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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’s vision has always been global’

Tesla says mass production of electric Semi to begin this year

Tesla said its long-awaited Class 8 truck, the Tesla Semi, will begin volume production later this year, a milestone CEO Elon Musk framed as part of a broader manufacturing and AI investment cycle.

Speaking during Tesla’s Q1 earnings call, Musk said the company will “begin production of our semi-truck soon,” cautioning that output will ramp slowly at first before accelerating later in the year and into 2027.

The company reiterated in its shareholder update that both the Tesla Semi and its Cybercab robotaxi platform are “on schedule for volume production starting in 2026,” as Tesla expands manufacturing capacity and supply chains to support new products.

Austin, Texas-based Tesla (NASDAQ: TSLA) released its first-quarter earnings Wednesday and held a conference call with analysts after the market closed.

Financials beat on revenue growth, margins improve

Tesla reported Q1 revenue of $22.4 billion, up 16% year over year, driven by higher vehicle deliveries, stronger services revenue and improved pricing.

  • Net income (GAAP): $477 million
  • Operating income: $941 million
  • Free cash flow: $1.4 billion

Operating margin came in at 4.2%, while adjusted EBITDA reached $3.7 billion, reflecting continued investment in AI, robotics and manufacturing capacity.

Tesla said profitability was boosted by higher vehicle pricing, lower material costs and growth in software-related revenue such as Full Self-Driving (FSD), though partially offset by rising operating expenses tied to AI development and new product launches.

Semi production tied to supply chain buildout

Tesla has been preparing its Nevada facility for Semi production while expanding battery, cathode and lithium supply chains—areas executives repeatedly flagged as critical constraints.

Musk emphasized that new products like the Semi will follow a typical “S-curve” ramp, with early production limited by supply chain complexity before scaling rapidly.

The company also highlighted deployment of Megachargers and heavy-duty charging infrastructure alongside the Semi rollout, signaling a broader push into commercial freight electrification.

Bigger bet on AI, autonomy and robotics

Beyond trucking, Tesla is doubling down on AI-driven revenue streams, including robotaxis and humanoid robots (Optimus), while expanding its training compute and chip design capabilities.

The company launched unsupervised robotaxi rides in Dallas and Houston in April and continues to scale its autonomous fleet, though executives said meaningful revenue contribution is more likely in 2027.

Tesla expects capital expenditures to surge to support six factories, AI infrastructure and new product lines, positioning the company for what Musk described as a “very significant increase in future revenue.”

Einride files for $1.35B Nasdaq listing while scaling Amazon electric fleet

White Einride electric heavy-duty truck with distinctive black front panel parked next to a larger white semi-trailer at an industrial warehouse

Einride, an autonomous technology and electric truck maker, announced two milestones this week. The first is a collaboration with Amazon to use its electric trucks. The other is the filing of a registration statement on Form F-4 with the U.S. Securities and Exchange Commission.

Einride filed the registration statement with special purpose acquisition company Legato Merger Corp. III on Wednesday. This filing marks the next regulatory step toward a public listing that values the Swedish company at $1.35 billion. At the same time, Einride announced Tuesday a major expansion of its Amazon partnership. The company will deploy 75 electric heavy-duty trucks across five U.S. locations.

The proposed business combination, announced last November, will list Einride on Nasdaq under the ticker symbol “ENRD.” The listing is expected around the second quarter of 2026, subject to customary closing conditions.

The transaction should deliver approximately $333 million in gross proceeds. This total includes:

  • $113 million from an oversubscribed Private Investment in Public Equity (PIPE) capital raise announced Feb. 26.
  • Up to $220 million from Legato’s cash-in-trust before accounting for potential redemptions and transaction expenses.

“This filing marks a significant step as we advance toward becoming a publicly listed company and continue scaling our platform globally,” said Roozbeh Charli, chief executive officer of Einride. “Over the past year, we have expanded our commercial operations, deepened partnerships with leading global shippers, and continued to deploy electric and autonomous freight solutions in real-world environments.”

Commercial Traction and Financial Performance

Einride’s audited 2025 financial results appear in the registration statement. Revenue reached SEK 457.8 million. That figure is up from SEK 388.4 million in fiscal 2024 — or about $49.7 million and $42.2 million, respectively. The company now serves more than 30 enterprise customers across seven countries in North America, Europe and the Middle East.

Einride reports approximately $92 million in expected annual recurring revenue (ARR) from signed customer contracts. It also sees more than $800 million in potential long-term ARR through joint business plans with blue-chip customers.

“We are proud to partner with Einride at this important stage in its journey to the public markets,” said Eric Rosenfeld, chief SPAC officer of Legato. “Einride has built a differentiated platform at the intersection of electrification, autonomy and digitalization, three forces reshaping global logistics. We believe the company is well positioned to execute on its strategy and deliver long-term value as it continues to scale its operations.”

Amazon Deployment Scales Electric Middle Mile

Following a successful initial trial, Einride announced via LinkedIn that it will deploy 75 manually operated electric heavy-duty trucks. The company will also provide supporting charging infrastructure across five U.S. locations. These trucks will support Amazon’s middle-mile network, powered by Amazon Relay. They are projected to drive up to 3 million electric transport miles annually with zero tailpipe emissions.

Einride’s proprietary optimization software, Saga AI, manages electric vehicle execution for select Amazon loads. This includes charging planning.

“Working with Amazon is yet another powerful validation of Einride’s technology and strategic vision,” Charli said. “By deploying our intelligent platform within one of the world’s most sophisticated logistics networks, we are accelerating growth while continuing to build industry-leading operational expertise.”

Platform Capabilities and Licensing Strategy

Einride’s Freight-Capacity-as-a-Service platform integrates autonomous and electric trucks. It also combines AI optimization software and charging infrastructure into one unified solution. The platform optimizes freight operations. Einride operates one of the world’s largest electric heavy-duty fleets.

Beyond core freight operations, Einride focuses on licensing its autonomous driving stack, the Einride Driver. It also licenses the Saga AI fleet management software to third-party operators and original equipment manufacturers.

Founded in 2016, Einride recently raised $113 million in an oversubscribed PIPE ahead of its SPAC merger. The company showcased its proprietary technology and large-scale commercialization strategy at an analyst and investor day in Austin, Texas. Austin is home to Einride’s U.S. headquarters.

Legato Merger Corp. III is a blank-check company. It was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition or similar business combination.

Knight-Swift aims for double-digit rate hike in tight market

A Swift trailer being pulled on a highway

Knight-Swift Transportation reported a messy first quarter but the company is becoming increasingly bullish on truckload market fundamentals.

Knight-Swift (NYSE: KNX) reported a headline net loss of $1.3 million for the first quarter on Wednesday after the market closed. Adjusted earnings per share of 9 cents were in line with the negative preannouncement last week, which was well below the consensus estimate of 25 cents at the time.

The result included several items that are not expected to recur. The quarter included 8 cents per share in negative claims development in its less-than-truckload unit, 5 to 6 cents per share from weather and fuel headwinds, and 2 cents per share from an adverse value-added tax ruling in its Mexico business.

“The first quarter had its challenges, but these were largely transitory and even bring some upside as the weather disruption exposed market tightness that has served to accelerate the pricing environment, and the spike in fuel prices adds one more headwind to truckload capacity,” said Knight-Swift CEO Adam Miller in a news release.

Table: Knight-Swift’s key performance indicators – Consolidated

Miller said the TL market is continuing to tighten as heightened regulation and surging fuel costs are forcing capacity to the sidelines. The carrier is now targeting high-single- to low-double-digit rate increases during bid season versus its expectation for low- to mid-single-digit increases at the beginning of the year.

“While the pricing environment is improving, we are still seeing carrier failures, as the damage done over a prolonged downcycle is not quickly recovered, especially with the cash flow crunch brought on by the recent fuel spike,” Miller said.

The company reiterated second-quarter adjusted EPS guidance of 45 to 49 cents. That outlook was also issued last week and bracketed the consensus estimate at the time.

First-quarter consolidated revenue of $1.85 billion was 1% higher year over year.

Table: Knight-Swift’s key performance indicators – TL

Revenue in the TL unit was in line with the prior year at $1.05 billion. Average tractors in service declined 4%, which was offset by a 4% increase in revenue per tractor, excluding fuel surcharges. The increase in revenue per tractor was driven by a 2.3% increase in loaded miles per tractor and a 1.6% increase in revenue per loaded mile (excluding fuel).

The TL unit reported a 96.3% adjusted operating ratio (3.7% operating margin), which was 70 basis points worse y/y. Fuel and weather, among other headwinds, negatively impacted the period.

Table: Knight-Swift’s key performance indicators – LTL

The LTL unit reported a 3% y/y revenue increase to $313 million. A 1% decline in daily shipments was offset by a 4% increase in revenue per shipment (excluding fuel). Weight per shipment reached the highest level recorded since 2021, and rate renewals continued to come in higher by a mid-single-digit percentage.

The segment booked a 99.6% adjusted OR in the quarter; however, the adverse claim development was a 570-bp headwind.

Knight-Swift will host a call at 5:30 p.m. EDT on Wednesday to discuss first-quarter results.

Table: Knight-Swift’s key performance indicators – Logistics & Intermodal

More FreightWaves articles by Todd Maiden:

What Network Downtime Really Costs Manufacturers

A parts supplier outside Detroit runs its production line around the clock. Orders feed in through a cloud-based ERP system, shipping commitments sync with carrier TMS platforms in real time, and quality data streams from sensors embedded in the assembly equipment. All of it depends on a network connection that many people take for granted.

When that network connection drops, though, the math gets ugly fast.

According to a 2024 Siemens report, unscheduled downtime now drains roughly 11% of annual revenues from the world’s 500 largest companies. That adds up to a collective hit of $1.4 trillion, up sharply from $864 billion just five years earlier. In the automotive sector alone, the per-hour cost of a production stoppage runs $2.3 million. That’s $600 every second a line sits idle.

For the contract producers, component fabricators, and the packagers and assemblers that make up the backbone of American freight, those numbers take a proportionally steep toll. The average cost of unplanned downtime for a manufacturing facility is roughly $260,000 per hour, and many plants log more than 800 hours of downtime annually across planned and unplanned events. 

Swiss electrical equipment manufacturer ABB surveyed more than 3,200 plant maintenance leaders globally and found that two-thirds of companies dealt with unplanned downtime at least once a month, at a reported cost of $125,000 per hour.

Keep in mind, those are just the direct costs attributed to things like idle labor and raw materials sitting in queue. The downstream consequences are where network failures inflict the deepest damage.

The ripple effect moves quickly when a network outage takes down production. Modern manufacturing operates inside a web of contractual shipping commitments and just-in-time delivery windows. Decades of this kind of operation have left customer expectations with zero tolerance for delays. 

If a cloud-based production scheduling system goes dark, work orders freeze and operators on the floor lose visibility into what to run next. Likewise, automated, API-connected TMS platforms can stall carrier dispatching. The resulting cascade impacts millions of people yearly, even those who aren’t aware of why. 

In February 2022, Toyota suspended operations across all 28 production lines at 14 manufacturing plants in Japan for a full day after a system failure at a key supplier severed network communications with Toyota’s production monitoring systems. The ripple effect extended across numerous partner companies. At Toyota’s production volumes, those 14 plants accounted for roughly a third of its global output.

When AT&T’s mobile network went offline nationwide for more than 12 hours in February 2024, the disruption blocked an estimated 92 million calls, took down mobile payment systems at countless businesses, and knocked out real-time tracking for logistics providers who depended on cellular connectivity for fleet visibility. 

Trucking technology platforms reliant on AT&T’s network were directly impacted, too. Because our supply chain is increasingly dependent on real-time data flows, many operations lost track of where freight was going during the network outage.

Network-driven production delays translate directly to financial penalties, especially for those manufacturers that ship under contract. Late delivery clauses are a standard feature in supply agreements, and they carry teeth. Typical contract language stipulates penalties of 0.5% to 1% of order value per week of delay, with caps often set at 5% to 10% of the total contract value. In some industries, buyers can charge back the cost of expedited freight when a supplier misses its window.

Retail programs routinely issue chargebacks for late or incomplete shipments. In grocery and consumer goods, a missed delivery window can mean lost shelf space, promotional markdowns funded by the shipper, or even termination of a supplier relationship.

According to ABB, 46% of companies that experienced unplanned downtime reported that they couldn’t deliver services to customers as a result of that downtime. 29% were left completely unable to service or support specific equipment. That quickly becomes a customer relationship problem with long-term commercial consequences.

When a manufacturer misses a shipping commitment because its systems went dark, the customer doesn’t file the incident under “network outage.” They file it under “unreliable supplier.” Because supply chain procurement teams often maintain approved vendor lists and regularly benchmark supplier performance scorecards, one missed delivery window can trigger a review that leads to reduced allocation, a shift to a backup supplier, or an outright loss of the account.

What Always-On Connectivity Makes Possible

The cost of network failure is one side of the ledger. The other is the opportunity that manufacturers leave on the table when connectivity is merely adequate rather than engineered for performance.

The same network infrastructure that prevents a catastrophic production stoppage can also enable real-time quality monitoring, where sensors on the line detect defects at the point of assembly rather than at end-of-line inspection. It can power dynamic production scheduling that adjusts work orders on the fly based on inbound material availability and outbound shipping windows. Likewise, it can support dense, low-latency automation, such as autonomous guided vehicles coordinating with robotic arms. In other words, reliable connectivity is the foundation for future investments in smart manufacturing, AI, and robotics.

Investing in Prevention

Given the scale of exposure, the investment case for network reliability is not particularly close. Industry analysts note that proactive monitoring and redundancy systems typically cost 10% to 20% of a manufacturer’s total annual downtime risk exposure. The break-even on that investment often occurs after preventing a single incident.

One automotive parts manufacturer with 75 employees and just-in-time delivery commitments invested in comprehensive network monitoring and redundancy after experiencing two to three system outages per month, each lasting two to four hours. Unplanned downtime fell by 89%, customer complaints related to delivery delays dropped to zero, and the company saved an estimated $180,000 annually in avoided downtime costs.

If the cost of a single hour of production downtime exceeds $50,000 (which is a threshold most mid-size manufacturers easily clear), the math heavily favors redundancy and proactive monitoring.

How T-Mobile Advanced Network Solutions Bring It Together

T-Mobile for Business believes that the network connecting your factory floor, your warehouse, your fleet, and your customer should be as engineered and as redundant as the production line itself. That’s the thinking behind the company’s Advanced Network Solutions (ANS) portfolio, a set of integrated capabilities designed to not only prevent downtime, but also to power connected, intelligent manufacturing.

The foundation is T-Mobile’s standalone 5G network, a fully independent architecture that doesn’t rely on legacy 4G infrastructure. T-Mobile operates America’s largest and fastest 5G network, named Best Mobile Network in the U.S. by Ookla Speedtest in 2025.1 

Standalone 5G enables the capabilities that matter most to manufacturers: network slicing for guaranteed performance on mission-critical operations, ultra-reliable low-latency communications (URLLC) for time-sensitive automation, and support for the massive IoT device density that smart factory environments demand.

What makes the ANS approach different is how those capabilities come together on the plant floor and across the supply chain.

On-site, T-Mobile’s Edge Control service enables cellular traffic to exit locally and flow directly into an enterprise’s edge computing environment, rather than routing through centralized data centers or the public internet. For a manufacturer running IoT sensors, quality inspection cameras, and autonomous guided vehicles, that means fewer network hops, lower latency, and the kind of deterministic performance that real-time automation requires. Edge Control is hyperscaler-agnostic, supporting integration with AWS, Azure, and Google Cloud, and it can be paired with private or hybrid 5G deployments that deliver dedicated, interference-resistant connectivity on factory floors where heavy equipment, metal structures, and dense device environments challenge conventional Wi-Fi.

From there, T-Mobile’s network slicing allows manufacturers to carve out a prioritized slice of network capacity for the operations that absolutely cannot tolerate degradation (such as ERP systems, production scheduling, carrier dispatching, and first responder communications), ensuring guaranteed bandwidth and low latency even when the broader network is under load.

Tying it all together is T-Platform, T-Mobile’s unified management portal, which gives manufacturers a single interface to monitor and manage everything from 5G Business Internet to IoT device fleets to Edge Control deployments. 

Beyond the factory walls, T-Mobile’s IoT platform and Control Center extend real-time asset tracking across the full supply chain, covering inbound raw materials and outbound finished goods with device lifecycle management, SIM management, and dynamic cost controls.

The cumulative effect is a connectivity layer that enables manufacturers to operate the way the industry is heading: continuous, data-driven, and increasingly autonomous.

Where Manufacturing Goes From Here

The factories leading the next wave of American manufacturing will be connected and intelligent. AI-driven predictive maintenance that flags equipment failures before they happen. Digital twins that model entire production lines in real time, letting managers test operational changes before committing resources. Fully autonomous material handling systems that coordinate across facilities without human intervention. These capabilities are already in deployment at the industry’s leading edge, and every one of them depends on a connectivity layer that is fast, reliable, and built for density.

The ROI conversation is less about whether to invest and more about how quickly the investment pays for itself. The manufacturers that have already done the painful post-mortem on network failures can tell you that the answer is usually “before the next one happens.” The right network protects today’s production and enables tomorrow’s.

The freight that moves through America’s supply chain starts at the production line. When that line goes down because the network did, every truck, every shipper, and every customer feels the impact. When the network is engineered to make the entire operation smarter, the upside can be even more impactful than the downside it prevents.

Click here to learn more about T-Mobile for Business.

  1. America’s Best Network: Best based on analysis by Ookla of Speedtest Intelligence® data 2H 2025. Ookla trademarks used under license and reprinted with permission.  T-Mobile is America’s Largest and Fastest 5G Network:  Based on analysis by Ookla® of Speedtest Intelligence® data of national Speed Score results incorporating 5G download and upload speeds for 2H 2025. See 5G device, coverage,& access details at T-Mobile.com ↩︎

Teamsters fighting deal between Amazon and NLRB on joint employer status

Efforts by the Teamsters to advance organizing efforts at various targets, but with special aim at Amazon, have received two significant developments in recent days, one looking like a clear setback and the other more ambiguous.

Where the Teamsters had a negative outcome is in a case before the National Labor Relations Board, where the union is objecting to a settlement between Amazon and the NLRB’s General Counsel. That case, which came out of the Los Angeles district, so far had been successful in advancing the union’s argument that Amazon was effectively a joint employer with its direct service providers (DSPs). 

It’s the DSPs which handle the job of actually delivering goods to homes and businesses throughout the country. Although they may be decked out in Amazon-labeled uniforms and drive a truck emblazoned with the Amazon log, when their workers get their W-2 forms every year, it is the name of the DSP, not Amazon, that is listed as their employer.

In the second legal action this week, a federal circuit court decision could be seen on a microeconomic basis as a victory. But the win didn’t do anything to push back against a decision last month that undercut the so-called Cemex precedent, an NLRB decision from the Biden administration that on the surface should make organizing easier, not just for the Teamsters but for all unions, now in danger of disappearing.

An ‘ambush’

In the case involving the question of Amazon (NASDAQ: AMZN) being a joint employer, lawyers for the Teamsters filed a letter with the agency objecting to a reported agreement between the NLRB’s General Counsel and Amazon that would end the process involving a former West Coast DSP called Battle Tested Strategies (BTS). 

BTS is the only known DSP that after being confronted with a successful Teamsters organizing drive among its workers chose to recognize the union. BTS lost its contract to deliver parcels and products out of Amazon’s Palmdale, California warehouse in Los Angeles county soon after the recognition. The company has said the ending of BTS’ contract was not related to the union recognition decision.

Preliminary findings by judges in the complicated NLRB pathway to the full board found that Amazon was a joint employer, a conclusion that if upheld could have major ramifications on the model that governs relations between Amazon and the DSPs. And the case had been going the Teamsters’ direction in other ways; an attempt by Amazon to stop the proceedings before a Los Angeles administrative law judge was rejected late last year. 

Oral arguments in that case were heard back in September. 

In a filing earlier this week with the NLRB, Teamsters attorneys described the deal between the counsel and Amazon as an “ambush settlement agreement,” dropped to the Teamsters on April 10 and then modified on April 12. 

While the specifics of the deal are not spelled out in the Teamsters’ brief, and there are no other documents in the docket that elaborate on the agreement, a Bloomberg article from April 13 first reported its existence.

“The federal government is moving to settle a yearlong case of Amazon’s treatment of a group of delivery drivers, averting what could have been a landmark ruling establishing the company as the boss of some of the workers it has long insisted aren’t its employees,” Bloomberg reported.

Two weeks pay for about 80 workers

Under the terms of the deal, according to Bloomberg, the workers at BTS, which could total as many as 84, would receive two weeks pay “without admitting wrongdoing or being found liable as a joint employer.”

If the case ends with the settlement, the earlier regional NLRB finding that Amazon is a joint employer–a clear victory for the union but one that was relatively early in the NLRB process–would have little to no lasting impact.

A spokeswoman for the Teamsters said the union would not comment on the case at this time. An Amazon representative had not returned an email by publication time.

The Teamsters’ filing with the NLRB cites a long list of actions involving Amazon at NLRB that the union says “illustrate Amazon’s contempt for the (National Labor Relations) Act, its determination to escape its legal obligations and its recidivist nature. This is the exact type of employer who requires a formal settlement to ensure compliance and further the Act’s purposes.”

The settlement between the General Counsel and Amazon, the Teamsters brief says, “completely lets Amazon off the hook on the joint employer issue.”

A win, but not with legs

Meanwhile, the action out of the Ninth Circuit was, in the short term, a victory for the Teamsters attempting to organize drivers with Cemex Construction Materials Pacific.  

The Ninth Circuit upheld an earlier NLRB decision that ordered Cemex to bargain with the union. The Teamsters had not won a traditional election at Cemex. Instead, it had used the submission of a majority of cards declaring employee support for the union as its path to recognition, a process often referred to as “card check.” 

In finding that Cemex committed a series of unfair labor practices, the NLRB in 2023 handed down remedies that also included provisions giving more weight to card check as a way to be granted company recognition of a bargaining unit.

But those provisions took a significant blow last month in the Sixth Circuit, when an appellate court ruled the NLRB had exceeded its authority in establishing the Cemex precedent.

The Cemex case before the Ninth Circuit was a victory for the Teamsters in that the court upheld the NLRB decision and affirmed that Cemex’ anti-union activities constituted unfair labor practices.

But in a blog posting by labor-focused law firm CDF, which specializes in California issues, the firm said the decision was “impactful, but notably unfinished.”

“What is notable is what the court didn’t do,” CDF said. “It declined to address the board’s new Cemex framework altogether.”

The earlier order by the NLRB directed against Cemex was made under a precedent known as Gissel. Doing so was easy, CDF said, because Cemex’ violations of its employee rights were so egregious. Gissel allows the NLRB to order several remediation steps when an employer is found to have committed unfair labor practices.

Two circuits might have been in conflict

But the Ninth Circuit in the Cemex case didn’t take up the precedent set in March by the Sixth Circuit. “The court sidestepped the issue entirely and affirmed the bargaining order under the Gissel standard alone,” the law firm said. “This is a classic appellate move: decide the case on narrower, settled grounds and avoid stepping into a doctrinal fight.”

In the long term, CDF said, “the issue is likely heading toward a circuit split showdown and will likely result in Supreme Court involvement.”

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Werner doubling intermodal fleet in Mexico

A white Werner tractor pulling a trailer on a highway

Werner Enterprises announced Wednesday that it is doubling its intermodal container fleet in Mexico to 800 units by the end of the year. The further deployment of 53-foot containers is expected to give customers better cross-border shipping options.

The company said it’s focused on adding assets in Monterrey and Silao to start, with additions slated for Mexico City in the back half of the year.

“We want Mexican businesses to know there is a local, asset-based solution ready for them,” said Bernardo Alexander, Werner’s commercial vice president of Mexico. “With our long, trusted history in Mexico since 1999, we have the expertise to simplify cross-border shipping.”

Werner’s (NASDAQ: WERN) intermodal revenue increased 16% last year to approximately $129 million (15% of the company’s total logistics revenue of $857 million). Intermodal loads were up 17%, while revenue per load was flat.

Its container fleet has GPS location sensors and cargo cameras. It only uses C-TPAT certified carriers for cross-border shipments.

The company is using the cycle inflection to expand its presence in Mexico. Nearshoring prospects across the country have garnered incremental foreign direct investment. Further, industrywide intermodal conversion opportunities are popping up as fuel prices and truckload rates have surged.

“By combining our advanced tracking technology with 24/7 bilingual support, we are removing the friction from cross-border trade and making the process more efficient than ever,” Alexander said.

Werner will report first-quarter results after the market closes on Tuesday.

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DQS nets contract logistics provider in latest acquisition

trucks at a warehouse

DQS Solutions & Staffing announced it has further expanded its transportation and logistics platform with the acquisition of contract logistics provider Comprehensive Logistics, Inc.

The deal merges CLI, DQS and McLaren Transport, which DQS acquired last year, under parent company Axvor. Each company will continue to operate under its current banner.

Financial terms of the transaction were not disclosed.

The acquisition provides Dearborn, Michigan-based DQS with infrastructure and scale. Bonita Springs, Florida based CLI operates over 20 facilities spanning 17 states, totaling more than 5 million square feet of warehouse space. It also gives DQS control of CLI’s proprietary warehouse management system, which oversees inventory, sequencing and manufacturing logistics.

“Having previously served as the Plant Manager of the CLI Dearborn Plant as well as on the CLI Leadership Team, I witnessed firsthand the company’s tremendous potential,” said DQS CEO Joshua Morris in a Wednesday news release. “Our goal is to build on CLI’s strong foundation while investing in the people, facilities, and expanded services our clients need.”

The CLI acquisition is part of a multi-year pivot for DQS. DQS was originally launched as Detroit Quality Staffing, an employment agency focused on manufacturing workforce solutions. However, over the past few years it began layering in security, transportation and warehousing services.

The April 2025 acquisition of Detroit-based McLaren onboarded trucking assets and a 75,000-square-foot cold storage facility, along with two decades of automotive supply chain leadership experience. With these acquisitions, DQS now offers complex cross-border and inbound-to-manufacturing logistics.

“CLI has always been execution-driven and customer-focused,” said Brad Constantini, chairman and owner of CLI. “Joining DQS under the leadership of CEO Joshua Morris is a strategic step that expands our capabilities and reach while preserving the discipline and culture that define CLI.”

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Alaska Airlines upgrades Amazon cargo contract

An Amazon Prime freighter aircraft with light blue accents is parked on an airport tarmac.

Alaska Air Group has renegotiated a cargo transportation contract with Amazon that was unprofitable, but executives on Tuesday suggested improvements to the deal didn’t go far enough.

Alaska Airlines (NYSE: ALK) operates 10 Airbus A330-300 converted freighter aircraft for the retail and logistics behemoth, shuttling e-commerce packages between nodes in its U.S. air distribution network. Alaska inherited the Amazon (NASDAQ: AMZN) flying contract when it acquired Hawaiian Airlines 18 months ago. Under the transport agreement, Amazon supplies the aircraft and Alaska Airlines provides crews, maintenance and insurance to operate them.

“We’ve restructured the Amazon deal from losses to not having losses, and we’ve got a little more work to do there as well,” said Alaska Air CEO Ben Minicucci during a call with analysts after the company reported first-quarter earnings.

The first public sign that Alaska Air was unhappy with its Amazon partnership came in December when Chief Financial Officer Shane Tackett said the airline wasn’t making money from it.

People familiar with Amazon’s culture say the company typically forces vendors to accept very small profit margins. A contract that was marginally profitable at the start could have turned negative with the transition to a new airline, which has different crew bases and other operating needs, and compensates pilots differently.  

Both companies are headquartered in Seattle.

“We’ve really enjoyed getting to work more closely with the folks at Amazon. We know them because they’re neighbors of ours. We have folks who used to work in Alaska over there. We’ve worked on deepening the partnership, and I think it’s going well,” a less-than-enthusiastic Minicucci said. “The partnership is getting better. It’s getting healthier. We’re continuing to talk about how we can deepen it further, in a way that’s mutually beneficial to each other. We had a nice sort of update to the agreement that’s in force today that helps us on the economic side, and we’re hopeful that we can expand that through more partnership over time.” 

Hawaiian agreed to become an Amazon contractor in 2022 as a way to diversify revenue when it was losing money following the Covid crisis. Amazon had leased the Airbus A330 passenger-to-freighter aircraft and was looking for an operator because it isn’t a licensed airline. Hawaiian was one of only two A330 operators in the United States.

Alaska Air, the parent of Alaska Airlines and regional carrier Horizon Air, has not disclosed specific concerns with the Amazon contract. But an aviation professional told FreightWaves in December that Amazon drove a hard bargain, leaving Hawaiian with an uneconomical fixed-fee deal with little room to decrease costs and enhance margins. 

Another logistics expert, speaking on condition of anonymity at the time, speculated that the lack of coordinated passenger and cargo crew bases could be a challenge for Alaska Airlines. Periodic changes to Amazon’s route structure, or the number of flight hours required each month, could conflict with Hawaiian’s original pricing assumptions on pilot staffing levels and expenditures, or make it more difficult to rotate crews to passenger flying.  

“I won’t share where the specific economics on the freighters were. But, if we’re going to put time into flying aircraft around, we feel like we need to earn a reasonable margin — not a break-even margin. That’s not really our philosophy in terms of investment,” Tackett said on Tuesday. “We’ll be focused on generating decent returns on this flying.”

Q1 results

Cargo revenue, most of which comes from shipments carried on Alaska Airlines passenger aircraft and five Boeing 737-700 and 737-800 converted freighters, increased 23% year over year to $150 million in the first quarter. 

“Over the next year or two, we’re excited regardless of the freighter contract, about the opportunities with belly cargo on the widebodies, the opportunities to continue to grow our own freight market share up in the state of Alaska and along the West Coast,” Tackett said.

Alaska Airlines, traditionally a narrowbody carrier, began operating from its Seattle hub to Tokyo and Seoul, South Korea, last year using Airbus A330-200 passenger jets from Hawaiian’s fleet. In January, the carrier switched to Boeing 787-9 Dreamliners on the Tokyo route, increasing passenger and cargo capacity.  Alaska begins daily 787-9 passenger service to Rome next Tuesday and to London Heathrow airport on May 21. 

Chief Operating Officer Jason Berry noted that the cargo division’s quarterly performance was aided by the integration of Hawaiian and Alaska Airlines cargo systems, with combined booking systems and a unified sales approach allowing the carrier to leverage wider network connectivity. 

Overall, Alaska Air posted a net loss of $193 million as the carrier felt the brunt of surging jet fuel prices and revenue pressure because of heavy flooding in Hawaii and drug cartel violence in Mexico, two of its key leisure markets. The airline pulled its full-year guidance, warning of a profit cut due to rising fuel costs. 

Management said it expects fuel expenses to jump by about $600 million as it pays about $4.50 per gallon this quarter. Minicucci last month said the carrier has been tankering fuel from Singapore to Seattle because West Coast refinery margins are extremely high. 

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

Write to Eric Kulisch at ekulisch@freightwaves.com.

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SMBs ditch ‘wait-and-see’ as tariffs force supply chain overhaul

Small and midsize businesses are rapidly restructuring their supply chains and inventory strategies as tariff volatility stretches into a second year, according to a new survey from supply chain software firm Netstock. 

The company’s 2026 Tariff Impact Report shows a sharp shift from cautious observation to active mitigation, with companies diversifying suppliers, extending planning horizons and leaning more heavily on data tools to navigate what executives describe as “structured volatility.”

“Last year was largely a kind of wait-and-see, and this year … 97% are deploying at least one active mitigation strategy,” said Jefferson Barr, Netstock’s chief marketing officer, in an interview with FreightWaves. “They can no longer kind of take a wait-and-see approach.”

Supplier diversification accelerates, but challenges remain

Netstock, which provides demand planning and inventory optimization software for SMBs, said one of the clearest signals from the report is a shift in sourcing strategy. 

About 35% of SMBs changed suppliers in the past year, while nearly half now source from multiple regions, reflecting growing exposure to tariff impacts across geographies.

China remains the most impacted sourcing region, cited by 74% of respondents, but companies are increasingly branching into Europe, Southeast Asia and Mexico as they look to reduce risk.

Still, diversification is easier said than done for smaller companies.

“I was interested to see that a third of them had changed suppliers,” Barr said. “But … it’s hard to find a supplier. If you’re sourcing from China, it’s hard to find another location that can do the same production.”

The result is a hybrid approach, with many SMBs maintaining legacy suppliers while adding secondary sources — a shift that could fragment freight flows and alter traditional shipping lanes.

Longer planning horizons reshape inventory cycles

Tariff uncertainty is also pushing businesses to rethink how far ahead they plan. Nearly three-quarters of SMBs said they have extended their inventory planning horizons, according to the survey.

That shift reflects a need to anticipate cost swings, longer lead times and potential policy changes, but it also introduces new risks around inventory management.

“Three-quarters said the tariff uncertainty has pushed them to extend their planning horizons,” Barr said. “If you don’t have the right visibility tools, it’s kind of hard to make those decisions.”

The report notes that many SMBs were already struggling with inefficient inventory positioning last year, raising questions about whether longer planning cycles will improve outcomes — or simply push risk further down the line.

Pricing pressure builds as cost absorption fades

After initially absorbing tariff-related costs to maintain customer relationships, SMBs are increasingly passing those costs downstream.

The survey found that 82% of companies are now raising prices in response to tariffs, up sharply from the prior year.

“That was one of my biggest takeaways,” Barr said. “It’s kind of pushed past the point of them being able to bear it.”

The shift could have broader implications for demand, as higher prices ripple through supply chains and potentially dampen order volumes later in the year.

Analytics adoption emerges as key differentiator

As complexity increases, SMBs are turning to data and automation tools to guide decision-making. The report found that heavy use of analytics more than doubled year over year, while adoption of AI-driven inventory tools continues to rise.

Barr said the move toward analytics is becoming essential for navigating uncertainty.

“The spreadsheet’s not going to cut it,” he said. “They’re going to have to rely on … inventory optimization solutions to help give them that visibility.”

Freight market implications: volatility likely to persist

Taken together, the shifts outlined in the report suggest continued volatility in freight demand patterns.

Supplier diversification and multi-region sourcing could lead to more fragmented shipping networks, while extended planning horizons may drive earlier ordering cycles. At the same time, rising prices and inventory risks could create periods of softer demand if consumption slows.

For SMBs, the challenge is balancing resilience with efficiency in an environment where policy shifts remain unpredictable.

“They can’t control global volatility,” Barr said. “But they can control … inventory levels and supplier mix.”

Shell Starship 3.0 showcased at US Eco-Marathon

Shell Starship 3.0 natural gas truck at Indianapolis Motor Speedway with IndyCar trailer and Champions of efficiency banner during U.S. Eco-marathon.

INDIANAPOLIS — Shell’s Starship 3.0 natural gas truck made its latest stop at the Indianapolis Motor Speedway during the U.S. Shell Eco-marathon. The event, marking more than 40 years since its 1985 launch, showcased a decade of iterative engineering aimed at decarbonizing commercial trucking through available technologies rather than far-future promises.

The demonstration brought together Shell engineers, fleet efficiency experts and Penske Entertainment sustainability leaders to discuss the practical realities of reducing emissions in long-haul freight. The sector faces mandates to reduce its emissions and chart a path toward achieving carbon neutrality by 2050.

“It’s part of a varied portfolio of solutions,” said Ryan Manthiri, project leader for innovation at Shell Global Solutions and engineering manager for the Starship program. Manthiri stressed that there is no one-size-fits-all solution.

Starship’s Evolution from Diesel to Natural Gas

Shell launched the Starship initiative in 2015 as a material demonstration program focused on reducing emissions and energy usage in commercial road transport. The first truck debuted in 2018 with a diesel powertrain, reflecting diesel’s dominance at the time.

The program has since evolved through three iterations, each designed around the sector’s energy transition at that snapshot in time. Starship 3.0 pivoted to natural gas to align with low-carbon fuel standards and the push toward renewable natural gas. RNG is derived from landfills, dairy farms and other waste streams.

Demonstrations prove concepts, but ensuring the technology works in practice is essential. “We found, regardless of whatever sector we were in, whether it’s mining, manufacturing, transport or marine, the best way to do this is through material demonstrations,” Manthiri said.

The latest chapter includes Starship China, a diesel-electric hybrid featuring a 30-kilowatt lithium-ion battery paired with a 270-kilowatt electric motor. The configuration suits the stop-and-go logistics operations common in the Chinese market.

Engineering the ‘Lab on Wheels’

The Starship 3.0’s most noticeable feature is its fully carbon-fiber cab with a sloping hood and rounded bumper. However, despite its custom exterior, Shell engineers emphasize that many efficiency gains come from components available to any fleet today.

The truck achieves a drag coefficient of 0.25 — roughly half that of a standard Class 8 tractor at 0.6. An automatic gap sealer closes the space between tractor and trailer, while an automated boat tail reduces the low-pressure wake at the rear.

“A lot of times when we talk to people who see the truck, they kind of look at it and they kind of like, ‘Oh, well, I don’t know how realistic it is,’” said Scott Burian, global communications manager for Shell Lubricants. “But there’s so many things on this truck that you can implement and make immediate impacts to your fleet.”

Burian pointed to engine oil as a prime example. The Starship runs 5W-30 natural gas full synthetic oil.

“A lot of truckers today still use 15W-40, and if you go down even from 15W-40 to a 10W-30 Shell Rotella T5 or T4 product, you’re going to get up to 2% fuel economy savings,” Burian said. “If you go down to a 5W-30, you’re up to 3.3% fuel economy savings compared to that conventional 15W-40.”

Other off-the-shelf components include the Eaton Endurant transmission and Meritor fuel-light axle.

Natural Gas Performance Surprises

Converting the truck from its original 15-liter diesel to a 15-liter natural gas engine proved more straightforward than expected, Manthiri said. The engine footprints are nearly identical, and the natural gas unit delivers comparable performance with simplified after-treatment systems.

“You have very little NOx, very little volatile organic compounds coming off — near zero to near zero NOx coming off actually,” Manthiri said. “The after-treatment systems that are required here are way, way smaller than what you would expect in diesel, which makes maintenance a whole lot easier.”

The truck also runs quieter than diesel equivalents. Shell tested it at 80,000 pounds gross vehicle weight in 2023 and covered just shy of 5,000 miles at 73,000 pounds last year.

Technology Creating Real-World Takeaways

Mike Roeth, executive director of the North American Council for Freight Efficiency (NACFE), which has validated Starship data through real-world demonstration runs, emphasized that efficiency gains remain available across existing diesel and natural gas fleets.

“We saw 11.5 miles per gallon by two trucks in Run on Less. And that shocks a lot of people when the national average is under 7,” Roeth said. “Right now it’s $6 a gallon diesel. Now we’re talking about hundreds of percent, not just tens of a percent.”

The Starship 3.0 achieved 204 ton-miles per gallon compared to roughly 80 for a standard Class 8 tractor — a two-and-a-half times improvement in freight efficiency.

Shell has integrated the truck into IndyCar logistics, hauling the technical inspection and administrative trailers for the 2025 and 2026 seasons as part of Penske Entertainment’s “Racing Toward Zero” initiative targeting a 50% reduction in operational emissions by 2030.