the only, trigger driving up freight rates. Carriers and their customers must also cope with
the impact of CSA 2010, a government safety initiative designed to winnow out unsafe drivers; the cost of recruiting and
retaining drivers; compliance with new federal engine emission standards; and escalating expenses for all types of
equipment ranging from trailers to tires.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.