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Improved Carrier Sentiment Signals Potential Rate Increase in Truckload Spot Market

40Seas global trade import supply chain rate cross-border

Improved Carrier Sentiment Signals Potential Rate Increase in Truckload Spot Market

A recent Bloomberg | Truckstop survey reveals that sentiment among North American carriers in the truckload spot market has improved over the past three months, although some concerns remain.

Read also: Truckstop.com and Bloomberg Intelligence Survey Shows Carriers Remain Optimistic About Demand Despite Obstacles

“The industry is emerging from a challenging quarter, and the improved sentiment coupled with Truckstop’s rising Market Demand Index suggest rates may move higher from here,” said Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence. “The direction of rates will be driven by supply-side factors as the industry remains flush with capacity.”

Key Findings from the 1Q24 Truckload Survey

1. Demand and Future Predictions

While 62% of carriers reported lower freight volumes in Q1, 33% anticipate an increase in freight demand over the next 3-6 months, a significant improvement from previous expectations. Only 19% foresee a decline in demand, marking a 12-point improvement from the last survey.

2. Market Improvements

The survey indicated that market conditions might be improving, with Truckstop’s Market Demand Index up 9% year-over-year, the first annual gain after seven consecutive declines. Additionally, only 26% expect rates to drop in the next 3-6 months, while 28% anticipate rising rates.

3. Carrier Uncertainty

Despite the positive outlook, 44% of respondents were unsure about their future in the industry, and 9% expressed a desire to leave trucking. High interest rates impacted 78% of businesses, with 19% citing increased equipment-financing costs as a barrier to upgrading or adding tractors. Demand challenges persisted, with an average load drop of 10%, slightly better than the 13% decline in Q4.

“We’re all eagerly anticipating a more positive shift in the tide,” said Kendra Tucker, CEO of Truckstop. “Truckstop continues to be a trusted partner, committed to delivering innovative solutions to help carriers navigate this ever-evolving business landscape.”

The Bloomberg | Truckstop survey, conducted among 225 owner-operators and small fleets, provides valuable insights into the health of the spot market. The sample included various types of carriers, with 45% operating just one tractor.

The full survey results are available to Bloomberg Terminal subscribers via BI.

global trade rail train derailment

Freight Train Derailment Sparks Fire Near US-Mexico Border

A freight train transporting gasoline and propane derailed near the Arizona-New Mexico border, igniting a blaze that engulfed approximately six rail cars. New Mexico State Police (NMSP) reported the incident, which prompted the closure of a vital trucking route.

According to NMSP Lieutenant Phil Vargas, the derailment occurred close to Houck, Arizona, and resulted in a prolonged fire that required hours to extinguish. Fortunately, there were no injuries reported in connection with the incident.

As a safety precaution, both east and westbound lanes of interstate highway I-40 near milepost 8 were shut down following the derailment. The McKinley County Sheriff’s Office indicated uncertainty regarding the reopening of the affected roads.

Lena Kent, a spokesperson for BNSF Railway, confirmed the derailment and assured that the crew remained unharmed. The incident is currently under investigation and is being treated as a hazardous materials incident, as reported by local media outlets. Authorities are actively probing the cause of the derailment to prevent similar incidents in the future.

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Freight Cost Optimization: Reducing Deadheading, Factoring, and Fuel 

Trucking industry market ebbs and flows are expected. Costs associated with operating a truck are also to be anticipated. During these times, partnering with a third-party logistics (3PL) provider can be very helpful for smaller fleet owners. 

How Carriers Can Easily Combat Frequent Obstacles in the Industry

Third-party logistics providers help carriers effectively reduce deadhead miles, accelerate their payment cycles, improve their factoring, and lower fuel expenses. Working with a 3PL that offers a wide range of loads can significantly reduce dead miles, thereby maximizing their earnings. Partnering with a reputable 3PL can provide carriers with access to a diverse pool of loads, enabling them to better manage their deadheading. 

1. Deadhead Miles

Truck drivers all understand this universal concept – driving without freight means losing money. This issue ranks high among the most frequent complaints from carriers in the supply chain field. Numerous factors that contribute to this problem are beyond the carriers’ control, such as labor, cost of the truck, and maintenance. However, one big factor carriers can control is dead miles.

Third-party logistics providers can help carriers minimize deadhead miles, which is key to maximizing profitability. To address this challenge effectively, small carriers can benefit greatly from partnering with a reliable 3PL that manages a vast network of available loads, which results in more volume and opportunities for closing the gap between where they made their last delivery and where they’ll pick up their next load.

According to a study conducted in 2021 by the American Transportation Research Institute, an average truck driver in the United States covers approximately 100,000 miles per year, of which around 20% are deadhead miles. This statistic emphasizes the financial impact of inefficient routing and underutilized truck capacity. 

Minimizing dead miles is crucial for truck drivers to optimize their financial returns. While various factors affecting carriers’ profitability are beyond their control, carriers do have options when it comes to finding ways to reduce deadheading, factoring, and fuel costs. 

2. Factoring

A small carrier can get into catastrophic trouble if they’re factoring their money, because they’re basically giving what would be profit away. Partnering with a 3PL with a carrier’s interest in mind means helping them to get the best loads and rates, especially when the market gets quiet.

Another crucial advantage of partnering with a 3PL is the ability to get paid quicker and enhance the factoring process. Third-party logistics providers often have established relationships with shippers, which enables them to negotiate faster payment terms for carriers. 

Carriers can benefit from quicker payment cycles that bring a steady cash flow to cover operational expenses, fuel costs, and driver wages. Some 3PLs even offer factoring services that are less expensive than a bank’s fees, allowing carriers to receive immediate payment for their delivered loads and eliminating the need to wait for payment from the shipper. This streamlined process not only helps carriers improve their financial stability but also reduces administrative tasks associated with invoicing and collections.

3. Fuel

Fuel costs continue to be a daunting pain point for carriers, especially with the unpredictable fluctuations in oil prices. But, partnering with a 3PL is an easy way to reduce fuel expenses through optimized routing and load consolidation. A reputable 3PL has access to advanced technology and data analytics, allowing them to plan efficient routes that minimize unnecessary detours and empty miles.

Through maximizing load utilization and minimizing deadhead miles, drivers can significantly reduce fuel consumption and, in turn, lower their overall fuel costs. This not only translates into financial savings but also contributes to a greener and more sustainable transportation industry.

Working with a trusted 3PL helps carriers increase profitability and operational efficiency by reducing deadhead miles, accelerating payment cycles, improving factoring options, and lowering fuel costs. 

With a straightforward approach and the right partnership, carriers can overcome hurdles, thrive in their business, and build a brighter future for themselves and their drivers.

Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/

 

global trade

Global Trade Trends: What Will 2021 Unwrap?

2021 is a handful of oliebollen away in the rearview mirror and it’s time to prepare for new events. What will global trade unwrap? A number of nuggets below.

Think Green

No, not that green. Real green. As in: will the U.S. and European Union’s green initiatives put pressure on their trading partners to invest in more environmentally friendly manufacturing, transportation methods, or forms of energy? For example, will U.S.–Mexico relations be strained because of the demand for greener solutions in manufacturing plants?

Sanctions

It is expected that sanctions will remain a prime measure to put pressure on political regimes. When countries improve their standing, however, sanctions can get lifted: the Sudan sanctions are already lifted, and the question is if more will follow. Iran will demand a reprieve if the nuclear treaty is to be put back in place and Cuba may get another look with a Democratic administration. Anticipating the impact, or perhaps the opportunities, is important. 

Ecommerce

Lead by retail growth at a high rate of ~20-23% until 2020, ecommerce exploded last year (Forbes noted the May 2020 year-over-year growth was 77%) and will stay a part of every company’s selling strategy. Forced or accelerated by the pandemic, companies have adjusted their customer interactions, and ecommerce strategies will remain an integral part of all global businesses. No longer confined to specific market segments, this change drastically affects how global trade is conducted and where resources will be spent. Shipping directly to customers affects many aspects of the global supply chain and companies now must account for shipping and compliance aspects that are different from previous models.

Various governments (e.g., EU, Australia) already implemented or announced changes regarding treatment of low-value shipments (value-added taxes are no longer waived) and, with more revenue at stake, more governments will follow that trend. Additional scrutiny on the compliance front is another logical step. The ecommerce burst included markets outside of the traditional ecommerce heavy retail products. Industries with a heavier compliance burden (e.g., dual-use goods) have also shifted to online models and are dealing with non-traditional importers that will be less familiar with required compliance measures. New legislation/procedures will certainly make their entry in 2021 to ensure products do not end up in the wrong hands.

Brexit

No surprises here—the shadows Brexit threw ahead are now being caught up with. One thing perhaps underestimated in the mayhem of new regulations and immediate requirements is that the Free Trade Agreements (FTAs) that were mostly copied and pasted to avoid disruptions will get a closer look around Q3 2021. This may result in new Rules of Origin (i.e., requirements to meet preferential thresholds) or even different duty rates.

Manufacturing

Countries such as Vietnam and Cambodia made significant infrastructure investments and it looks like efforts are paying off. Manufacturing in South East Asia (and, for example, in the Philippines, Indonesia and Laos) is growing exponentially and with new locations come new compliance requirements. New Rules of Origin, documents, shipping lanes and trading partners make for exciting yet busy changes.

Besides South East Asia, Africa is also making strides. With large investments from China (among others in South Africa, Alegria and Zambia), infrastructure and capabilities improve, and the next global shift is in the works.

Tariff Measures

Regarding the additional duty rates the Trump administration put in place on imports (either on specific goods and/or from specific countries), it is to be expected those will be reduced if not nullified over the next months or years. That does not mean things will go back to how they were prior to 2016. The U.S. is expected to continue operating more forcefully when it comes to supporting U.S. businesses and industries against unfair third-country competition, and that includes protectionary measures. Perhaps there will be an uptake in the more traditional Anti-Dumping/Countervailing Duty cases through the WTO as a preferred path over unilateral actions.

US Changes

Undoubtedly the change in administration in the U.S. will have a significant impact on its position towards global trade. Balancing the need to keep a tight grip on foreign trade (especially with crucial partners such as China, the U.K. and the EU) with a more outward-facing policy will be an interesting affair for new Secretary of State Andrew Blinken. Expanding and re-establishing trade relationships will also be on the agenda. This will likely include a fresh effort to revisit the Trans-Pacific Partnership (U.S. – ASEAN), the review of a few other FTAs that were slowed down and, further down the line, even a Trans-Atlantic (U.S. – EU) pact, possibly spearheaded by a U.K. – U.S. agreement first.

All in all, 2021 will not allow companies to take a breather. If anything, the agility of supply chain strategies will be tested further this year.

CRM

The Key to Unlocking Hidden Treasures in your CRM

Customer relationship management systems (CRMs) are great for collecting and organizing data. But, what are we doing with all this data? Promoting new services to existing customers, improve customer loyalty, repurpose old leads that could be interested in new products or services?

A CRM system can store a big amount of customer data and by using this data you can form deep insights into how your prospects and customers interact with your business. This will help you to build a better customer experience, increase customer engagement and loyalty.

Let the data guide you

Use your sales dashboard to check progress towards your sales quota, monthly trends, and overall value of your sales pipeline. Without a good CRM, you simply won’t be able to manage your sales pipeline properly. Gain a full view of your entire sales pipeline and never get lost about how your team is tracking toward quota, and you’ll have all the data you need to coach your team to success.

Updated and correct data

CRM is most effective when the data is updated and fresh. If the customer’s address, company name, or preferred method of contact has changed, your staff should update the information immediately, so your sales and marketing teams are always equipped with the right information.

Find potential money between the cracks using filters

Filter data in your CRM to find prospects that you haven’t spoken to in a certain time, maybe they said no due to bad timing or the price. Maybe their attitude has changed? Play with different ways to filter data and soon your salespeople will have a gold mine to pick from. The next step is to automate this process so that these lists are created and served to the salespeople automatically.

Set up automated email sequences and collect more leads

Since many sales teams are more data-driven than ever, take the advantage to automate your workflows to eliminate time-consuming and repetitive functions. When new leads are added to a CRM (newsletter subscriptions or website visits), you can program your CRM to send follow-up emails, offer promotions, invites to webinars and events to keep your business at the forefront of their attention. This saves you a lot of time, spent on writing emails while also making sure that you are engaging your prospects throughout the whole sales process.

Unlock hidden insights from your customers’ purchase history

With a CRM you can boost your sales performance by analyzing your existing customers’ purchasing history. It’s easier to sell to existing customers than acquiring new ones.  One of the keys to upselling is that you offer products that add value and improve your customer’s life.

Data-driven approach

If your company uses a CRM tool, you already own all the information needed, the challenge is to find a clear and organized way to access this knowledge by unlocking the value stored deep in your CRM data.

It is important to have as much data as possible about customers, products, and revenues in your CRM, but this information will never be useful or bring value to your business if you don’t define which type of data, metrics, and KPIs you need to follow-up on a regular basis. Once your data is organized, it will be easier for your sales teams to adopt a data-driven approach.

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Sara Cronsioe is an Inbound Marketing Specialist at GetAccept, the go-to platform where B2B sellers can interact with buyers in a personal and engaging way, making business easier and faster. 

EPA

Old Dominion Confirmed for the 2020 EPA SmartWay Excellence Award

Old Dominion takes leading sustainability efforts in the trucking industry to a new level. Thanks to its role within the SmartWay Transport Partnership, the LTL carrier has contributed to the savings of 279.7 million oil barrels, $37.5 billion in fuel costs, and 134 million tons of air pollutants, according to information released. These successes in addition to consistent efforts in sustainable operations have earned Old Dominion the EPA SmartWay Excellence Award award for the sixth year in a row.

“Sustainability is a critical component of Old Dominion’s operational strategy. We’re committed to being a good corporate citizen and our partnership with the SmartWay Transportation program helps us move towards being a more sustainable carrier,” said Greg Gantt, president and CEO, Old Dominion Freight Line.

The award and 11-year partnership with SmartWay support Old Dominion’s position as a leader in sustainable operations within the freight supply chain arena. Old Dominion represents one of roughly 3,670 companies in partnership with SmartWay. SmartWay partners range from freight shippers to manufacturers, cargo owners, retailers, and more.

Sam Faucette, Old Dominion’s vice president of safety and compliance, received the award on behalf of the company on November 5th during the EPA SmartWay Excellence virtual conference.

“We will continue to look for ways to improve our sustainability practices and ultimately reduce our carbon footprint. We are humbled by this recognition and thrilled to receive this award for the sixth consecutive year,” Gantt concluded.

Old Dominion

Old Dominion Meets Growing Demand with Facility Expansions

As capacity and customer demands continue to grow, leading LTL carrier Old Dominion Freight Line (OD) prepares to meet these industry needs by expanding its facilities across the country from Texas and Ohio to Idaho and Arkansas while adding more facilities to growing markets. The announces expansions include innovative technology allowing for increased shipping paces and seamless shipment transfers while reducing shipping time and adding more room for capacity and flexibility options.

“As our customers adjust to growing e-commerce demands, they rely on us to not only accommodate the additional shipments but to also help them keep their promises to their customers with fast, on-time delivery with no product damage,” said Terry Hutchins, Vice President of Real Estate. “We are excited about these new and renovated service center openings. OD will continue to invest in new capacity to welcome the growing demand and exceed our customers’ expectations.”

Among the regions now boasting renovated and improved facilities in El Paso and Lubbock, TX, Columbus, OH, and Chicago. The facility expansions and additions ultimately strengthen the LTL carrier’s market presence while maintaining customer satisfaction through upgrades and more bodies for support.

In addition to facility expansions, remodeling, and employee additions, OD will celebrate the opening of new facilities recently opened in Oregon, Idaho, Arkansas, and Georgia throughout the month of October.

Our long term strategic plan includes continual investment in our network to improve efficiencies and increase capacity so when our customers grow, we can serve them. The end goal of helping our customers keep their promises is solidified by our continued investment in new technology and service center expansion,” said Hutchins.