Sign In Newsletters Contact Us

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.

Related Articles:

Project44 expands real-time visibility into China

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

‘Project44’s vision has always been global’

Duffy urges more American dollars invested in US infrastructure

bridge being built

WASHINGTON — Transportation Secretary Sean Duffy told a new group of advisors that he wants to rely more on American investors to maintain and expand the country’s transportation infrastructure.

“What we see in a number of our projects is an opportunity for private capital,” Duffy said during the first meeting of the DOT Advisory Board, held at the White House on Wednesday.

Duffy speaking to advisory board members at the White House on Wednesday. Credit: DOT

“But it’s frustrating because there’s a lot of foreign private capital, and it seems like pretty good returns that they’re making on American infrastructure. It would be great if we could get [more] American private capital into American infrastructure and see those returns go to American investors.”

Duffy told the 12 board members that it’s also “important for our group to think about how we can innovate, how we can spend money more effectively and more efficiently.”

The board members were selected from dozens of nominees to help guide DOT’s approach to overhauling freight and passenger transportation systems and how they’re funded. 

“This team will be essential to executing President Donald Trump’s bold agenda to build big, beautiful things again and I could not be more excited for what is to come,” Duffy remarked in a press release before the meeting.

The following advisory board members were appointed for two-year terms:

  • Gregg Reuben (Chair), CEO, Centerpark.
  • Steven Lefton (Executive Chair), president and CEO, Kimley-Horn.
  • Peter Bartek, founder and CEO, FTS Rail.
  • Michael Capasso, CEO, C.A.C. Industries.
  • Stephen Dickson, former administrator, Federal Aviation Administration.
  • Todd Ehmann, senior international captain, United Airlines.
  • David Horner, partner, Hunton Andrews Kurth LLP
  • Brigham McCown, chair and founder, Alliance for Innovation and Infrastructure.
  • Francis Sacr, principal, Lorne Infrastructure.
  • Trent Morse, deputy assistant to the President.
  • Mark Tedesco, CEO, Academy Bus.
  • Robert Valentine, senior managing director, Macquarie Infrastructure Fund.

Click for more FreightWaves articles by John Gallagher.

BNSF, UP settle dispute over Salt Lake City intermodal service

BNSF Railway and Union Pacific settled their Salt Lake City trackage rights dispute Tuesday prior to a scheduled meeting with federal regulators.

The deal allows BNSF to begin international intermodal service between Southern California ports and a new intermodal terminal on the Salt Lake Garfield & Western Railway.

In a filing posted on the Surface Transportation Board website Wednesday, the railroads asked the board to dismiss BNSF’s request for an emergency order that would have required UP (NYSE: UNP) to accept the new trackage rights trains.

“BNSF is proud to announce its new intermodal service between California and Salt Lake City. We have reached an agreement and service is currently underway,” spokeswoman Kendall Sloan said in an email to Trains. “This new product offers the capacity to meet market demand and will grow as we move forward. We look forward to serving our customers with this expanded capacity and service.”

The filing did not provide details about the deal the two Class I railroads reached, including what route the trains will take or how many trains will operate per week.

“Union Pacific is pleased with the settlement, which allows us to ramp up service over time and enables Union Pacific and BNSF to efficiently serve our customers,” spokeswoman Jill Micek said in an email.

Last week UP told regulators that it did not oppose BNSF using its trackage rights. But the railroad said it would be unable to handle the trains until it could hire and train additional train crews, which would take months. UP also said the traffic would have to follow the railroad’s directional running pattern, with the eastbound running on the former Southern Pacific main line via Donner Pass in northern California and the westbound using the former Western Pacific through the Feather River Canyon, also in the northern part of the state.

Union Pacific contended that the BNSF trackage rights agreement imposed as a condition of its 1996 acquisition of the Southern Pacific would require BNSF to pay for its share of a 2009 clearance project that UP funded so that the Donner Pass route could handle domestic double stack trains.

BNSF, however, told regulators that the trackage rights agreement stipulation regarding funding clearance work applies only to hi-cube domestic double-stack containers – not to the international containers the new service would handle for liner customers CGM CMA and Mediterranean Shipping Co.

BNSF also had requested that the trains run via the former Western Pacific in both directions, and that the service be allowed to start immediately. The terminal on SLGW opened July 7, and BNSF, its customers, and Utah inland port officials had hoped the service would begin last week.

The STB last week ordered the railroads to participate in a July 15 technical conference where the board would be able to gain more details about the proposed service. The board, in a decision today, approved the railroads’ request to drop the case.

Related coverage:

Washington rail short lines on Jaguar buy list

BNSF launches new expedited LA-Houston intermodal service

CSX cuts dozens of management jobs

UPDATE: CPKC denies KCS wrongdoing as rail union polls members on strike

FMCSA nominee details safety, enforcement plans

Derek Barrs at nomination hearing.

WASHINGTON — FMCSA nominee Derek Barrs told lawmakers that his law enforcement experience will inform his leadership at the agency on a range of issues, including the Trump administration’s recent crackdown on truck drivers who lack skills in speaking and reading English.

“I have been a roadside inspector and have inspected commercial motor vehicles, and understand the difficulty it places on me as the inspector having to communicate with someone who cannot communicate with you,” Barrs testified at his nomination before the Senate Commerce Committee on Wednesday.

“If I want to do a full inspection of that vehicle and have to get under and check brakes, I need to be able to communicate with that driver – not only for the sake of roadway safety but for me as the inspector.

“So it’s extremely important for that driver to be able to at least have a conversation, understand the commands, and understand our road signs for safety. That’s where I believe my experience comes into this, understanding the effects on roadside inspection.”

A Florida native, Barrs, who was nominated to be FMCSA administrator in March, served as the FMCSA lead for the agency’s Motor Carrier Safety Assistance Program during his time with the Florida Highway Patrol.

He is also a member of the American Trucking Associations’ Law Enforcement Advisory Board and the Florida Trucking Association.

Freight fraud and DOT retaliation

Sen. Ted Cruz, R-Texas, told Barrs that his state is dealing with Mexican truck drivers being issued fraudulent CDLs, coming into the U.S. and potentially operating illegally.

“Ensuring drivers are qualified and safe has got to be the utmost importance of what we’re doing with commercial vehicle safety,” Barrs responded.

“If confirmed I’m committed to addressing this particular issue, I’ve worked closely with the Texas Department of Public Safety throughout my career and understand this is concerning, and will work closely with you to make sure all drivers in our country are safe.”

Barrs also assured Cruz that he would also tackle freight and CDL fraud by continuing work to update FMCSA’s motor carrier registration system, including by requiring more thorough identity verification for driver applicants and cracking down on violators.

“This is a nationwide problem that is causing major issues within the trucking industry and the economy,” Barrs said. “I look forward to working with you on this and working with our partners to ensure bad actors are penalized or they go to jail. We can work with different agencies to make sure that can happen.”

Sen. Maria Cantwell, D-Wash., told Barrs she’s concerned about the potential chilling effect that a new policy being proposed by the U.S. Department of Transportation could have that would allow modal agencies to discipline their own inspectors for ruling against motor carriers in enforcement cases. She asked Barr to commit to making sure there’s “no political interference” with regard to such enforcement policies.

“Inspectors and officers working within FMCSA have a diligent job to do in making sure they can carry out the missions and place these bad actors out [of service],” Barrs said. “It’s extremely important to me that we make sure we do that.”

Autonomous vehicles and underride protection

Barrs and Jonathan Morrison, who was also questioned at the hearing on his pending nomination to be administrator of the National Highway Traffic Safety Administration, were asked about how they would oversee the rollout of autonomous vehicle technology.

Morrison testifying on Wednesday. Credit: U.S. Senate

Barrs pledged to look into allowing warning triangles and other roadside safety devices required to be deployed manually be replaced with electronic beacons that can be deployed remotely.

The technology is considered a necessity in paving the way for autonomous trucks, but FMCSA has so far denied requests to allow such technology to be exempted from current regulations.

Morrison, who told the committee he planned to increase his agency’s engagement with industry to develop regulations on autonomous deployment, was also asked about NHTSA’s previous analysis on truck side underride guards, and the agency’s determination that the cost to install them exceeded the benefits.

“Unfortunately to reach this estimate, NHTSA makes assumptions in their analysis that excludes whole categories of preventable deaths of vulnerable road users such as bicyclists, pedestrians and motor cyclists,” said Sen. Ben Ray Lujan, D-N.M.

Lujan asked if Morrison would commit to including such road users in cost benefit analyses and any future rulemakings on side underride guards.

“I will work with the economists at NHTSA and make sure everything appropriate is being considered,” Morrison responded.

Click for more FreightWaves articles by John Gallagher.

Washington rail short lines on Jaguar buy list

Jaguar Transport Holdings, which owns or controls 11 other short lines, is seeking to buy two railroads in Washington state, the company said this week in filings with the Surface Transportation Board.

The transaction would include the Columbia Basin Railroad and the Central Washington Railroad. The Columbia Basin operates 86 miles of track — 73 owned by the railroad and 13 leased from BNSF — in a series of lines centered around Warden, Wash., southwest of Spokane. The Central Washington operates 80 miles of track in two disconnected sections in or near Yakima, Wash. The two railroads date to 1986.

The July 14 filings by Joplin, Mo.-based JTH said the intention is to close the deal by Aug. 13. However, BNSF Railway must approve the transaction; its agreement to sell the lines used by the two railroads includes right-of-first-refusal language giving the Class I railroad the option to repurchase the lines in the event of a transfer of control. The filing says closing will depend on BNSF’s pending response.

Financial and other terms of the sale were redacted from the CBRW and CWR STB filings.

The Jaguar Rail Holdings unit of JTH operates eight short lines: the Southwestern Railroad in New Mexico; Texas & Eastern; Oregon Eastern; Missouri Eastern; Charlotte Western and Kinston Railroad, both in North Carolina; Waterloo Railroad in Iowa; and the recently created Kansas City West Bottoms Railroad. 

Two other railroads, the Cimarron Valley Railroad in Kansas, Oklahoma, and Colorado, and Washington Eastern Railroad, are controlled through Wyoming & Colorado, operator of the Oregon Eastern. The West Memphis Base Railroad is controlled through a separate JTH affiliate.

Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.

Related coverage:

BNSF launches new expedited LA-Houston intermodal service

CSX cuts dozens of management jobs

UPDATE: CPKC denies KCS wrongdoing as rail union polls members on strike

Rail freight gains in short week

A smaller Marten turns in a second quarter of 2025 much like a year earlier

Marten Transport turned in a second quarter performance that by various metrics was an echo of the corresponding quarter of 2024, but it did so on a base that reflected a somewhat smaller company.

Compared to the second quarter of 2024, Marten’s revenue was down 6.6%. Its total number of tractors declined 6.3%. Total trailers were down 6.8%. It drove fewer miles in both its Truckload and Dedicated segments. 

End result: net income was down about 9%. But there were several operating measures that showed improvement.

Marten’s operating ratio (OR) net of fuel in its Truckload segment, its largest by revenue, improved 120 basis points to 97.8% from 99%. Its Dedicated segment did see a deterioration in its OR, but it was only down 60 bps to 92.4% from 91.8%. 

There was deterioration in the OR for its intermodal segment (down 180 bps to 106.3%) and its brokerage segment (down 90 bps to 93.2%).

The net result was where the year-on-year comparison looks most similar. Marten’s (NASDAQ: MRTN) company-wide OR in the second quarter of 2025 net of fuel was 95.2%. A year earlier, it was 95.3%.

There’s another financial metric in the report signaling that Marten has strengthened its business in one respect: its balance sheet, which shows cash and cash equivalent on hand at $35 million at the end of the quarter, up from $17.3 million just since the end of 2024.

The somewhat smaller size of Marten can also be seen in its figure for salaries, wages and benefits. They declined to $78.6 million from $86.5 million a year ago. For the six months, the number is down to $157.4 million compared to $175.3 million in the first half of 2024. 

One expenditure that barely changed over the last year: purchased transportation. It was $43.1 million in the quarter, down from $43.2 million a year earlier. That suggests Marten moved a larger percentage of its freight with independent owner operators, given the decline in salaries and wages. 

In his prepared remarks–Marten does not conduct an earnings call with analysts–Executive Chairman Randolph Marten focused on the company’s Dedicated and Brokerage segments for the last six months and full year, though he did not specifically mention the quarterly performance of those segments.

“Our unique multifaceted business model’s value continued to be highlighted by the operating results of our dedicated and brokerage operations for the first six months of this year and throughout last year,” he said in his remarks. 

But for the quarter, operating income at Dedicated and Brokerage were significantly lower on a year-to-year comparison. 

Dedicated dropped 18.4% year over year, to an operating income of $5.43 million from a year earlier. Brokerage fell 6.8% to operating income of $2.7 million.

For the six months, Dedicated’s operating income was down 35.4% and Brokerage was down 13.1%. Truckload increased 27.4%.

However, on an outright dollar basis, although Truckload produced about 40% of the company’s operating revenue, Dedicated and Brokerage each produced more dollars of operating income. And both had lower ORs than Truckload.

Dedicated’s operating income of $5.42 million was about 230% of Truckload’s, and Brokerage of $2.89 million was about 115% of Truckload, which came in at $2.34 million.

Brokerage also increased its operations. For the six months, brokerage loads rose 4%. They were up 6.1% for the second quarter. 

Marten released its earnings while equity markets were open, which is unusual for any public company. 

Marten’s stock showed no outright reaction to the earnings release. ,At approximately 3 p.m., it was up just 0.15%, or 2 cents, to $13.15.

It has been a tough year for Marten shareholders. In the last 52 weeks, Marten stock is down about 28.5%, though in the last 3 months it is up 2.25%, per Barchart data. 

Randolph Marten acknowledged the market that it continues to face in its operations. “Our earnings have continued to be heavily pressured by the considerable duration and depth of the freight market recession’s oversupply and weak demand – and the cumulative impact of inflationary operating costs, freight rate reductions and freight network disruptions,” he said in the prepared statement.

Most of the expenses listed by Marten in its earnings report were not noticeably higher with one exception: insurance.

Second quarter insurance and claims expenses rose to $15.85 million from $12.56 million a year earlier. For the six months, the comparison was $29.23 million in the first half of 2025 and $24.22 million last year. 

There is a growing theme in the trucking segment that a bottom may have been reached because of an expected drop in capacity as a result of federal enforcement of regulations regarding a driver’s ability to speak English. Marten addressed that in his prepared remarks. 

“We remain focused on minimizing the freight market’s impact – and the impact of the U.S. and global economies with the current trade policy volatility – while investing in and positioning our operations to capitalize on profitable organic growth opportunities,” Marten said. “We expect such growth opportunities to be positively impacted by anticipated additional industry capacity exits relating to increased enforcement of the English Language Proficiency and B-1 visa regulations.”

More articles by John Kingston

Another broker liability case knocks at Supreme Court door, this one involving C.H. Robinson 

Werner loses again on issue of deaf driver, but dollar amounts are a lot lower

XPO rating cut by S&P, agency cites continuing weak freight market

Supply Chain AI Symposium to feature execs from Augment, project44, GenLogs, and HappyRobot

FreightWaves is gearing up to host its pioneering Supply Chain AI Symposium at the historic International Spy Museum in Washington, DC, on July 30, 2025. The event promises to bring together a dynamic mix of industry leaders, innovators, and AI enthusiasts who are at the forefront of transforming the logistics landscape. Among the notable speakers at the symposium are Harish Abbott, Jett McCandless, Ryan Joyce, and Javi Palafox, whose experiences and insights into AI-driven advancements in FreightTech will help symposium attendees stay on the leading edge.

Harish Abbott, the CEO and Co-founder of Augment, stands out as a visionary in logistics technology. With an impressive background in e-commerce fulfillment and AI innovations, Abbott’s latest venture, Augment, is at the cutting-edge of enhancing productivity within the logistics industry. Augment’s platform focuses on automating routine tasks, thus boosting operator efficiency and turning complex operational challenges into innovative solutions. Abbott’s experience includes substantial roles at Amazon and the successful founding of companies like Deliverr, which have been pivotal in facilitating rapid, scalable logistics solutions across global supply networks. His leadership at Augment continues to address inefficiencies in logistics through AI, wielding the potential to drive substantial improvements in supply chain operations.

Jett McCandless, the Founder and CEO of project44, is another highlight of the symposium. Honored for his innovative contributions to supply chain intelligence, McCandless has been instrumental in redefining supply chain visibility. Project44, under his guidance, has become a trailblazer in utilizing SaaS technology to promote real-time visibility across global logistics networks. The company integrates data and automation to optimize transportation processes, significantly enhancing supply chain resilience and operational efficiency. McCandless, with over 20 years of experience, brings a wealth of knowledge in aligning traditional logistics practices with cutting-edge technology, having previously served in executive roles contributing to scaling operations and strategic growth at GlobalTranz.

Ryan Joyce, co-founder and CEO of GenLogs, merges his intelligence community expertise with logistics innovation. Having spent over a decade in U.S. intelligence and counter-terrorism, Joyce brings a unique perspective to the logistics industry by applying counter-terrorism methodologies to combat freight fraud and inefficiency. Through GenLogs’ cutting-edge freight intelligence platform, Joyce enhances supply chain visibility with real-time data insights using a nationwide sensor network. His leadership aims to provide brokers, carriers, and shippers with actionable intelligence to improve security and operational efficiency within the $7 trillion logistics market.

Javi Palafox, Co-Founder and COO of HappyRobot, blends financial strategy and technological innovation. Transitioning from corporate finance into startup innovation, Palafox has played a crucial role in developing AI-driven communication tools designed for logistics. HappyRobot’s voice agents automate numerous logistical operations, aiming to address inefficiencies and reduce operational costs significantly. Palafox’s role is pivotal in leveraging AI to enhance operational efficiency while ensuring seamless integration within existing logistics frameworks. This focus on product development and fundraising, along with his strategic approach to using AI for real-world problems, makes him a valuable addition to the symposium’s roster of speakers.

The Supply Chain AI Symposium will delve into topics beyond individual company achievements, fostering an environment of knowledge exchange through panel discussions, case studies, and keynote addresses. Attendees will gain insights into innovative AI applications in logistics, exploring how these technologies are revolutionizing supply chain efficiency, visibility, and sustainability.

As the logistics sector sits on the brink of a new digital era, participation in the Supply Chain AI Symposium is crucial for industry veterans and emerging innovators alike.

Registrations for the event are already open and spots are expected to fill quickly. Interested participants are encouraged to secure their place promptly to access the full range of opportunities available at this transformative gathering. Mark your calendars for July 30, 2025, and prepare to engage with leading minds who are driving the future of AI in logistics.

Prologis says warehouse ‘demand is piling up’

A nighttime view of empty loading docks at a warehouse

Logistics warehouse operator Prologis boasted a record leasing pipeline as “broader economic uncertainty begins to clear” following April’s Liberation Day tariff announcements. The company cautioned that conditions will likely “remain choppy” over the next few quarters but said leased space utilization is increasing and “demand is piling up.”

The San Francisco-based real estate investment trust said Wednesday that customers are actively signing leases, albeit at a slower-than-normal pace. The company’s leasing pipeline of 130 million square feet was up 19% year over year in the second quarter and now stands at “historically high levels.”

“With every passing day there’s more water building up behind the dam,” said Hamid Moghadam, Prologis co-founder and CEO, on a quarterly call with analysts. “I think every bit of business that’s delayed is going to translate to more business in the future.”

Occupancy across Prologis’ (NYSE: PLD) portfolio was 94.9% in the second quarter, 120 basis points lower y/y, but level with the first quarter as market conditions appear to have stabilized. The company ended the quarter with the portfolio 95.1% occupied, which it said is 290 bps ahead of the broader market.

Table: Prologis’ key performance indicators

Prologis reported second-quarter core funds from operations (FFO) of $1.46 per share before the market opened on Wednesday, which was 4 cents above the consensus estimate and 12 cents higher y/y. Total revenue increased 9% to $2.18 billion as new leases commenced rose 10% to 51.2 million square feet.

Leasing activity slumped 20% shortly after the April tariff announcements but improved throughout the period, ending the quarter just 10% lower than normal. Roughly one-third of Prologis’ leasing activity in the quarter came from 3PLs. That was a little lower than the prior two quarters, but those periods saw outsized activity from logistics operators.

The company raised its full-year FFO guidance range to $5.80 to $5.85 per share, which was roughly 1% higher than the prior guide at the midpoint of the range.  

The new outlook assumes average occupancy in a range of 94.75% to 95.25% and development starts between $2.25 billion and $2.75 billion. The new guide for starts is back in line with the company’s initial outlook for 2025, which was issued in January.

Importantly, Moghadam said that the market has seen a 7.4% median vacancy rate since 2000, with vacancy exceeding that level 44% of the time. He believes the market has already topped out at a mid-7% vacancy rate and noted that at 5% vacancy, the landlord regains pricing power. (Market rents were off 1.4% in the quarter.)

A fear of missing out and inflationary concerns are likely to push tenants away “from being very conservative to being much more aggressive,” Moghadam said.

“I think if you have people that are pulling the trigger on big capital improvements … they are going to take comfort by seeing other people make the same decisions.”

Shares of PLD were up 1.4% at 2:28 p.m. EDT on Wednesday compared to the S&P 500, which was up 0.2%.

More FreightWaves articles by Todd Maiden:

Cross-border trucking company accused of labor violations

Authorities in the U.S. have asked the government of Mexico to investigate whether Tijuana-based Liber Gennesys Group has denied the right of truck drivers to organize for bargaining purposes.

The U.S. Trade Representative (USTR) said Tuesday an interagency committee received a complaint on June 12 from the Supply Chain Transporters Union (SITRABICS) in Mexico, and Rethink Trade at the American Economic Liberties Project, a nonprofit advocacy group.

“The petition alleges that Liber Gennesys and its affiliated and/or successor companies have violated workers’ rights by using intimidation and harassment to discourage workers from supporting the SITRABICS union and have dismissed workers due to union activity,” the USTR said.

Liber Gennesys and its affiliates, including San Diego-based Transportista Kamu, provide transportation services for Hyundai Motor Co. in Mexico and the U.S., according to the USTR.

The complaint against Liber Gennesys Group falls under the labor provisions of the United States-Mexico-Canada free trade agreement’s rapid response mechanism.

Mexico has 10 days to decide whether to conduct a review and 45 days to investigate the claims and present its findings.

SONAR adds intermodal savings rates

Building upon SONAR intermodal and dry van contract rate data already available in the platform, as of today, intermodal savings rates are now included in SONAR, as a national average, for 63 individual lanes, and two indices. 

The LA to Dallas lane is competitive between truckload and intermodal with a 9% average intermodal savings rate. That’s below the national average of 23%. (Chart: SONAR)

The intermodal savings rate is the percent savings that a shipper can expect to realize by using domestic rail intermodal rather than truckload. It is the calculated percent difference between rates that include fuel surcharges for both modes. The inclusivity of fuel surcharges is important because the greater fuel efficiency of intermodal is a significant component of the overall savings versus truckload. 

The new dataset primarily targets shippers that move freight in dense corridors and/or longer haul lanes where rail intermodal could potentially be a viable option over truckload. 

The 63 lanes chosen for the index are those with sufficient intermodal density to make intermodal a viable option for most shippers that can tolerate “truckload plus a day” service levels. The individual lanes were also selected on the basis of those where sufficient intermodal rate data is available.   

The Transcontinental Index displays the average intermodal savings of five dense intermodal lanes outbound from Los Angeles. The objective is to give importers a quick read on changes in rates to move goods to consumption centers after they are transloaded from international containers into 53’ domestic containers. Meanwhile, the Local East Index displays the average savings of nine lanes in the eastern one-third of the US. That grouping of lanes is intended to represent those that are highly competitive with dry van, and therefore, more influenced by truckload market conditions. Truckload contracts are often repriced more frequently than intermodal contracts, so a tightening in market conditions could cause the savings rate to rise, at least temporarily, all else being equal. 
For additional detail, see the Intermodal Savings Index Knowledge Center Article.

Report: White House maritime chief leaving

Ian Bennitt, the senior director for maritime and industrial capacity at the National Security Council, is leaving the White House office, according to a published report.

Bennitt is expected to leave for the private sector, Reuters reported, quoting anonymous sources. Brian McCormack, the NSC’s chief of staff, also has left to become chief of staff for Republican Sen. Bill Hagerty, an ally of President Trump.

Ian Bennitt

The departures come amid restructuring at the NSC that has eliminated some sections while combining others.

Bennitt did not immediately respond to messages seeking comment.

The NSC maritime office was created shortly after President Donald Trump in April signed an executive order designed to revitalize U.S. shipbuilding while blunting China’s growing dominance over global shipping. 

But five of the office’s seven staff had left by early July, according to the Wall Street Journal.

Reuters reported that the State Department is now overseeing maritime matters, and that the NSC office had been moved to the Office of Management and Budget, the latter confirmed by White House spokesperson Anna Kelly on X. No other details were provided.

Find more articles by Stuart Chirls here.

Related coverage:

Ports back bill to limit Customs charging for inspection services

FMC investigating Port Houston pacts with container carriers

June box record for Port of Los Angeles 

China-US container trade trending down as peak season nears