Welcome to the WHAT THE TRUCK?!? newsletter. In this issue, Facebook outage’s impact on e-comm; are long-term contracts worth it for shippers; Ever Given out of service again; and more.
Onward and upward
Uphill battle — National dry van rates inclusive of fuel jumped 5 cents this week and are now at their second-highest level since 2019. Taking a glance at the above SONAR chart, you can see the mountain that’s been building since May 2020 when initial COVID shutdowns took the air out of trucking’s tires. FreightWaves’ Tony Mulvery reports, “Contract rates, which are reported on a two-week lag, have increased by over 25% in the past year as an attempt to drive better carrier compliance.” That hasn’t worked and rates continue to climb.
Relief for shippers? — All indications point to no time soon. While the national average is $3.53/per mile inclusive of fuel, outbound on a lane like Los Angeles to Phoenix is $4.55. Although outbound tender rejections have stabilized, more than 1 in 5 contracted loads are still getting rejected on a national level. At this point, it appears that trucking rates won’t see much relief until the shipping crisis becomes, umm, less of a crisis. We’ll get to that next.
Bad Santa
Jingle bellwether — Tom Fishburne posted a brilliant cartoon this week that depicts a girl on Santa’s lap reciting her Christmas list. As she reads off each item, Santa gives one supply chain-related reason or another as to why the girl won’t get said gift. XBox? Chip shortage. Bratz toys? Raw material shortage. Coal for being bad? Not this year: coal shortage. Laugh as we may, in comedy lies truth and in this comedy it is all truth.
How about a fixed supply chain for Christmas? — Sorry, Santa is out of that too. FreightWaves’ Greg Miller reports, “Industry experts speaking to American Shipper, as well as other market players and analysts, are increasingly talking about a scenario in which high ocean shipping costs and congestion could persist throughout next year, if not into the following year.” You may experience deja vu when we’re having this same conversation next year. In the meantime, Coke has gone bulk, and more and more retailers are entering the charter market.
“Who knows what happens when you get out of a pandemic? I don’t think any of us alive have been in this situation before.” — Maersk CEO Soren Skou
Are long-term contracts the answer? — Carriers, 3PLs and NVOCCs have started to heavily promote the advantages of multiyear ocean shipping contracts, but do they make sense? With contract rates averaging over $4,500, that could be a steep price to pay should the market correct itself, but retailers may be looking at these long-term contracts as a way to buy short-term capacity.
Pricing power — Like with trucking, ocean contracts are barely worth the paper they’re printed on. When shippers hold the pricing power, they often ignore minimum container promises (known as MQCs) just as the steamship lines have during the shipping crisis. On the other side of this crisis, will there be any goodwill or good faith left between parties? I wouldn’t count on many of these long-term contracts sticking if the market dynamics shift.
Zucks to be you
Facebook has fallen … for a few hours — Twitter users couldn’t wait to dunk on Facebook, Instagram and WhatsApp when their platforms went dark after a system update went awry. Facebook’s engineering team’s explanation: “configuration changes on the backbone routers that coordinate network traffic between our data centers caused issues that interrupted this communication.” Aside from saving families and friends from each other’s scorn on the platform, what kind of impact did the outage have on retail? ShipHero founder and CEO Aaron Rubin tweeted that Facebook-driven non-Amazon e-commerce sales fell 27% on average. As hated as Facebook may be, it is apparent just how vital it has become to SMBs.
Semi surfing
Dangerous game — The milk crate challenge has said “hold my beer” as a new disturbing trend has emerged. When this happened last week in Atlanta, it was easy to ignore as it was a single incident. But since then more incidents and videos have been reported to the Atlanta PD.
Bad fad — Now stupidity has struck again as a man was killed after hitching a ride on a semi in Nashville. WKRN reports, “Investigators said the man hung on to the truck’s rear-view mirror and tried to pull the cab’s door open but it was locked.” I’m assuming the investigator means the side view mirrors for obvious reasons. In this case, the victim fell off the truck on Interstate 40 and didn’t survive. Keep your doors locked and look for stowaways during that precheck, drivers.
Ever Given OOS
R&R for the big ship — The Ever Given arrived in Qingdao, China, for repairs on Monday after sustaining battle scars six months ago when it got wedged in the Suez. Xinhua reports, “The vessel, which was mainly damaged in the bow, will undergo repairs for more than 20 days in a shipyard of Qingdao Beihai Shipbuilding Heavy Industry Co., Ltd.” The bad news? That’s space for 20,124 20-foot containers removed from capacity for three weeks. Looking for a Halloween costume this year?
Hero trucker saves HS football team
Stop the bus — On Sept. 24, trucker Alvin Edwards spotted a wheel on fire on a school bus. Inside the bus? An entire Kentucky high school football team. Fortunately, Edwards sprang into action by alerting the bus driver and using his own fire extinguisher to help douse the flames. According to NBCDWF, “The team honored Edwards by inviting him and his family back to Kentucky for their rivalry game on Oct. 1.” He was also issued a key to the city and given a signed football jersey with the number 35 on it. Why 35? That’s the number of people who were on the bus.
WTT this week
Wednesday — FreightWaves kicks off its all-day virtual event dedicated to tumultuous seas of ocean freight. Dive into the technology, processes, procedures and regulations that keep global maritime trade afloat.
Catch keynote speaker Gene Seroka, executive director at the Port of Los Angeles, at 9:05 a.m. with “Port perspective on managing import surge.” The Port of Los Angeles is on the front lines of America’s import surge, and Seroka outlines how the port is handling the capacity limits of rail, trucking and warehousing.
We’ll also have a live WTT from the event at 11:50 a.m. EDT.
OceanWaves starts Wednesday at 9 a.m. EDT; register for free now.
Friday — The brains behind gCaptain. Why bootstrapping a company and crowdfunding millions in 2021 created an “Impossible Situation” for one e-tailer and how they know they’ll survive. The latest in lidar with Ouster.
With special guests John A Konrad V, CEO at gCaptain; Conor B. Lewis, founder of FORT; and Angus Pacala, co-founder and CEO of Ouster.
Catch new shows live at noon ET Mondays, Wednesdays and Fridays on FreightWavesTV, FreightWaves LinkedIn and Facebook, or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player.
Now on demand
The container shipping massacre
Art of freight journalism
Smart kid
Supply chain education goes back to campus — “I don’t think there’s any topic more interesting than supply chain to be teaching” — Isenberg School of Management, University of Massachusetts Amherst’s Anna Nagurney on the return to in-person classes on campus and students’ escalating interest in supply chain curriculum. Take a listen.
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One love,
Dooner
