Peter Cyr, MBA

Shippers ICYMI: On January 27, 2025, UPS will change the definition of the 40 lb minimum overlength penalty. Although UPS announced this change on October 21st, details regarding the dimensional calculations have yet to surface. For many shippers, if you are not getting hit with this cost today, it will be difficult to identify the impact this will have on your business based on the way UPS passes over information. Typically, UPS will only pass over information on length, width and height if it triggers a cost event.   FedEx typically provides this information 90% of the time, even if it doesn't trigger a cost event. With UPS it isn't as clear.   If you don't have a technology provider or a BI partner who can easily access this data, please make sure you are looking into the new rules around this change, so you don't get hit with penalties in January.

37

There is a lot of excitement in the trucking community that the current freight recession is over (heavily influenced by the articles from FreightWaves). While I’ve publicly said I expect a substantial increase in dry van truckload spot rates next year, it’s important to remember that a significant rebound of freight volumes will take some time to materialize (this isn’t an overnight thing). This can be seen in the most recent quarterly version of the trucking ton-mile index (now that September’s data is complete). One chart. Thoughts: •Q3 2024 came it 0.1% above Q2 2024; I feel good at this stage declaring Q2 2024 the bottom of the current freight recession, which began in late Q2 to early q3 2022. •While we saw very high levels of containerized imports, which appeared in sectors such as electrical goods wholesaling posting record inflation adjusted sales, it’s critical to remember that many freight-centric sectors of U.S. manufacturing continue to perform poorly relative to peak freight demand in the first half of 2022. These include: Wood products: https://lnkd.in/gNmwNRd5   Paper: https://lnkd.in/gYDt3kcK Plastic & rubber: https://lnkd.in/g8ya9dAw Nonmetallic mineral products: https://lnkd.in/gJEH2Gh5 Machinery: https://lnkd.in/gy2NrYza •It will take time for manufacturing activity in these industries to rebound. As I’ve said repeatedly, late Q1 to early Q2 2025 is when I truly expect demand conditions to get strong enough for spot rates to show the type of sustained increase needed to pressure contract rates. Implication: I get carriers are excited that brighter days are ahead in 2025. However, we need to be reasonable and understand it takes time for the manufacturing ecosystem to see sustained demand increases. Moreover, I have severe concerns about 2026, as I expect folks are going to be in for a very nasty inflation surprise… #supplychain #supplychainmanagement #shipsandshipping #freight #trucking

306

42 Comments

Now that we are halfway through July, I wanted to look at where the dry van truckload spot market was at. Using data from DAT Freight & Analytics, I’ve calculated the dry van spot market cycle indictor as broker buy contract rates less dry van TL spot rates divided by the average of the two series. One chart below. Thoughts: •Historically, when this ratio falls below 10%, we tend to see a bull market pricing cycle begin, which is picked up well the Bureau of Labor Statistics primary service producer price index for general freight trucking, long-distance, truckload (https://lnkd.in/gUXXNHrd). Conversely, anytime we see the series move above 15%, we enter a bear market pricing cycle. Key dates for bull cycles labeled in black, bear cycles in red. These dates mirror swings in observed contract & spot rates picked up by BLS. •The bad news for carriers is that July’s reading of 15.8% is well away from the 10% threshold. As such, there aren’t signs of the market being ready to turn. •For the market to turn, we need more freight demand. Unfortunately, as I’ve been noting frequently, demand conditions just aren’t great now. For example, Cass Shipments, which tracks the trucking ton-mile index quite closely, fell in June to the lowest level since the recovery from the COVID-19 pandemic (https://lnkd.in/gAZb34hZ).  As I’ll share next week, machinery manufacturing and wholesaling is especially weak. Implication: I continue to see few signs that the dry van truckload sector will enter a bull market pricing cycle in 2024. It increasingly looks like any capacity tightening felt in June was just a return of seasonality. Continued weakness in pricing and freight demand reinforces my emphasis on why domestic manufacturing activity must be front and center in discussions about freight demand, with less attention given to retail sales. #supplychain #supplychainmanagement #freight #trucking #economics #markets

275

13 Comments

Headlines about layoffs rightly cause much concern and consternation in the trucking industry (e.g., https://lnkd.in/g9useTDD). However, it is critical to understand that this tells only half the story because a substantial percentage of trucking layoffs occur because a firm loses a key customer account. What that means is that the firm which won the business will often expand (which tends not to be reported). Below I wanted to document just how prevalent such reallocation of jobs is in trucking using population-level data from administrative records for all employer firms in truck transportation via the Business Dynamics Statistics (BDS) program. Data from https://lnkd.in/gVr6BbRW for all carriers. Thoughts: •The chart shows three series. The job creation rate is the jobs added by the subset of carriers that expanded or started operations in year t relative to t-1 divided by the average employment across all carriers in years t and t-1. Analogously, the job destruction rate is defined as the jobs lost due to carriers that downsized or exited in year t relative to t-1 divided by the average employment across all carriers in years t and t-1. The Net Rate of Job Change is the difference between the series and represents the percent change in employment for a given year. Data cover 1978 – 2021, with each data point representing change for that year relative to the prior year (e.g., 1978’s data point compares March 1978 data with March 1977 data). •What I want to emphasize: even when the net rate of job change is relatively low (e.g., 4.3% for March 2019 vs March 2018), this hides that there is a much higher rate of jobs being reallocated across carriers. For example, that 4.3% March 2019 figure hides a 14.9% job creation rate and a 10.6% job destruction rate. •Consequently, what economists call excessive job reallocation in 2019 was 21.2%, which represents the sum of job creation and destruction rates (14.9 + 10.6) less the absolute value of the net change in jobs (4.3), ergo 25.5 – 4.3 = 21.2. That is a lot of reshuffling of jobs across firms. Implication: Trucking jobs are reshuffled across carriers all the time. Focusing only on layoffs misses that firms which win new contracts are likely to expand. #supplychain #supplychainmanagement #freight #trucking #truckload #logistics #transportation

141

10 Comments

Join us today for a great discussion on how to optimize your food & beverage supply chain!

27

One argument I've been making regarding seasonal capacity tightness in the truckload sector is that 2024, while having more pronounced seasonal tightening than 2023 (when capacity was quite abundant), isn't showing the same degree of seasonal tightening that we saw in 2019. This morning, FreightWaves published an article (https://lnkd.in/gT7Dn5ex) that provides corroborating evidence of my prediction. Below I've shared the plot from the link. Thoughts: •Tender rejection rates are currently around 6%, which while higher than 2023, is down more than 150 basis points from where they were at this time in 2019. From a historical standpoint, their data reporting a 6% tender rejection rate points to capacity being generally plentiful. Implication: The fact seasonal tightening isn't more pronounced suggests that January 2025, excluding some extreme weather event, will see capacity becoming quite plentiful during the nadir month of the year for truckload shipments. These data continue to point to a true recovery of trucking conditions not materializing anytime before late Q1 2025. #supplychain #supplychainmanagement #freight #trucking

94

4 Comments

Early freight orders for peak season are showing a modest increase, according to the CNBC Supply Chain Survey. However, consumer spending is predicted to be relatively conservative compared to previous years. #supplychain #supplychainmanagement #cnbc #yahoo #yahoofinance #logistics #logisticsindustry Vance Zahorski, John Mills, Denny Smolinski, Luba Ilyasova, Oleksandr Nyezhnyk

3

According to ACT Research, freight demand is projected to experience an upturn in the coming months due to factors like growing goods spending, a turning inventory cycle, and rising industrial production. The analysis also highlights the potential record demand for new commercial vehicles driven by private fleets preparing for the 2027 emissions regulations. #freight #freightbroker #freightindustry #transportation #truckingindustry #truckinglife

5

Lead Times are big deal. This is not a 'set and forget' field. A lot of things can change lead times from your #SupplyPartners: ❗ Capacity changes from other customers, time of year ❗ Machine/tool issues ❗Staffing ❗Weather ❗Freight ❗World events/conflict ❗Material shortages ❗Quality issues Finding out at the time of PO placement that lead time has doubled or tripled is very very very very very unpleasant. Ideally, you should stay in contact with your partners and they should keep you informed of changes or issues... but what if you/they do not? Then own that responsibility and reach out and connect with your partners. Put a reminder on your calendar (or whatever tool you use to stay organized) to stay current on this. And if there is a change, update your Team AND your system. One of the worst #SupplyChain experiences is to find yourself suddenly facing a months long backorder because of missed communication. #SupplierRelationships #Communication #CPGBrands #Operations #Procurement Have you ever experienced this?

14

9 Comments

🎙️ Do you understand the freight recession and truckload market dynamics❓ In a recent Logistics Management podcast, Mike Regan from TranzAct Technologies dove into the current state of the freight recession and its impact on the truckload market. Your business could gain valuable insights into the driving forces behind these changes and what it means for the logistics industry. 🎧 The podcast discusses: - Analyzing the economic factors contributing to the freight recession. - Understanding how truckload carriers and shippers are adapting. - Preparing for what lies ahead in the logistics sector. How is your company navigating the current freight recession? Share your strategies and thoughts in the comments below! #Logistics #FreightRecession #TruckloadMarket #SupplyChain #TranzActTechnologies #IndustryInsights #LogisticsManagement

4

🚛 Truckload Prices Set to Rise in 2025: What Shippers Need to Know 📈 As we celebrate National Truck Driver Appreciation Week, it's a good time to acknowledge not just the hard work of drivers but also the evolving economic landscape in freight. 🔍 Key Update: The breakeven truckload cost per mile is now $2.72—a 4.4% increase from 2023. While fuel prices have dipped, rising costs in driver wages, equipment, and maintenance continue to push overall prices higher. 💡 What This Means: Shippers should anticipate steady or increasing spot rates into 2025. Now is the time to revisit logistics strategies, optimize routes, and strengthen carrier relationships to stay competitive. Staying proactive today will help you manage costs tomorrow. #Trucking #Freight #Logistics #SupplyChain #Truckload

18

3 Comments

With the election settled, I’ve received many inquiries regarding how I anticipate dry van truckload rates will move in 2025. To help answer that, below I’ve charted year-over-year percent change in DAT’s dry van TL spot rate (red) and the BLS’s primary service PPI for general freight trucking, long-distance, truckload (NAICS 484121). Thoughts: •The most profound change that has occurred with these data is that the PPI is now more strongly correlated (albeit with a lag) with spot rates. A decade ago, a 10% year-over-year increase in spot rates would net a ~3% year-over-year increase in the PPI. That relationship appears to have doubled since COVID-19 hit (e.g., a 10% increase in spot rates now gets you a 6% increase in the PPI). •If we assume the shift in the relationship since COVID-19 isn’t due to a unique one-time event but is an underlying product of an environment with much greater information availability, then it would be reasonable to assume this magnitude of relationship will continue. •The question then: how much will spot rates increase? I’ve been on record saying I expect the next bull market cycle to look like 2014 in that I don’t see an increase in trucking ton-miles in 2025 that would be the same pace we saw in late 2017 and early 2018 (not to mention no ELD mandate at work). With that, I’m willing to predict spot rates increase ~15-20% year-over-year by Q3/Q4 2025. That would imply an increase in the BLS PPI by 9-12% year-over-year (but with a lag). That would be the same magnitude of increase in the PPI we saw in 2018. Implication: My best guess basing on looking at underlying demand and supply conditions is dry van spot rates rise 15-20% in 2025 from where they are in 2024 (with those figures being reached in Q3 and Q4 2025). That implies the BLS’s primary service PPI for dry van trucking will rise 9-12% year-over-year, with those gains lagging the spot market changes. #supplychain #supplychainmanagement #freight #trucking #truckload

285

41 Comments

LTL isn't solely for urgent needs. It complements the network alongside full truckload, intermodal, and dedicated fleet solutions. Here are a few instances. Access the comprehensive guide on integrating LTL freight into your multimodal strategy: https://sndr.pro/5M

1

Many of you know I frequently disagree with FreightWaves regarding their continually revisions to their predictions of when the truckload market will turn, and I also challenge that their tender volume data are representative for all of truckload operations. However, one thing I do agree with them about is that the American Trucking Associations continually claims about a systematic shortage of truck drivers are incorrect. That said, this article from today (https://lnkd.in/gt4fmJep) caught my attention. A few thoughts: •FW's isn't pulling punches in stating "the bill [H.R. 3013] is intended to rectify the shortage of truckload drivers — an oft-repeated myth of the ATA, and one for which the organization’s projections are revised frequently — there is no real urgency behind its advancement. •And no punches pulled with, "Based on its results this Congress, the American Trucking Associations’ lobbying efforts make it look less like a Machiavellian operator, pulling strings in the halls of power, and more like another Washington grifter — a shop that raises a lot of money, pays its staff well and takes congresspeople to dinner, but gets little done." Implication: regarding this story, grabs🍿and waits for the ATA to respond. #supplychain #supplychainmanagement #freight #trucking #truckload #transportation

133

13 Comments

Where are dry van truckload prices at? With DAT’s most recent data released this week, as well as the BLS’s PPI for general freight trucking, long-distance, truckload [primary services], I wanted to share my thoughts. Two charts below. Thoughts: •Top chart shows DAT’s dry van spot rates (red) and what they call contract rates (black) (including fuel). Both continue to move in parallel. Historically, every major market shift (2014, mid-2017, mid-2020) has corresponded to a sharp uptick in dry van spot rates, inclusive of diesel prices. We just aren’t seeing any signs of such an uptick now, which further solidifies my view that we can write of 2024 as the year the market could turn. It’s time to turn the page to 2025. •Bottom chart shows the producer price index for the commoditized portion of dry van TL freight (which includes fuel). That index continues to move sideways. Historically, as with spot rates (but to a much lesser extent [at least in 2014 and 2017-2018), we will see these rates spike when market cycles change. The BLS’s data likewise is corroborating this hasn’t happened yet. Implication: despite a lot of excitement with the election outcome, the brutal reality is that the dry van truckload sector needs a significant infusion of freight to get out of the current “limbo” conditions where we have seen one cycle end but have yet to see another cycle begin. To continue to echo the prediction I’ve made for several months, the soonest I see the market meaningfully changing towards carriers’ favor would be late Q1 to early Q2 2025. We will need to closely watch demand signals over the coming months, especially data on manufacturing new orders. For the late Q1 to early Q2 market turn to materialize, we will need to see a rapid uptick in new orders over the next few releases from ISM. #supplychain #supplychainmanagement #freight #economics #trucking 

195

16 Comments