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IANA Releases Q1 Intermodal Quarterly Report

intermodal

IANA Releases Q1 Intermodal Quarterly Report

First Quarter 2020 Intermodal Volume

Intermodal volume declined 6.7% in Q1, following an annual loss of 4.1% in 2019. Intermodal volume was impacted by COVID-19 related issues at the start of 2020, while trade uncertainty pulled down volume in 2019. On a quarterly basis, Q1 performed slightly better compared to the 7.4% loss in Q4 of 2019.

From quarter to quarter, individual intermodal market performance was relatively the same, except for a directional change in domestic container growth. The domestic container market turned around this quarter, gaining 2.2% in Q1 compared to the 2.7% loss in Q4. In contrast, international container losses increased from 9.1% in Q4 to 11.3% in Q1. COVID-19 related issues impacted both domestic containers and international volume in Q1. Auto plant and other manufacturing shutdowns across North America, coupled with declining imports, made for a difficult start to the year.

3PL volumes are reported by participating Intermodal Marketing Companies. Overall, volume was up year-over-year slightly in Q1, as highway volumes recorded solid gains and intermodal volume was down a bit. While total domestic intermodal loads dropped 1.8%, IMC intermodal loads dropped just 0.3%, due to a slight decline in January and March and a solid increase in February. February’s jump likely resulted from being a day longer than the year before. Highway loads were up 2.9%, but is likely a result of a 10.6% surge in March following slight declines over the first two months of 2020.

It will be curious to see if IMCs have a significant decline in Q2 or continue to see highway loads rising. While volume was up slightly, average revenue per load fell significantly for both intermodal and highway loads. This resulted in a $113.7 million drop in revenue year-over-year, down 5.0%. Intermodal resulted in 78.8% of that total revenue decline.

Weak comparisons and an increase in conversions to containers led to the domestic container market gaining volume this quarter. On the other hand, falling imports pulled down potential growth as imports feed into transload volume. While domestic containers grew 2.2% in Q1, volume fell 4.9% from Q4 to Q1. In Q1 of 2019, domestic container volume lost 4.1% due to increased trucking competition and weak domestic demand. However, the positive change in domestic container performance in Q1 of 2020 could be the result of weak comparisons rather than an actual improvement in volume. Domestic containers fell in only three of the ten IANA regions this quarter. Losses were concentrated in the eastern U.S. as trucking tends to be more competitive with rail in this region.

In comparison, trailers only gained volume in two of the ten IANA regions in Q1. Western Canada and Mexico gained volume this quarter, but are the two smallest IANA regions. Due to their size, these two regions are sensitive to minor changes in volume. All other regions, excluding Eastern Canada as there are currently no trailers in service in that region, fell over 20%. On the whole, trailers fell 23.3% in Q1 and 21.4% in Q4. Trailer and domestic container performance in Q1 led to an overall loss of 1.8% in the domestic market.

Total international volume fell 11.3% in Q1, an increase from the 9.1% loss in Q4. International suffered in 2019 due to a 0.1% decline in imports into the U.S. This deterioration was triggered by trade disputes and economic uncertainty in the U.S. and across the globe. First quarter imports are normally volatile due to a shutdown of manufacturing plants during the Chinese New Year. However, these shutdowns were extended far past the normal two week hiatus due to COVID-19 related issues. An outsized loss of 27.2% of international loads on the West Coast in Q1 was caused by 11.2% fall in U.S. West Coast imports over the same time period.

Only one region showed an increase in international volume this quarter. Mexico gained 19.5%. However, in similar fashion to domestic containers, Mexico is one of the smallest regions and has limited impact on the overall performance of international volume. Eastern Canada and the Midwest lost over 10% in Q1, while the Northwest, South Central and Southwest all lost over 20%.

The COVID-19 impact on intermodal volume makes it the most difficult time ever to forecast. The decline is expected to be much larger in Q2, and perhaps through the rest of 2020. While volume could surge back up later this year, International volume will likely fall between 15% and 20% during the rest of 2020. This reflects the very low demand for imports as well as the impact of tariffs, most of which remain in place. Domestic container loads also are expected to fall between 15% and 20% as demand is low, fuel prices have fallen drastically, and transloads of imports are expected to decline. Trailers were expected to fall significantly prior to COVID-19, but are now expected fall even more. Overall, total intermodal loadings are forecast to fall about 15% for all of 2020. Yet all those dealing with intermodal should know it is very difficult to confirm where this will go this year.

Trucking Industry Outlook

The coronavirus’ (COVID-19) effects on truckload volumes were essentially limited to March, but they were more than enough to turn what had been forecast as a flat 2020 Q1 year over year into a negative one. Even with two months that largely were unaffected by COVID-19 and a few weeks in March when refrigerated and dry van spot market volumes were sharply higher due to the need to restock grocery store shelves, total Class 8 tractor-trailer loadings were down 1.6% from the same 2019 quarter. Compared to 2019 Q4, loadings were up 0.2%.

No truckload length of haul saw growth, either year over year or quarter over quarter. Long-hau truckload experienced the biggest hit, falling 2.1% year over year and 1.5% quarter over quarter. Super long-haul was down 1.8% year over year, although quarter over quarter it fared the best at flat. Medium-haul was down 1.3% year over year and down 1.0% quarter over quarter. Short-haul loadings were down 0.7% from Q1 last year and 0.8% from Q4.

Refrigerated truckload volume was just above flat year over year in Q1 at 0.1% growth and up 0.6% from the fourth quarter of 2019. Dry van fell 2.6% year over year and 0.8% from 2019 Q4. Together, all other segments were down 1.1% from 2019 Q1 and 1.6% from 2019 Q4.

Before the COVID-19 crisis, active truck utilization – the share of seated trucks engaged in hauling freight – bottomed out in late 2019 and utilization was expected to begin a gradual firming in the first quarter of 2020. However, utilization began to weaken toward the end of Q1. And this trend is not anticipated to reverse soon.

With truck insurance premium costs still high, the number of trucking companies losing operating authority was the highest ever in 2020 Q1. The gross number of carriers losing authority is not necessarily significant as the total number of motor carriers has risen over time, but failures have been above trend since 2018 Q4. However, there continues to be new entries, and indications are that until the COVID-19 crisis most of that capacity was being absorbed into the existing carrier base to haul what had been solid freight demand.

Spot market capacity in dry van and refrigerated freight rose modestly in late March as carriers chased a very brief period of higher loads and rates. However, spot truck availability remains slightly below 2018 in dry van and well below that level in refrigerated. When overall freight demand was solid, low truck postings suggested a general balance between capacity and demand. In the current environment, we would have expected a surge of trucks posted in the spot market. A smaller-than-anticipated increase could imply that some smaller operations either cannot operate or are choosing not to do due to health worries.

Meanwhile, truck and trailer orders are plunging due to the COVID-19 crisis. North American Class 8 orders plummeted in March to their lowest level since 2010.

The for-hire trucking industry added 1,500 payroll jobs in 2020 Q1, according to preliminary Bureau of Labor Statistics estimates. Even in March, trucking jobs were basically flat at a loss of just 200 jobs in a month that the U.S. economy lost 701,000 jobs. However, data collection for the BLS report ended in mid-March, and the early stages of the COVID-19 impact represented the strongest period of increased demand in dry van and refrigerated freight.

The FTR Truck Driver Pressure Index remained negative in 2019 Q4 at -6.1, indicating no driver-related pressure on rates. The index has a baseline of zero, which represents balance in the driver hiring environment. Positive readings suggest greater pressure on rates and utilization; negative readings suggest less pressure.

The near-term outlook for trucking obviously is bleak due to COVID-19. The forecast for Class 8 tractor-trailer loadings in 2020 Q2 is for a 9.0% drop year over year and an 8.1% drop quarter over quarter. The third quarter could be even slightly worse compared both to the second quarter and 2019 Q3. We might not see any significant recovery begin until early in 2021. All segments are forecasting as negative in 2020 compared to 2019 with refrigerated least negative and flatbed and bulk/dump hit the hardest.

Utilization likely will continue to deteriorate through early 2021. Although driver capacity certainly will fall, our expectation is that the collapse in freight demand will outpace the decline in active capacity. However, this is clearly one of the major areas of uncertainty. Direct federal assistance from Washington coupled with very low diesel prices is expected to keep some capacity in the market that normally would exit during such conditions, especially considering that carriers cannot readily dispose of equipment. Even before the COVID-19 crisis, used truck values were poor. On the other hand, truck insurance premiums likely will continue knocking out carriers once temporary moratoriums against cancelling insurance for non-payment expire. Although this has been happening for more than a year, the freight market was strong enough to absorb the idled drivers, and that won’t be the case for a while.

The weaker active truck utilization and sharply lower diesel prices – both consequences, directly or indirectly, of COVID-19 – mean that intermodal volumes, which are weak enough due to lower imports and exports and other COVID-19 impacts, will be further challenged by competition from the truckload sector.

truck drivers

Coronavirus Reminds America that Truck Drivers are Essential Every Day

Life on the road feels a little more lonely these days. Just ask Harold Simmons.

A truck driver for LS Wilson Trucking out of Utah, Simmons is afraid to go home because he doesn’t want to risk bringing the coronavirus with him. His wife has had pneumonia, and he wants to protect her.

At truck stops, he is eating alone more often because of social distancing practices in force at restaurants. No more small talk with a driver sitting next to him at the counter.

So it was a nice change of pace when he recently pulled into a rest area off the highway, and a group of strangers were in the parking lot handing out free food to truck drivers. “People, in general, are showing us their appreciation,” Simmons said. “Even shippers and receivers are finally treating us like human beings again.”

In our newfound appreciation for essential workers in the global pandemic, it’s heartening to see the support for our truck drivers. Social media is filled with posts marked with the #ThankATrucker hashtag.

Truck drivers have always been essential employees, hauling freight across the country, away from their families and the comforts of home. They have been easy to ignore because they toil behind the scenes. Most Americans never interact with them, unlike our doctors, nurses, pharmacists, supermarket cashiers and restaurant delivery drivers.

But what’s left of our economy would not be standing without the tireless dedication of professional drivers. They are the essential link in our supply chain. Despite health risks, they are hauling consumer goods to ensure retailers can keep their shelves stocked. They are delivering personal protective equipment and other supplies to hospitals when they often don’t have their own PPE. They are driving into hot zones when others are fleeing.

Truckers are providing critical services even when their own economic well being is at risk. In the early days of the crisis, freight volumes rose as supermarkets restocked their shelves and other essential businesses built inventory to protect against supply chain disruption. However, as shelter in place orders have expanded to cover most of the population, industrial production has contracted, and freight volume has declined sharply.

The reduction in freight volume has squeezed revenues for trucking companies. One widely followed financial measure is the dry van spot rate, which is the amount of money a driver is paid per mile to haul freight within about a day of the shipment. This rate has fallen 20% since the end of March, according to DAT Solutions. There’s no clear sign when rates might rebound, as some states have extended stay-at-home orders until the end of May.

Trucking companies say they are concerned about having enough revenue in the coming months to meet their two biggest sources of fixed costs: insurance and loan or lease payments for trucks and trailers.

This is a big concern because many trucking companies are small businesses, just like the florist or the neighborhood restaurant or the hair salon. Most drivers work in fleets that contain 20 or fewer trucks, according to the Owner-Operator Independent Drivers Association.

OOIDA has been lobbying Congress and the Trump Administration to do more for the trucking industry during the pandemic, including providing PPE and testing to truck drivers and targeted economic and regulatory relief for trucking companies.

“They’re facing a real economic crisis to be able to continue to operate, not to mention the fact that they actually are on the front line in the battle against coronavirus,” Todd Spencer, president and chief executive officer of OOIDA, recently said on CNBC.

Preserving our nation’s trucking capacity is critical to our economic recovery post-COVID-19. It is essential that when industrial production rebounds, trucking capacity is not constrained. We cannot allow America’s trucking companies to fail or we jeopardize the broader recovery.

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Daniel Burrows is the founder and CEO of XStream Trucking, a design and engineering company for connected hardware for the long-haul trucking industry.

fleet

How to Prepare Your Fleet and Stay Organized During a Global Crisis

In times of global crisis, the world relies on the trucking industry to transport essential items across the country. From medical supplies to restocking the shelves at local grocery stores, truck drivers play an integral role in maintaining the supply chain. In order to keep these essential items moving during the COVID-19 crisis, the Department of Transportation has suspended most of the Hours of Service regulations for those trucks that are transporting these essential goods.

Commercial truck drivers have had their driving hours extended from 11 to 14 hours depending on the goods being carried. With so much going on and so many depending on trucking and freight transportation organizations during this global crisis, fleet managers and owners need to be extremely organized to handle current and future industry needs. With that in mind, here are a few ways in which you can keep track of your fleet during a time of heightened demand and uncertainty:

Communication is key
The visibility that essential telematics technology brings can be incredibly helpful. Being able to stay in constant communication with your drivers via messaging and dedicated contact forms—as well as knowing their locations at all times—allows fleet managers to make informed decisions. With things being so hectic right now, knowing where your assets are, who is available for the next load, who is nearest to the depots, and who has encountered longer detention times is critical in a time when efficiently maintaining your fleet on the road is more important than ever.

Most likely due to shelter-in-place orders reducing the traffic overall, many of the states experiencing the highest level of COVID-19 spread are seeing a reduction in travel times for drivers. According to the American Transportation Research Institute (ATRI), freight trucks are clocking faster times overall in these areas, particularly in regularly congested areas. That being said, because of additional route changes, border regulations and detention delays, freight is taking much longer to transport. Having access to accurate telematics and open lines of communication with drivers will be key in planning and tracking routes.

Documentation should continue
While logs are not mandatory to be kept while under the Federal Emergency Declaration, continuing to make notes and annotate the daily log with the reason for non-compliance is a good practice. This will make sure that logs are current when the Emergency Declaration is lifted. It’s a good idea to integrate a route planner or add-on the service if it isn’t included by your telematics provider to facilitate the planning of loads and tasks. With so much on the fleet manager’s plate and the additional hours drivers are logging, any opportunity for automation should be embraced.

Driver safety
For all fleet managers, the safety of your drivers should be the top priority. The Department of Transportation Hours of Service regulations are there for a reason. The guidelines, of course, are there to make sure that drivers are not being overtaxed, reducing the possibility of accidents. Giving your team ample time to rest before taking the next load is imperative. And while it’s required that drivers receive at least 10 consecutive hours off if they let their company know they need immediate rest, they may be inclined to push themselves given the current situation, feeling a responsibility to their fleet manager and the community at large. Plus, with people practicing social distancing, it’s likely there will be an uptick in eCommerce purchases, adding additional strain to fleet capacity. A fleet tracking tool will allow managers to review driver’s time, how often they have completed a 14-hour shift, and allow for properly scheduled rest periods to avoid exhaustion and potential accidents.

Track maintenance
While drivers are putting in the extra miles, so are their rigs! Keeping track of oil changes, tire rotation and other regular maintenance items can keep your drivers and trucks safely on the road. While you may think a global crisis is not the time to stop for regular maintenance, these quick care items are much easier and more cost-effective to complete than larger complications they could cause going unaddressed. An oil change can help engines run more efficiently and reduce a fleet’s cost per mile. Taking time to examine tires could reveal a small leak or puncture which could lead to a popped tire on the road, leaving your driver stuck for hours on end or even cause them to lose control of the truck due to the blowout. Addressing these regular maintenance items will boost efficiency and save time in the long run.

Invest in add-ons
During times of global crisis, the supply chain can change at a moment’s notice. Add-ons such as a brokerage provider integration can help keep the lines of communication open with your customers and help you keep track of where the loads are and when they will arrive. With demand high, and lives on the line while carrying freight like medical supplies, these up-to-the-moment notices can be key in providing your team and customers with the proper support.

Driving demand
There’s no doubt about it – the trucking industry is a key player in combating this global crisis. Delivering everything from medical supplies, to food to other ecommerce purchases for those in quarantine, the country is demanding quite a bit from our fleets. By staying organized and using helpful telematics tools, fleet managers and owners will be able to meet this challenge with the knowledge they need to make smart decisions. Staying in constant communication with drivers and customers will also help manage expectations and make sure everyone is on the same page.

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Marco Encinas, Senior Product Manager at Teletrac Navman, plans the product strategy and roadmap releases globally for all of Teletrac Navman’s software platforms. He gains industry insights from customers, integration partners and R&D to improve current Teletrac Navman product features and tools, and drive development of new product requirements. Before joining the Teletrac Navman team, Marco planned product strategy and roadmap releases for both commercial and consumer product lines, developed sales training tools and product curriculum at Magellan GPS and Mitsubishi.

DRIVER SHORTAGE & TRUCKING-CAPACITY: WHY THEY’RE NOT GOING AWAY

In the busy and demanding world of trucking, industry players are inevitably reminded of two significant challenges that show no signs of lessening now and in the near future: trucking capacity and the driver shortage. Neither issue will solve itself with current approaches. Companies are now faced with the reality that change must be embraced through improving training standards and the utilization of advanced technology solutions. 

This might not come as a surprise to some, but for others still operating with outdated practices, reality presents its own set of challenges. To look at the numbers the industry is dealing with, a report released by Insurance Journal confirmed the driver shortage figure has reached 51,000–up from 36,000 in 2016.

Some industry leaders, such as Advanced Training Systems CEO John Kearney, are confronting these issues at every angle–from a legislative, cultural, educational, and technological positions. 

“The issue is that the existing workforce is aging,” Kearney maintains. “The truck is a different piece of equipment from what it was a few years ago–it’s very sophisticated. The technology advances are significant and the regulations are outdated. Simulators are really emerging as a major change to the training field. A lot of companies are now going to simulators because there are some things they can do that are not possible to train any other way.”

Advanced Training Systems (ATS) has spent more than a decade developing cost-effective training simulators and preparing aspiring truck drivers across the United States through many of the training schools in the country. These driver training schools offer students unmatched training experiences that have propelled ATS in a leading position in the driver training field. 

“In 2008 we started the process of developing simulators because we know they are an excellent part of the training process,” Kearney says. “Today, we have simulators in a number of places around the U.S. and Mexico with operations in California where we do manufacturing and technology development while our corporate offices are in Florida.”

Among the scenarios truckers are faced with at a moment’s notice that traditional training methods can’t address include sudden road obstructions, aggressive drivers, inclement weather and truck malfunctions. These unavoidable situations present some of the most challenges in preparing the next generation of truck drivers

“Let’s take the example of a front tire blowout,” Kearney suggests. “If someone does that in a real truck, they could kill someone. There’s also the risk of something coming out on the road all of sudden and if the driver swerves, they could create an accident. These types of scenarios can be taught in a simulator.” 

He continues, “Ice is another example. If a driver is sliding on ice, what do they do? They don’t want to slide in a real truck, so what we do is have simulators that train properly so drivers know how to react if that happens. The reaction time is improved through the process of repetitive proper actions needed to teach muscle memory in the training process.”

Earlier this year, 28 vehicles were involved in a devastating truck collision in Lakewood, Colorado, that claimed the lives of four people. Since then, conversations surrounding improved training methods have taken priority among industry players, with simulators leading the position of potential solutions. 

“Technology is a big part of the answer,” Kearney maintains. “If we use technology, we use better methods of training and we’re not sending someone to sit in a classroom for too long. Change in technology expands on the number of people who can become interested in the field. The methodology of training using simulation and various other training methods available today—such as virtual reality—will provide the industry with better drivers and more people interested in a career in the field.”

Beyond technology, Kearney urges legislators to consider how current age restrictions limit the industry’s growth. Current laws only permit young adults over the age of 21 to drive a truck over state lines, limiting both driver populations and proactive education efforts. The desire to learn is there, but current laws restrict motivated and qualified students to begin training, leaving high schools with little reason to further pursue efforts in education. 

“High schools are not teaching students to drive in a truck. What’s beginning to happen is we are realizing young people are very qualified, they’re very used to working with things like simulation, and we need to allow the young driver to enter into the profession from the time they leave high school, between ages 18-21 once properly trained.”

The trucking industry is sometimes generalized as an exhaustive, demanding and less-than-glamorous profession. It’s time for a refresh of trucking culture to mirror what a career in the industry really looks like, beyond long hours and demanding schedules, according to Kearney. 

“The other part of the issue is we must educate young people to think about truck drivers differently. A truck driver today has much more involvement than just being a truck driver. The industry needs to change the name of what truck drivers are to something that better indicates what they do and what they are. The current trucking condo is actually a very nice place to live and travel around the country.”

The first step in creating reliable and effective solutions for the trucking industry begins with expanded training for existing and future drivers and elevation to a professional level. The technology available in today’s markets enable companies across the nation to improve operations and prepare the next generation of drivers for fulfilling careers. The reality is, trucking is not what it used to be both operationally and professionally. 

“The driver of today has become a manager of multimillion dollars’ worth of freight, managing the technology with careful compliance to the delivery schedule, serious regulations and changes in the method of operating a $100,000-plus vehicle and the method of driving as it develops. The driver of today can move up in the company they work for. Many drivers will be moving up in the industry from driving a truck.”

Opportunities now exist that weren’t fathomable in previous decades. The challenge now is to overcome antiquated mindsets and operation patterns to boost productivity, driver satisfaction and safety. It’s up to industry leaders to step up and initiate change.