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The ‘ingenious strategy’ behind most truckers’ least favorite week of the year: International Roadcheck

truck fallen over

International Roadcheck Week is hardly the sexiest topic in trucking, but it is a darn-tootin’ important one. Inspectors in the U.S. and Canada halt tens of thousands of trucks for vehicle inspections for a few days every summer or early fall. They remove thousands of trucks and drivers from the road; in 2021, 16.5% of inspected vehicles were put out of service along with 5.3% of drivers.

It’s uncommon for truck drivers to actually get their vehicles inspected at random during most of the year. To avoid International Roadcheck Week, many truckers simply don’t drive during that period of time — which, presumably, means more unsafe vehicles and drivers on the road outside of the inspection blitz. It’s a question that ate at Andrew Balthrop, a research associate at the University of Arkansas Sam M. Walton College of Business. 

Around 5% fewer one-person trucking companies are active during International Roadcheck Week. But Balthrop and his fellow researcher, Alex Scott of the University of Tennessee, found a major upside to the inspection blitz — even with all the folks who avoid it. According to their working paper published in March 2021, vehicles are safer a month before and after the inspection period. There’s a 1.8% reduction of vehicle violations, according to Balthrop and Scott’s analysis. Surprise inspection blitzes don’t result in the same uptick of compliance. 

I caught up with Balthrop about his research last week at FreightWaves’ Future of Supply Chain conference, and we chatted again on the phone this week about his findings on International Roadcheck Week.

Enjoy a bonus MODES and a lightly edited transcription of our phone interview: 

FREIGHTWAVES: For our readers who are not aware of what Roadcheck Week actually is, can you explain a little bit about what it and why it is important to drivers and companies?

BALTHROP: “The International Roadcheck is part of an alliance between the inspectors in Canada and the ones in Mexico and the U.S. to have a unified framework for making sure trucks are safe to operate. That should make it easier to go across borders when you have this kind of unified structure.

“In the U.S., one of these CVSA inspection blitzes is the International Roadcheck that happens for three days in the summer. Usually it’s a Tuesday, Wednesday and Thursday. And usually it’s the first week in June.

“And in it, they focus on Level One inspections, the North American Standard Inspection where they inspect the driver records, the hours of service, the licensure and I believe medical records as well. Then they inspect the truck. It’s an in-depth inspection where the inspector will actually crawl under the truck to look at various things. And these inspections, from the data that I’ve seen, take about a half an hour on average.

“During the Roadcheck Week, they’ll do about 60,000 inspections, so 20,000 a day. They’re going to pull over a lot of trucks, and this can cause a little bit of congestion at the weigh stations and the roadside inspections localities as the inspectors are doing these inspections.”

Roadcheck Week doesn’t catch all truck drivers, but it has a long-lasting benefit to safety

FREIGHTWAVES: So, can most drivers kind of expect to be pulled over? How likely is that?

BALTHROP: “There’s 1 million or 3 million trucks on the road, somewhere around there on any given day. With 20,000 inspections, most drivers still will not get inspected, but there’s going to be a higher proportion of drivers inspected. 

“You’re more likely to get inspected on these days. If you don’t have a recent inspection on your record, or if you have a bad recent inspection on your record, you’re more likely to be pulled over on these days.”

FREIGHTWAVES: Your research focused on that it’s just unusual that this inspection is announced, that it’s planned. We were talking before about how normally, if you’re trying to assure quality or compliance, you would not announce an inspection in advance. It would be more of a surprise-type situation. 

Can you walk us through why that’s so unusual, or what’s the rationale that you see behind announcing it in advance?

BALTHROP: “It is unusual, and on the surface, it doesn’t make much sense, but it turns out to be kind of an ingenious strategy. So I’ll walk through it here. 

“Over the course of a year, there’ll be 2 million inspections of 3 or 4 million trucks out there. The average rate of inspections is pretty low. It’s not uncommon for truckers to go years without having an inspection. With this low inspection intensity, the FMCSA has sort of a problem of, how does it get anybody to abide by the regulations?

“I’m a jaded economist, and I don’t worry or consider too much ethics and morality and all that kind of stuff. It comes down to incentives for drivers to follow these inspections. The incentives do guide behavior. So, how could the FMCSA incentivize drivers to follow these regulations more closely and adhere to the standards?

“They do this by announcing the blitz. This does two things. On one side, it allows everybody to prepare in advance. There’s a bunch of anecdotal evidence out there that people do prepare for these blitzes in advance. They will have their trucks inspected beforehand for any problems. They’ll time maintenance and upkeep in advance to make sure that their vehicles are in order. “They’ll be a little bit more cognizant of the driver-side regulations. One thing we notice in our study is that hours-of-service violations really drop during these extensions, because people see them coming. They don’t fudge the books in any way.”

Owner-operators can evade Roadcheck Week. Big carriers, not so much.

BALTHROP: “The issue with the announcement, on the flip side, is that it allows people to just dodge the inspection entirely. For a long time, people have talked about how owner-operators and smaller carriers time their vacations for this particular time. They could do this for a couple reasons. To avoid the hassle is a nice way to put it, but it also allows you to be noncompliant to avoid the high-intensity inspections.

“You have this balance here that on one side you get the behavior you want with people complying with regulations. That’s the behavior the FMCSA wants. But on the flip side, you get a bunch of people that are kind of outright dodging inspections.

“When you compare these two things on balance, the policy is actually pretty effective because you get a lot of people focused on maintaining their trucks and obeying the rules during that particular week. Especially with the vehicle maintenance stuff, that lasts a long time. 

“In our research, we saw that vehicle violations, a month before and up to a month afterwards, is when you still notice your vehicle violations. That trucks are kind of better maintained around these blitzes.

“The ingenious aspect of it is that the FMCSA, by concentrating their inspection resources all at one time and announcing it, they’re making it clear that they’re serious about enforcing these regulations and everybody prepares for it. For the number of inspections that are happening, you get fewer tickets than you would have otherwise expected.

“The FMCSA, they’re putting people through a little bit of a hassle, but they’re not having to write a bunch of tickets to get people to comply. They’re not really punishing a whole bunch of people because, by making this apparent that this is going to happen, people comply and the FMCSA gets what they want essentially without having to come down on carriers too hard.”

A convenient time for a vacation, indeed

FREIGHTWAVES: OK, interesting. And how does this pattern of shutting down, how does that compare for an owner-operator versus a driver for a big fleet?

BALTHROP: “If you’re a motor carrier with thousands of power units, you can’t just pack up and not do business on a particular day. They just don’t have that option. So they get inspected at a higher intensity, and you see the larger carriers kind of more focused on making sure that they’re prepared for these inspections. With so many inspections, the larger carriers are going to be inspected at higher rates. You can really damage your reputation if your equipment isn’t in order on this particular day. 

“Versus the smaller carriers, especially if you’re talking about a single-vehicle fleet, an owner-operator type, it is not that difficult to just not work for those three days. And so you see a lot about that. 

“In terms of what the roadway composition looks like, if we look at inspection data and relative to a typical day with the usual inspections, on these Roadcheck days, you have about 5% fewer owner-operators on the road than you otherwise would expect.”

FREIGHTWAVES: Wow. And when you say owner-operators, you also mean just like fleets with just —

BALTHROP: “One-vehicle fleets.”

FREIGHTWAVES: OK, that’s interesting.

BALTHROP: “You know, you see a little bit of effect with the smaller fleets, below six vehicles, but it basically disappears by the time you get to a hundred vehicles.

“This effect is being driven by smaller carriers staying off the road in terms of avoidance. You see this goes also how you would expect; it’s also older vehicles that stay off the road. This is correlated with carrier size. The larger carriers use newer vehicles and owner-operators tend to use some of the older vehicles. But it’s particularly the older vehicles that are off the road.

“This makes intuitive sense. Older vehicles are more costly to keep compliant. Maintenance is more costly, and they’ve been around longer so there’s time for more stuff to have broken essentially.

How a truck driver gets stopped for inspection

FREIGHTWAVES: Can you explain a little bit more, the idea of having this inspection history and why it would benefit a larger or small carrier?

BALTHROP: “Getting flagged for inspection is sort of random, but not totally. If somebody notices something obviously wrong with your truck, that’s ground for a more in-depth inspection. Or if you get pulled over for some other reason, this can be grounds for inspection of some type. 

“But there’s also the inspection selection service. The computer program that is random, that it randomly flags people in for inspection, but it’s based on your inspection history.

“So if your firm hasn’t been inspected recently, or if your carrier doesn’t have a very dense inspection history, you’ll be more likely to trigger that system to pull you in and have you inspected. If you have a dense inspection history, you’re less likely to get inspected.”

FREIGHTWAVES: So how do you get pulled over for inspection? As a person who only drives a passenger car, my main interaction with being pulled over is, I’m driving down the freeway or wherever, and I get stopped by the police. How does it work for a truck driver? How does getting pulled over or inspected work in that way?

BALTHROP: “The law is that you cannot pass a weigh station without pulling in and getting weighed. At that point they may flag you to be inspected. Now, in the past decade or two, there’s been a bunch of electronic devices that are installed in cabs. You may have heard of PrePass or Drivewise. This allows you to pass weigh stations. 

“I don’t have data on how many trucks have the in-cab devices. But from a trucking perspective, they’re so convenient that you don’t have to stop every time you cross a state line. I think the vast, overwhelming majority of trucks have some sort of one of these electronic devices. The DOT inspectors at these roadside inspection points have a dial they can twist essentially about how many people they want to inspect. 

“So during the roadcheck inspection week, they’ll crank that dial all the way up and pull everybody over. And if they get too backed up, they might crank it back down a little bit and so on.”

FREIGHTWAVES: OK, interesting. It reminds me of a highly sophisticated E‑ZPass.

A $10 million-plus expense to trucking companies every year … but it’s worth it if just one fatal crash is avoided

FREIGHTWAVES: Zooming out, when we hear about large truck crashes, something like a vehicle maintenance issue is not really the most sexy explanation. But just looking at the FMCSA data, in 29% of all truck crashes, a major factor is brake problems. So it seems like a lot of the truck crashes on the road are caused by vehicle maintenance, versus something like the driver using illegal drugs or some other sort of more dramatic explanation. Can you speak a little bit to why this sort of vehicle maintenance is important for safety in preventing large crashes?

BALTHROP: “We did a little bit of a back-of-the-envelope cost benefit analysis of this. Let me try and make sure I remember it clearly, but we have it in the paper that the cost of this on one side is that you have the compliance costs the firms are undertaking, and then you have to add to that the delay costs from doing this, and then the cost of the inspection itself, having to pay federal inspectors to do this.

“On the benefit side, it reduces crashes. So when we add up, just looking at the cost of what an inspection is, we don’t have a good idea of how to measure the compliance cost. It’d be fun to measure the delay cost, but I don’t have good enough price data on that to get at that cost. 

“But if you look at what the cost of an inspection is, it is something like $100 or $120 is what you would pay to have one of these inspections done privately. A lot of people do this in the run-up to inspections, and have it done privately so that you can fix whatever the problems are and be sure that you would pass the FMCSA inspection.

“With that $120 figure, if you aggregate that up to 60,000 inspections or whatever, and you take that in comparison, I’m going to give you a bad figure here, it’s on the order of $10 million. That is about the value of a statistical human life. Looking at this economically, it’s worthwhile if it saves one human life. If you identify just one faulty brake system that would’ve resulted in an accident, you’re getting some value out of the program. 

“When you add those other costs in there, we’re going to need to save a couple of lives, but in terms of cost benefit analysis with this kind of stuff, we’re usually looking at orders of magnitude differences in cost and benefits to say something for sure. 

“If you can save just a couple lives, this program will pay for itself.”

Time to start inspecting in the winter

FREIGHTWAVES: Then one last question: Is there any rationale for this program happening in the summer? 

BALTHROP: “I think part of it is that for the inspectors this gets much harder and much more miserable to do in winter conditions.”

FREIGHTWAVES: That makes sense.

BALTHROP: “Inspectors are less productive. One of the things that we talk about in the paper, that they have in addition to the International Roadcheck, is that they have Brake Week where they focus a little bit more on brake inspections. You have Operation Safe Driver a little bit later on in the summer, usually in September, where it’s a little bit more focused on passenger vehicles and how they drive around these trucks.

“But there’s not one in the winter time. There’s an unannounced brake check that usually happens in May, a surprise inspection that’s just one day. But you’re right in pointing out that it might be worthwhile having one of these in the wintertime. You have this periodic high-intensity inspection that kind of incentivizes everybody to be compliant through the summer. 

“But there’s nothing in the winter, so that’s an area. But if I was managing the FMCSA, that would be one of the first questions I ask, ‘Why don’t we have one of these in the wintertime?’”

FREIGHTWAVES: That makes sense. Maybe they can do it in the South or something. Maybe a Miami January inspection … 

That’s it for this special bonus MODES. Subscribe here if you’re not already receiving MODES in your inbox every Thursday. Email the reporter at rpremack@www.freightwaves.com with your own tales on International Roadcheck Week or any other trucking topics. 

Why the Northeast is quietly running out of diesel

The nozzle of a diesel fuel pump is inserted into the tank of a commercial truck as its driver looks on the bankground.

The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked.

The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of last Friday, that region of the U.S. is reporting under 52 million barrels. 

The sharp increase of diesel prices has been a major stressor in America’s $800 billion trucking industry since the beginning of 2022. According to DOE figures, the price per gallon of diesel has reached record highs — a whopping $5.62 per gallon. It’s even higher on the East Coast at $5.90, up 63% from the beginning of this year. 

When relief is coming isn’t yet clear, and experts say higher prices are the only way to attract more diesel into the Northeast.

“I wish I had some good news for the Northeast, but it’s bedlam,” Tom Kloza, global head of energy analysis at OPIS, told FreightWaves. 

2022 has seen record-setting diesel prices. (SONAR)

Everyday Americans don’t fill up their cars with diesel, but the fuel powers our nation’s agriculture, industrial and transportation networks. More expensive diesel means the price of everything is liable to increase. Trucks, trains, barges and the like consumed about 122 million gallons of diesel per day in 2020. 

Patrick DeHaan, a vice president of communications at fuel price site GasBuddy, reported that retail truck stops are hauling fuel from the Great Lakes to the Northeast, calling it “extraordinary.” We’ve also seen anecdotal reports from truck drivers posting company memos:

Pilot Flying J and Love’s, two of America’s largest truck stops, told the Wall Street Journal yesterday that they were not planning to restrict diesel purchases, but were monitoring low diesel inventory.

Not unlike every other supply chain crunch we’ve seen in the past few years, the cause of the Northeast’s diesel shortage is multifaceted. A yearslong degradation of refineries is rubbing against the Gulf Coast preferring to ship its oil to Europe and Latin America.

Here’s a breakdown:

1. The East Coast has lost half of its refineries. 

As Bloomberg’s Javier Blas wrote on May 4 (emphasis ours): 

In the past 15 years, the number of refineries on the U.S. East Coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.

Rory Johnston, a managing director at Toronto-based research firm Price Street and writer of the newsletter Commodity Context, told FreightWaves that refining is a “thankless industry,” with intense regulations that have limited the opening of new refineries. The Great Recession of 2008 led to several East Coast refineries shuttering, but there have been more recent shutdowns too. One major Philadelphia refinery shuttered in 2019 after a giant fire (and it already had declared bankruptcy), and another refinery in Newfoundland shut down in 2020.

2. It’s a financial risk to bring diesel to the Northeast.

The Northeast has increasingly relied on diesel from the Gulf region. Much of that diesel travels to the Northeast through the famous and much-adored Colonial Pipeline. You may remember the 5,500-mile pipeline from last year, when a ransomware attack shuttered it for nearly a week!  

It takes 18 days for oil to travel on the Colonial Pipeline from its source in Houston to New York City (or, more specifically, Linden, New Jersey), Kloza said.

That’s a long enough time to prioritize Colonial pipelines financially risky for traders — or, as Kloza said, “incredibly dangerous” — thanks to a concept called “backwardation.”

Backwardation refers to the market condition in which the spot price of a commodity like diesel is higher than its futures price. It’s only gotten stronger over time in the diesel market, Kloza said. So, a company could send off a shipment of diesel and find that it dropped by $1 per gallon in the time the diesel traveled from the Gulf Coast to New York — er, New Jersey. That could mean hundreds of thousands or more in lost profits, so traders often avoid such a fate.

“We’re not in an era where there are any U.S. refiners or big U.S. oil companies who would ‘take one for the team’ and bring cargo in where it’s needed,” Kloza said. 

The desperation is showing in New England and the mid-Atlantic regions. New England diesel retail prices are up 75% from the beginning of 2022, per DOE data. In the mid-Atlantic, diesel is up 67%. 

It’s not worth the risk, even amid ultra-high prices. As FreightWaves’ Kingston reported last week, the spread between a gallon of diesel in the Gulf Coast and its New York harbor price is usually a few cents. Last week, that swung up to 66 cents.

But that uptick still isn’t justifying moving oil to the Northeast — particularly when traders can make so much more money selling diesel abroad. 

3. Of course, we can blame COVID and the crisis in Ukraine. 

The catalyst for this diesel shortage, of course, is the ongoing conflict in Ukraine — particularly Europe’s desperation for diesel after weaning off Russian molecules. 

As CNBC reported in March, Europe is a net importer of diesel. Europe consumed some 6.8 million barrels of diesel each day in 2019; Russia exported some 600,000 barrels per day of that. Today, Europe has only eliminated one-third of its Russian diesel, so prices are expected to continue to climb amid that transition. Latin America, too, has been clammoring for U.S. diesel.

The Gulf Coast has been happy to provide such diesel, amid “insane” prices for diesel abroad, said Johnston. Waterborne exports of diesel from the U.S. Gulf Coast hit record highs last month, according to oil analytics firm Vortexa. (The records only date back to 2016.)

Naturally, COVID is also to blame for the Northeast’s run on diesel. Those refineries still retained on the East Coast scaled back during the pandemic due to staffing issues. It takes six months to a year to reignite refineries that were previously shuttered, Kloza said.

The ‘everything shortage’ endures

It’s been a tale as old as, well, last year. An industry is quietly hampered by supply issues for years, or even decades, and COVID pulls back the curtains on its unsteady foundation. It’s particularly jarring for commodities we never thought about before, like shipping containers or pallets, but that quietly underpinned our livelihood all along. 

Recall the Great Lumber Shortage of 2020? Big Lumber had unusually low stockpiles of wood by the summer of 2020, thanks to a vicious 2019 in the lumber industry shuttering sawmills and the spring of 2020 sparking staffing issues. (There was also a nasty beetle infestation.) Those in lumber expected the pandemic to slow the economy, not ignite online shopping, construction and housing mania. It meant lumber went from around $350 per thousand board feet pre-pandemic to a crushing $1,515 by the spring of 2021. The lumber price roller coaster persists today.  

In diesel, there’s no beetle infestation, but there are plenty of other headaches. It all means higher fuel prices on the East Coast, particularly the Northeast, to lure molecules from the Gulf Coast. And, down the line, probably more expensive stuff for you. 

Do you work in the trucking industry? Do you want to say that you hate or love MODES? Are you simply wanting to chitchat? Email the author at rpremack@www.freightwaves.com, and don’t forget to subscribe to MODES.

Updated on May 13 with the latest comments from truck stops.

Exclusive: Central Freight Lines to shut down after 96 years

Nearly, 2,100 employees will be laid off right before Christmas. Central Freight Lines is the largest trucking company to close since Celadon ceased operations in 2019.

Waco, Texas-based Central Freight Lines has notified drivers, employees and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years, the company’s president told FreightWaves on Saturday.

“It’s just horrible,” said CFL President Bruce Kalem.

A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue operating, despite exploring all available options to keep its doors open.

Kalem agreed.

“Years of operating losses and struggles for many years sapped our liquidity, and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make money on this closing, nobody.” 

Central Freight will cease picking up new shipments effective Monday and expects to deliver substantially all freight in its system by Dec. 20, according to a company statement.

A source familiar with the company said he is unsure whether CFL will file Chapter 7 or “liquidate outside of bankruptcy,” but that the LTL carrier has no plans to reorganize.

The company reshuffled its executive team nearly a year ago in an effort to stay afloat, including adding the company’s owner, Jerry Moyes, as CFL’s interim president and chief executive officer. Moyes remained CEO after Kalem was elevated to president in July.

“I think it was surprising that there wasn’t a buyer for the entire company, but buyers were interested in certain pieces but not in the whole thing,” the source, who didn’t want to be identified, told FreightWaves. “Part of it could have been that just the network was so expansive that there was too much overlap with some of the buyers that they didn’t need locations or employees in the places where they already had strong operations.”

Third-party logistics provider GlobalTranz notified its customers that it had removed CFL as “a blanket and CSP carrier option immediately, to prevent any new bookings,” multiple sources told FreightWaves on Saturday.

CFL, which has over 2,100 employees, including 1,325 drivers, and 1,600 power units, is in discussions with “key customers and vendors and expects sufficient liquidity to complete deliveries over the next week in an orderly manner,” a CFL spokesperson said. Approximately 820 employees are based at the company headquarters in Waco.

Despite diligent efforts, CFL “was unable to gain commitments to fund ongoing operations, find a buyer of the entire business or fund a Chapter 11 reorganization,” another source familiar with the company told FreightWaves.

Kalem said the company had 65 terminals prior to its decision to shutter operations. 

FreightWaves received a tip from a source nearly two weeks ago that CFL wasn’t renewing its East Coast terminal leases but was unable to confirm the information with CFL executives. 

Another source told FreightWaves that some of the LTL carrier’s West Coast terminals had been sold recently, but that no reason was given for the transactions.

At that time, Kalem said the company was “working to find alternatives” and couldn’t speak because of nondisclosure agreements. He said executives at CFL, including Moyes, were trying to do everything to “save the company.”

“Jerry [Moyes] pumped a lot of money into the company, but it just wasn’t enough,” Kalem said.

Kalem said he’s aware that a large carrier is interested in hiring many of CFL’s drivers but isn’t able to name names at this point. 

“Central Freight is in negotiations to sell a substantial portion of its equipment,” the company said in a statement. “Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area.”

As of late Saturday night, Kalem said fuel cards are working and drivers will be paid for freight they’ve hauled for the LTL carrier until all freight is delivered by the Dec. 20 target date.

“I’m going to work feverishly with the time I have left to get these good people jobs — I owe it to them,” Kalem told FreightWaves. “We are going to pay our drivers — that’s why we had to close it like we’re doing now. We are going to deliver all of the freight that’s in our system by next week, and we believe we can do that.”

During the outset of the pandemic, Central Freight Lines was one of four trucking-related companies that received the maximum award of $10 million through the U.S. Small Business Administration’s Paycheck Protection Program (PPP). This occurred around the time that CFL drivers and employees were forced to take pay cuts, a move that didn’t go over well with drivers.

“It all went to payroll,” Kalem said about the PPP funds. “Yes, our employees and drivers did take a pay cut over the past few years, and we gave most of it back, even raised pay over the past several months, but it just wasn’t enough to attract drivers.”

FreightWaves staffers Todd Maiden, Timothy Dooner and JP Hampstead contributed to this report.

Watch: Central Freight Lines’ impact on the LTL market

FreightWaves CEO and founder Craig Fuller reacts to the Central Freight Lines news:

“With Central struggling for many years and unable to reach profitability, it makes sense that they would want to liquidate while equipment and real estate are fetching record prices.”

Central Freight Lines statement

Here is the statement given by Central Freight Lines to FreightWaves late Saturday after reports surfaced of its impending closure:

“We make this announcement with a heavy heart and extreme regret that the Company cannot continue after nearly 100 years in operation. We would like to thank our outstanding workforce for persevering and for professionally completing the wind-down while supporting each other. Additionally, we thank our customers, vendors, equipment providers, and other stakeholders for their loyalty and support.

“The Company explored all available options to keep operations going. However, operating losses sapped all remaining sources of liquidity, and the Company’s liabilities far exceed its assets, all of which are subject to liens in favor of multiple creditors. Despite diligent efforts, the Company was unable to gain commitments to fund ongoing operations, find a buyer of the entire business, or fund a Chapter 11 reorganization. Given its limited remaining resources, the Company concluded that the best alternative was a safe and orderly wind-down. As we complete the wind-down process, our primary goal will be to offer the smoothest possible transition for all stakeholders while maximizing the amount available to apply toward the Company’s obligations.

“Central Freight is in negotiations to sell a substantial portion of its equipment. Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area. Discussions are ongoing and no purchase of assets or offer of employment is guaranteed.”

Brief history of Central Freight Lines

1925Founded in Waco, Texas, by Woody Callan Sr.
1927Institutes regular routes in Texas between Dallas, Fort Worth and Austin.
1938Dallas facility opens as world’s largest freight facility.
1991Receives 48-state interstate operating authority, expands into Oklahoma.
1993Joins Roadway Regional Group and begins service in Louisiana.
1994Expands into Colorado, Kansas, Missouri, Illinois and Mississippi.
1995Consolidation of Central, Coles, Spartan and Viking Freight Systems into Viking Freight Inc. is announced. Central’s Waco corporate HQ starts closure.
1996Becomes the Southwestern Division of Viking Freight Inc.
1997Investment group led by senior Central management purchases assets of former CFL from Viking Freight and reopens as a new Central Freight Lines.
1999Expands into California and Nevada.
2009CFL Network provides service to Idaho, Utah, Minnesota and Wisconsin.
2013Acquires Circle Delivery of Tennessee.
2014Acquires DTI, a Georgia LTL carrier.
2017Acquires Wilson; new division created with an increase of 80 terminals.
2020Wins Carrier of the Year from GlobalTranz.
Acquires Volunteer Express Inc. of Dresden, Tennessee.
Source: Central Freight Lines

Warehouse cramming is about to begin — Freightonomics

nVision Global, is a leading Global Freight Audit, Supply Chain Management Services company offering enterprise-wide supply chain solutions. With over 4,000 global business “Partners”, nVision Global not only provides prompt, accurate Freight Audit Solutions, but also providing industry-leading Supply Chain Information Management solutions and services necessary to help its clients maximize efficiencies within their supply chain. To learn more, visit www.nvisionglobal.com

Warehouse space is at a premium right now and with peak season right around the corner, shippers are starting to scramble for space. 

Zach Strickland and Anthony Smith look into what shippers are doing to prepare for the end-of-year crunch. They welcome Zac Rogers from Colorado State University to the show to talk through the industry tightness. 

The three also talk about the latest Logistics Managers Index results and what they mean for the fourth quarter of 2021. 

You can find more Freightonomics episodes and recaps for all our live podcasts here.

Seasonality pushing rejections and rates higher ahead of the Fourth

This week’s DHL Supply Chain Pricing Power Index: 75 (Carriers)

Last week’s DHL Supply Chain Pricing Power Index: 70 (Carriers) 

Three-month DHL Supply Chain Pricing Power Index Outlook: 70 (Carriers)

The DHL Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers. 

The Pricing Power Index is based on the following indicators:

Load volumes: Absolute levels positive for carriers, momentum neutral

The Outbound Tender Volume Index at 15,980 is nominally higher now than basically at any point in the past 12 months with the exception of the week prior to Thanksgiving/Black Friday last year. OTVI captures all electronic tenders, including rejected ones, so when accounting for the rejection rate, we can get an even more accurate look at volumes. 

OTVI rose through the back half of May into the national holiday and has risen even further since. Throughout the back half of May and into the middle of June, tender rejections declined substantially. Meaning, current volume throughput is actually understated when comparing OTVI now to OTVI in November 2020. After adjusting for rejected tenders, the accepted outbound tender volume index is just 2.2% below the 2020 peak in November. At that time, OTVI surged towards 17,000, but the rejection rate moved in-kind towards its natural ceiling of 28%. So, the total accepted freight tenders in mid-June is comparable to the peakiest of peak seasons in 2020. Incredible. 

However, since the middle of June, tender rejections have begun increasing again heading into Independence Day, a time when many drivers spend time off the road with their families. The move higher in OTVI this week has been driven primarily by higher rejection rates, rather than higher freight demand. 

Over the past month, the drivers of freight volumes have continued to be imports and from just about every port. The west coast continues to provide seemingly non-stop container ships, while Houston, New Orleans, Miami and Savannah are seeing very strong throughput as well. 

It is van volumes that are driving freight markets higher right now. The Reefer Outbound Tender Volume index has tumbled 25% since its all-time high in the weeks after the polar vortex in February. Since Memorial Day, ROTVI has fallen another 10.5%. This is likely a factor of declining grocery demand, but I would expect the trend to reverse course in the near future as summer festivities accelerate. 

Dry van volumes pushed higher in the back half of May and into June while reefer volumes have declined significantly. 

SONAR: VOTVI.USA (Blue); ROTVI.USA (Green)

The congestion at our nation’s ports has spread from Los Angeles and Long Beach to Oakland, California. The California coastline is a parking lot of container ships, most of which are full to the brim with imports, awaiting berth. As detailed in the economic section, there are some signs that the reversion is underway with Americans paring back spending on pandemic superstar categories in favor of airlines, lodging and entertainment. But spending remains strong despite the moderation, and low inventory levels offset much of the decline that will occur from slowing demand. Real inventories are 3% higher now than pre-pandemic, but real sales growth is far outpacing inventory growth, leading to the lowest inventory-to-sales ratio in decades. 

On the manufacturing side, the ISM Manufacturing PMI expanded in May after declining in April. We’ve been in expansionary territory for 12 consecutive months. New orders, production, imports/exports and employment are all growing. The major issues should come as no surprise: Deliveries are slowing, backlogs are growing and inventories are too low. 

In all, there are many, many catalysts to keep freight demand strong for the foreseeable future. Americans are traveling and spending on services at a high clip, but the high savings rate is enabling it to occur without a massive detriment to goods spending. 

SONAR: OTVI.USA (2021 – Blue; 2020 – Green; 2019 – Orange; 2018 –  Purple)

Tender rejections: Absolute level and momentum positive for carriers

After declining steadily from mid-March to mid-May, the Outbound Tender Reject Index has reversed course heading into Independence Day. This is typical for a national holiday as carriers selectively choose loads to bring drivers closer to home. OTRI now sits above 25% for the first time in June. 

One of our newest indices in SONAR gives us the ability to compare markets on as close to an apples-to-apples basis as possible. FreightWaves’ Carrier Trend Market Score indices are divided into two perspectives – shipper/broker and carrier. The scores are positioned on a scale from 1-100 and have values measuring van and refrigerated (reefer) capacity. The higher values represent more favorable trends for whichever perspective. For instance, a value near the high-end of the range would suggest very favorable conditions for carriers in our carrier capacity trend score index. 

For the past several weeks, capacity disparities have been driven by import volumes. The markets with the tightest carrier capacity coincide with the nation’s busiest ports. Ontario, California, Savannah, Georgia, and Atlanta all have carrier capacity trend market scores of 100. 

SONAR: Capacity Trend Market Score (Carriers – VAN)

By mode. Reefer rejection rates tumbled from it’s all-time high in March to under 35% in mid-June before popping higher over the past two weeks. Reefer rejections are still quite high from a historical standpoint at 38%, but are significantly lower than just three months ago when reefer carriers were rejecting half of all electronically tendered loads. 

SONAR: VOTRI.USA (Blue); ROTRI.USA (Orange)

Dry van tenders make up the majority of all tenders, so the van rejection rate mirrors the aggregate index closely. Van rejections have surged from ~23% to ~26% over the past two weeks. 

Yes, one-in-four loads being rejected is not ideal, but it’s better than 30%. I am unaware of any meaningful signals that capacity is being added at a rate that would change my outlook. With so many catalysts for demand, and many constraints on drivers including the Drug & Alcohol Clearinghouse, driver training school closures and continued government unemployment benefits, the outlook is tight throughout this year and into 2022. That’s not to say we won’t see improvement as consumers revert to pre-pandemic spending habits and drivers enter or reenter the market. But I’m not expecting any quick reversal of this environment; there are simply too many catalysts driving volume and suppressing capacity. 

SONAR: OTRI.USA (2020/21 – Blue; 2020 – Green; 2019 – Orange)

Freight rates: Absolute level and momentum positive for carriers

Throughout June, spot rates have moderated while contract rates have pushed higher. The Truckstop.com dry van rate per mile (incl. fuel) has fallen from $3.21 to $3.11 since the beginning of June, while FreightWaves van contract rates have risen from $2.50 to $2.59/mile, exclusive of fuel. 

I still believe the Truckstop.com dry van national average will not retest the post-vortex surge pricing that brought spot rates up to an all-time high of $3.30. But, there aren’t many catalysts to bring spot rates down anytime soon either. Demand is unwavering with continued strong consumer goods demand, humming industrial recovery and a potentially cooling, yet still sizzling, hot housing market. And carriers can’t fill enough trucks to keep up with demand. 

Prior to the seasonal movements we’re seeing in tender rejections, routing guides generally had been improving through Q2. We should continue to see a convergence between spot and contract rates, but spot rates will remain historically very elevated throughout the summer as demand simply outstrips capacity. 

SONAR: TSTOPVRPM.USA (Blue); VCRPM1.USA (Green)  

Economic stats: Momentum and absolute level neutral

Several economic releases this week are worth noting.

Weekly jobless claims were released Thursday and give us one of the best close-to-real-time indicators of the overall economy.  This week, the data was again very promising as the labor market continues on a bumpy but trajectorially stable recovery path. 

First-time filings totaled 411,000 for the week ended June 19, a slight decrease from the previous total of 418,000 but worse than the 380,000 Dow Jones estimate, the Labor Department reported Thursday. Initial claims have held above 400,000 for consecutive weeks after falling to a pandemic low of 374,000 three weeks ago. As things stand, the current level of initial claims is about double where it was prior to the Covid-19 pandemic. 

The good news on the jobs front is that continuing claims are on the decline, falling to 3.39 million, a drop of 144,000. That number runs a week behind the headline claims total.

Initial jobless claims (weekly in May 2020-May 2021)

At the time of writing, the newest weekly data for the week ending May 29 had not been updated in SONAR. This week, claims fell from 405,000 to 385,000. 

SONAR: IJC.USA

Consumer. Turning to consumer spending, as measured by Bank of America weekly card (both debit and credit) spending data, total card spending (TCS) in the latest week accelerated to 22% over 2019. This is the first time in June that TCS has topped 20% over 2019, but spending has been running up 16-19% consistently on a two-year comp for months. For contect, the average pre-pandemic two-year growth rate was about 8% (from 2012 to 2019). 

The Bank of America team highlighted service spending in the nation’s two largest state economies, California and New York, which are now fully reopened. Spending at restaurants is now well above 2019 in both states, and the team believes there is more capacity for spending to accelerate in the states that were slower to reopen given pent-up demand. 

There was also a notable acceleration in spending on clothing this week, according to Bank of America. It could be a reversal from some softening in the early weeks of June, or an indication of people refreshing wardrobes ahead of a return to work, more travel and vacations. One tepid statement for freight markets from this week;s report: Leisure spending is on the rise and durable goods spending is flatlining.  

FreightWaves’ Flatbed Outbound Tender Reject Index, both a measure of relative demand and capacity, moves directionally with the ISM PMI. 

SONAR: ISM.PMI (Blue); FOTRI.USA (Green) 

Manufacturing. Over the past two weeks, regional manufacturing surveys have reported generally positive readings amid logistical challenges. The New York Fed’s Empire State business conditions index declined 6.9 points to 17.4 in June, retreating from strong readings the past two months. The Empire State Index is a diffusion index with a baseline of zero; any reading above zero indicates improving or expansionary conditions. 

Delivery times lengthened to a new record during the month, new orders and shipments fell, and inventories entered negative territory. The supply chain and transportation challenges are as visible upstream as downstream, but overall the manufacturing sector is handling. Growth continued throughout the second quarter in both the Empire State and Philly Fed indices. 

The Philadelphia Federal Reserve’s business activity index edged lower to a still robust 30.7 in June from 31.5 in the prior month. Unlike NY, the pace of shipments growth accelerated in the Philly region during June. The employment subcomponent rose to a very healthy 30.7 from 19.3 last month, the regional bank said. 

Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy, but demand remains strong. 

For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at khill@www.freightwaves.com or Andrew Cox at acox@www.freightwaves.com.

Check out the newest episodes of our podcast, Great Quarter, Guys, here.

Project44 acquires ClearMetal to strengthen predictive tools

Project44, a leader in real-time visibility of the global supply chain, announced on Thursday it has acquired ClearMetal, a San Francisco-based supply chain planning software company that focuses on international freight visibility, predictive planning and overall customer experience. The terms of the acquisition were not disclosed.

ClearMetal, founded by top software engineers and data scientists from Stanford, Google and other Silicon Valley elites, has created a “continuous delivery experience” that leverages proprietary machine learning algorithms that can forecast supply chain disruptions. 

In an interview, Jason Duboe, chief growth officer at project44, explained that bringing in ClearMetal’s elite team is essential for the company’s future predictive solutions.

“Their team construct is fundamentally different. When you look at their data science, machine learning and computer science background, they are best in class,” he said. “Applying the team to solve really interesting challenges, starting with highly predictive ETA and deeper exception management to create more predictive analytics is really a key component here.”

Project44 recently acquired Ocean Insights to gain global supply chain vessel visibility and has announced it has expanded its truckload tracking services within Asia. Bringing on this new team of engineers will allow the company to capitalize on strong predictive tools, strengthening the supply chain of its customers.

“We’re going to be expanding deeper into Asia, and from a port perspective, getting data much earlier than competitors,” explained Duboe. “Our freight forwarder integrations will give us much deeper visibility from an end-to-end perspective in these regions.”

Along with the acquired skills the ClearMetal team will bring to project44, it brings a large book of customers, including large CPGs, retailers, manufacturers, distributors and chemical companies. These advanced use cases will strengthen the predictive planning tools, and project44 continues to expand into different customer markets.

“What we gain from ClearMetal is a holistic platform for anybody that joins the platform in the future,” said Duboe. “They have large customers with incredibly demanding and advanced use cases. So when it comes to order and inventory, functionality, supplier onboarding, and moving upstream into those processes, we can capture exceptions earlier on.”

Click here for more articles by Grace Sharkey.

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Project44 expands real-time visibility into China

Project44 reels in Ocean Insights in ‘largest acquisition in visibility space’

‘Project44’s vision has always been global’

Trucking safety blitzes uncover broad violations in Maryland, Florida, Kentucky and Illinois

Commercial vehicle enforcement agencies in Maryland, Florida, Kentucky and Illinois are stepping up roadside inspections and traffic enforcement, uncovering hundreds of equipment, driver and safety violations and placing scores of trucks and drivers out of service.

The recent actions are part of a broader push by state and federal regulators to improve commercial vehicle safety by targeting driver qualifications, vehicle maintenance, speeding, hazardous materials transportation and compliance with Federal Motor Carrier Safety Regulations.

The operations ranged from targeted inspections along Maryland’s Interstate 81 corridor to a hazardous materials enforcement blitz in southern Illinois and a multistate speeding campaign in Florida.

Maryland operation targets I-81 corridor

The Federal Motor Carrier Safety Administration’s Maryland Division recently partnered with the Maryland State Police and Maryland Department of the Environment for a targeted inspection campaign along the I-81 corridor.

Inspection teams completed 37 commercial vehicle inspections and identified 78 equipment violations.

The operation resulted in 15 vehicle out-of-service violations and nine driver out-of-service violations. Inspectors also documented three seat belt violations and one violation each involving English-language proficiency, cellphone use and failure to obey a traffic control device.

Kentucky inspectors find nearly 600 violations

Kentucky State Police’s Commercial Vehicle Enforcement East Region conducted 792 commercial motor vehicle inspections across 25 counties during June.

Officers identified 587 commercial vehicle violations and placed 92 vehicles out of service. The agency also conducted 84 hazardous materials inspections during the month.

Kentucky State Police said vehicles placed out of service had safety issues that were required to be corrected before they could return to the road.

Illinois hazmat detail produces 584 federal violations

The Illinois State Police Commercial Vehicle Enforcement Bureau conducted a two-day hazardous materials enforcement campaign June 30 and July 1 along Interstates 55 and 70 and surrounding areas in southern Illinois.

The operation focused on enforcing state laws and federal regulations governing the safe transportation of hazardous materials.

Inspectors completed 488 commercial vehicle inspections, including 195 involving hazardous materials.

The detail uncovered 584 federal regulation violations and 85 Illinois Vehicle Code violations. Authorities placed 38 drivers and 61 vehicles out of service.

Florida agencies target speeding trucks

In Florida, the Ocala Police Department joined the Florida Highway Patrol, Marion County Sheriff’s Office and Belleview Police Department for Operation Southern Slowdown, a regional campaign targeting speeding and speed-related crashes across the Southeast.

Ocala officers conducted 267 traffic stops during the weeklong campaign and issued 243 citations, including 44 citations involving commercial motor vehicles.

Across Marion County, participating agencies conducted 929 traffic stops, issuing 581 citations and 359 warnings while making 29 arrests.

The arrests included drivers accused of operating with suspended licenses, driving under the influence and violating Florida’s “super speeder” law.

Why it matters: The latest enforcement operations show that state and federal authorities are increasing scrutiny of commercial drivers and equipment, creating greater compliance and out-of-service risks for carriers with unsafe trucks, improperly qualified drivers or inadequate safety procedures.

UPS labels allegedly diverted $2 million in Nike shoes, indictment says

Federal prosecutors indicted 12 people in an alleged cargo theft conspiracy targeting Nike’s Memphis distribution operation. The group allegedly diverted at least $2 million in products between July 2021 and June 2024. Court records say Nike employees placed unauthorized UPS labels on selected shoe cartons. Those shipments then traveled from Memphis to addresses across the country.

The U.S. Attorney’s Office declined FreightWaves’ request for additional comments, citing the ongoing investigation. Prosecutors instead directed FreightWaves to the unsealed court filings. The indictment provides new details about the alleged transportation network. It also identifies participants, destinations, shipping accounts and payment activity.

UPS labels allegedly diverted Nike shipments

Nike’s North American Logistics Center receives imported products and distributes them to sellers. Prosecutors claim participants identified merchandise they wanted to resell. Alleged insiders then located the requested cartons inside the Memphis warehouse. They replaced or supplemented shipping information with labels directing products elsewhere.

Roy Harvey Jr. allegedly created UPS labels for predetermined destinations. He sent those documents to Nike employees for placement on shoe cartons. Harvey allegedly kept some products and resold the remaining merchandise. He operated RHJ Global using his parents’ Memphis address, according to prosecutors.

Harvey allegedly received 149 labels from Cool Kicks between July 2021 and May 2022. He later created shipping documents through his RHJ Global business account. Prosecutors claim conspirators successfully used 1,860 labels between May 2022 and January 2024. Those shipments carried stolen Nike cartons from the Memphis facility.

Keith Cannon allegedly created another UPS account using information connected to Valid Kixx. Prosecutors claim his group successfully used 459 labels between April 2023 and January 2024. Cannon allegedly resumed producing shipping documents on March 26, 2024. Approximately 800 additional labels moved stolen products between April 23 and June 19, 2024.

Those figures indicate conspirators successfully used about 3,119 shipping labels during the alleged operation. The indictment does not provide corresponding carton counts for every label. It also does not identify each delivery address. Prosecutors named destinations in California, Wisconsin and Indiana.

No court filing alleges UPS knowingly participated in the conspiracy. The indictment portrays the company as the carrier whose network handled the labeled cartons. Prosecutors also claim Harvey sought false paperwork when UPS requested documentation. Bereket Abraham allegedly created a fake shoe invoice for him in September 2022.

Nike employees allegedly placed labels on cartons

Michael Perkins worked as a floor manager at Nike’s Memphis logistics center, according to the indictment. Prosecutors claim Perkins brought unauthorized labels into the warehouse. He allegedly distributed them to Julian Baker, Cortez Spencer, Roderico McClellan and Damon Johnson. Those employees then placed the documents on specified cartons for shipment.

Nike interviewed Perkins after authorities arrested Harvey in January 2024. The company then placed Perkins on administrative leave, according to prosecutors. Perkins later left his position at the facility. He allegedly continued distributing labels to four employees through June 2024.

Harvey allegedly communicated directly with Perkins between July 2021 and January 2024. Prosecutors claim he identified desired cartons and supplied the corresponding shipping labels. Perkins allegedly passed those documents to other warehouse employees. The group then attached them to selected Nike products.

The indictment also connects Cannon, Cadarian Mack and Marquesio Robinson to Harvey’s alleged operation. Cannon allegedly shipped shoes to Racine, Wisconsin. He also directed products to an address connected to Robinson in Charlestown, Indiana. Robinson previously worked at the Nike Employee Store, according to prosecutors.

Robinson allegedly registered Timetrav3lers LLC and opened a bank account. Prosecutors claim he sent money from that business to Cannon and Harvey. Mack allegedly listed shoes through StockX and GOAT Sneaker Marketplace. He received customer payments through PayPal.

Resellers allegedly received diverted shipments

Prosecutors identified three defendants who owned large shoe resale businesses. Joel Deluna owned Chicago Emporium in Illinois. Abraham co-owned Cool Kicks in the Los Angeles area. Jorge Cuellar operated Horhead Investments near Los Angeles.

Deluna allegedly provided labels to Harvey during the conspiracy’s early stages. He later purchased large quantities of shoes from Harvey and Cannon. Chicago Emporium allegedly paid Cannon approximately $492,000 between April and June 2024. Prosecutors connected those payments to shipments of stolen Nike products.

Abraham allegedly allowed Harvey to use Cool Kicks’ UPS labels. Those documents directed cartons from Memphis to Los Angeles during June and July 2021. Abraham later purchased large amounts of shoes from Harvey and Cannon. Cool Kicks allegedly paid the men $215,275 between April and November 2023.

Cuellar allegedly bought large quantities of Nike shoes from Harvey. Horhead Investments sent $696,700 to Cannon’s Memphis food truck business, according to prosecutors. Those transfers occurred between April 2023 and January 2024. The indictment identifies the food truck as R&Beef Dawgz.

Harvey allegedly collected Nike products in Los Angeles on Jan. 27, 2024. One indictment section says authorities arrested him after he received 27 cartons. Another section says he collected 28 cartons that day. The court filing does not explain that difference.

Count 2 charges Harvey with interstate transportation of stolen property and aiding and abetting. Prosecutors claim the January shipment exceeded $5,000 in value. The charge carries up to 10 years in prison. It also allows a $250,000 fine and three years of supervised release.

All 12 defendants face a conspiracy charge under federal law. That count carries up to five years in prison. It also permits a $250,000 fine and three years of supervised release. Prosecutors seek a forfeiture judgment of at least $2 million.

The indictment contains allegations and does not establish guilt. Each defendant retains the presumption of innocence during the judicial process. Prosecutors must prove every charge beyond a reasonable doubt. U.S. District Judge Thomas L. Parker oversees the case.

Why it matters

The case shows how unauthorized shipping labels can allegedly divert products from inside a legitimate distribution center. Transportation professionals should verify shipping accounts, label changes, destinations and supporting invoices before releasing high-value freight.

Click here for more articles on cargo theft and freight fraud by Phil Brink.

Truck tractors hauled 132 pounds of cocaine to Florida, sheriff says – FreightWaves

FBI says billion-dollar criminal network included cargo theft – FreightWaves

Indiana State Police recover 12 stolen truckloads worth more than $11 million – FreightWaves

Walkout by union dockworkers shuts down Oakland terminals

Union dockworkers at the Port of Oakland walked off the job Tuesday in sympathy with striking employees at an area sugar refiner.

The walkout by members of the International Longshore and Warehouse Union shut down terminals at Oakland; FreightWaves could not immediately confirm reports of similar protests at other West Coast ports.

“Representatives from the Port of Oakland’s major tenants reported yesterday morning that workers at several locations left their terminals in what appears to be a coordinated labor activity at several seaports, and unrelated to the Oakland waterfront operations,” said port spokesman Justin Berton, in an email to FreightWaves.

The port could not say how many dockworkers participated in the walkout; the terminals are privately owned by four companies that manage all hiring. FreightWaves has reached out for comment.

Terminals were all open as of second shift [Wednesday], were quite busy and operations are back to normal today, port staff said in an email.

Tensions over contract talks with striking warehouse personnel represented by the ILWU at C&H Sugar, 25 miles north of the port in Crockett, escalated this week when two union protesters were arrested after they and a crowd of supporters blocked truck access to the plant. 

Local media reported that strikers blocked the plant after C&H hired non-union workers to unload a ship. 

The sugar workers have been on strike since June 15. 

This article was update July 22 to correct the date of the walkout to Tuesday.

Read more articles by Stuart Chirls here.

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Alaska Air to acquire 4 cargo jets, base some in Hawaii

An Alaska Air Cargo jet sits on the tarmac on a sunny day at LAX airport.

Alaska Airlines will effectively double its freighter fleet capacity next year with the addition of four leased Boeing 737-800 converted freighters, enabling it to operate dedicated cargo jets in Hawaii for the first time, the company announced Tuesday evening.

Separately, the company reported cargo revenue of $163 million for the second quarter, up 17% year over year. In the first half, cargo revenue was up 21% to $316 million. The total includes payments from Amazon to fly 10 Airbus A330-300 converted freighters for its parcel network as well as incremental volume on new widebody aircraft introduced into international service.

Alaska Airlines (NYSE: ALK) currently operates three Boeing 737-700 converted freighters and two Boeing 737-800 passenger-to-freighter aircraft in its own network. The smaller 737-700 cargo jets are roughly equivalent to two -800s in terms of cargo space. The new planes are expected to enter service in the first half of 2027. 

Alaska didn’t indicate which lessor will provide the cargo jets, but it currently leases the two 737-800 converted freighters from San Francisco-based Babcock & Brown Aircraft Management.  

Alaska Airlines relies on its freighter fleet to serve Anchorage and other communities in Alaska via its main hub in Seattle, where shipments can connect with the passenger network for onward distribution throughout the United States and certain overseas destinations. The cargo division also manages cargo shipments carried on its domestic narrowbody and international widebody passenger jets. Alaska Air Cargo will deploy the incoming freighter aircraft to serve Alaska and Hawaii. 

“Our intent is for any dedicated freighters in Hawai‘i to operate within Hawaii,” an Alaska spokesperson said in an emailed message. The planes will be based at Honolulu airport and painted in the Hawaiian Air Cargo livery. 

In addition to extra capacity, dedicated cargo aircraft give communities greater service reliability. That is especially important for e-commerce shipments with fast delivery schedules, as well as farmers, ranchers and fishermen in Alaska and Hawaii seeking to get goods to market.

Alaska Airlines inherited widebody passenger jets — A330-300s and Boeing 787-9 Dreamliners — through its 2024 acquisition of Hawaiian Airlines. It launched international widebody service from Seattle to Tokyo and Seoul, South Korea, last year and to London and Rome this year. 

Why It Matters: Alaska Airlines is the only U.S. passenger airline that operates freighter aircraft. It is the sixth largest U.S. airline by passenger capacity and it is expanding into international markets. 

“Expanding our cargo fleet [… opens] up new international shipping opportunities for seafood and other commodities, while making sure we can reliably ship time-sensitive goods that our communities need, such as medicine, household supplies and groceries,” said Ian Morgan, vice president of cargo, in a news release.

In addition to removing seats and adding large cargo doors to accommodate pallets on the main deck, the conversion process involves extensive modifications to the fuselage, floor structure, loading systems, avionics and other systems to meet the demands of cargo transport.  

The second quarter was difficult for Alaska Air, which reported a net loss of $76 million. Headwinds included an 85% spike in jet fuel prices related to the Iran war and tight oil supplies, which added $600 million in direct costs, as well as historic rain storms in Hawai’i that impacted spring break travel. 

Alaska Air inherited the Amazon flying contract when it acquired Hawaiian Airlines. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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Stronger market helped Triumph in 2Q, Graft stresses other factors

The complex lengthy letter from CEO and founder Aaron Graft to the shareholders of Triumph Financial this quarter touted the benefits from a stronger freight market, but not too much.

Graft’s letter, which tries to both explain and defend the performance and strategy at a company that operates a bank but is ultimately like no other in the logistics field, acknowledged in one of his first paragraphs that “market conditions have become more favorable for Triumph’s earnings.”

But he quickly added that “over 30% of the revenue growth we have experienced in transportation year-to-date has come from organic growth.”

More of the focus in the letter was on a concept Triumph first introduced last quarter: the North Star Metrics.

It is a set of long-term targets, and Triumph (NYSE: TFIN) did well in meeting them in the second quarter.

The four key points in Triumph’s growth strategy are:

  • Transportation revenue growth, with a long-term target to grow 15% annually across all the transportation businesses. That grew 30.9% in the second quarter year on year.
  • Factoring operating margin, with a 40% target. Actual performance in the second quarter just fell short.
  • Payments EBITDA excluding (for now) its LoadPay digital wallet offering, with a 50% target. It came up well short with 34% in the quarter.
  • The fledgling Intelligence unit, with a target of 85% and a second quarter year-on-year performance that was just shy of that.

He referred to the metrics as constituting Triumph’s “value chain”: audit, payments (both activities are in the company’s Payments segment), liquidity (provided mostly by Factoring), digital banking (LoadPay) and Intelligence.

“Triumph’s value chain moves money and data along the line of supply from shippers to carriers and injects liquidity as needed along the way,” Graft wrote. 

In the letter, Graft came back to the point that financial performance at Triumph is not 100% correlated with the strength of the freight market. 

But the Factoring business’ performance clearly benefited from a stronger freight market, which Graft acknowledged.

“Not all our transportation-related revenue is tied directly to freight invoice size,” Graft wrote. “Portions of our business – particularly Payments, Intelligence, and Audit – generate revenue through transaction fees and subscriptions. That said, our Factoring business remains a significant contributor to earnings, and it benefits meaningfully when invoice sizes increase. The operating cost structure of Factoring is directionally fixed, which means increases in invoice size tend to flow through to revenue with little corresponding increase in expense beyond funding costs.”

Triumph’s average transportation factored invoice in the quarter was $2,160, up 23.4% from the fourth quarter. (The first 17 days of July saw that rise further to $2,210.)

Diesel during the month was up about 30% on average. And while diesel prices are embedded in a factored invoice, Graft did not mention them in his letter. (Diesel is up significantly from July 1, which presumably contributed to the higher invoice price in the first 17 days of the month).

Graft said a $100 shift in invoice prices “moves our annual pretax income by approximately $7 million.”

Factoring’s operating margin was 39.39%, up from 34.72% in the prior quarter and 32.61% in the fourth quarter. A year ago, it was 48.46% but that was positively impacted by a one-time settlement of a dispute.

Graft used the letter to disclose several other statistics about Triumph’s factoring business. 

In the quarter, larger carriers, which the company defines as more than seven trucks, were 75% of invoice volume but 15% of client count. The remaining 85% were carriers of less than seven trucks.

Year-on-year, smaller carriers in the quarter submitted 2.49% fewer invoices, “even as client count increased in this cohort,” Graft wrote.

The letter also revealed that the split between spot and contract invoices in the factoring segment is about 65% from the spot market.

Brokers are about 72% of accounts receivable, as the 3PLs are the entities that would pay Triumph to reimburse it for what it paid the carriers.

Not a short-term view

If there is a theme that has run through Graft’s letters for several years, it is that Triumph Financial is playing the long game, as best evidenced by the targets in the North Star. 

He returned to that theme in this letter, going back to old numbers about where the company was five years ago before it plunged into Payments with the acquisition of HubTran.

“At the time, there were investors who thought our efforts to create a payments network were smart and others who thought it was foolish,” Graft writes in this quarter’s letter. “We plowed on.”

He used that recap to argue in favor of investments in LoadPay and Intelligence. 

Short-term earnings could be boosted if investments in those businesses were slowed, Graft said. But, he added, “our choice is to invest and let the results of those investments speak for themselves over time. We believe LoadPay and Intelligence are important to our value chain and capable of producing high margin and durable revenue.”

Reduced headcount

Graft said the company has been producing “meaningful efficiency gains from our technology investments in Factoring.” A chart showed that in the first quarter of 2025, invoice volume was 1.5 million invoices processed with a full-time employee staff of 266. In the most recent quarter, that ratio was 1.87 million invoices processed with a staff of 225.

In declaring the freight market strength to be a result in large part of a reduction in capacity that is “unlikely to reverse in the near term,” Graft addressed the fallout from the case of Montgomery vs. Caribe Transport II, opening up the brokerage industry to liability and negligence claims, as well as fraud issues that have climbed up the ladder in importance.

“Compliance, fraud prevention, liability management and operational transparency increasingly determine who can profitably participate in the market,” Graft wrote. “The cost of doing things the right way has increased, but so has the penalty for not doing so.”

He described as “simplistic” the view that those changes only help larger fleets. “The benefit belongs to those who can demonstrate their ability to operate in a compliant manner,” Graft wrote, adding that Triumph is preparing for a “different freight market.”

More articles by John Kingston

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Trimble’s Big Move: Unpacking the Transportation Division Sale

Trimble is reportedly selling its transportation division, including major acquisitions like Transporeon and PeopleNet. Bart de Muynck breaks down the challenges of integrating disparate carrier and shipper tech worlds, poor market timing for acquisitions, and why even large enterprises struggle to unify complex platforms in a rapidly evolving logistics tech landscape. Discover how this move reflects deeper shifts in supply chain technology investment.

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Weather Optics: Unpacking Tropical Storm Bertha’s Impact on Freight

Tropical Storm Bertha is crawling along the Gulf Coast, raising concerns about significant coastal flooding and heavy rainfall. While this hurricane season is predicted to be quiet due to El Niño, Weather Optics’ Joshua Feldman explains why slow-moving storms like Bertha can still pose a serious threat to logistics and supply chains, especially with localized heavy downpours and storm surge. Learn about the storm’s path, potential impacts, and what areas need to stay vigilant through Thursday.

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Supply Chain Alert: Bertha Could Disrupt Gulf Coast Logistics

Tropical Storm Bertha is brewing in the Gulf, marking the second named storm of the season. While not yet a hurricane, Bertha’s path across the Gulf Coast poses significant risks to freight markets and the vital energy sector. Learn how flooding, production shutdowns, and relief efforts will impact logistics, and why even a “tropical storm” status can spell major disruption for carriers and supply chains.

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Energy Market Chaos: Unprecedented Diesel Price Spike Hits Logistics

The latest DOE/EIA report shows diesel prices experiencing their largest weekly jump since the Iran War, adding over 55 cents per gallon in just two weeks. This unprecedented surge in diesel, now twice the price of Brent crude, highlights severe imbalances in the global energy market. John Kingston breaks down the impact on US industry, natural gas, coal, and the looming threats of hurricane season and geopolitical conflicts on an already strained supply chain.

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Fuel Hedging: Restaurant Supply Chain’s Secret Weapon for Stability

Discover how Armada’s CFO, Brian McGowan, tackles the complex, low-margin world of food and restaurant logistics. Learn how their comprehensive supply chain solutions, including innovative fuel hedging strategies, saved clients nearly $9 million amidst volatile fuel prices and inflation. We also discuss how AI and new tech are reshaping food delivery and what GLP-1 drugs might mean for restaurant demand.

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