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

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:

pic.twitter.com/yFYyjzYMWE
— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) May 11, 2022

#FuelShortage #DieselShortage #SupplyChainCrisis pic.twitter.com/zVmXlshXN0
— Don Ricardo 👑 🇺🇸 🇩🇴 (@NjPier) May 5, 2022

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.

Billionaire John Catsimatidis owns a small oil refinery in the US East Coast and several hundred gas stations from Pennsylvania to New York:

“I wouldn’t be surprised to see diesel being rationed on the East Coast this summer.” #OOTT #DieselCrisis https://t.co/9g1e5UIf20
— Javier Blas (@JavierBlas) May 11, 2022

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

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

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’

Record operating income, revenue for Union Pacific in Q1

Union Pacific reported record first-quarter financial results despite carrying slightly less freight than a year ago.

“We had a strong first quarter and start to the year. Our network is running well, and we are delivering on commitments to our customers,” Chief Executive Jim Vena said on the railroad’s Thursday morning earnings call. “When you put it all together, we are doing what we said we would, leading the industry in safety, service, and operational excellence.”

Operating income rose 4%, to a record $2.45 billion, as revenue increased 3%, to a record $6.2 billion. Earnings per share was up 6%, or 9% when adjusted for the impact of one-time items.

The railroad’s operating ratio was 60.5%, a 0.2-point improvement compared to a year ago. The adjusted operating ratio was 59.9%.

Overall volume declined 1% for the quarter, driven by a 9% slump in premium traffic, which includes intermodal and automotive business. Domestic intermodal, however, had its third straight record quarter, said Kenny Rocker, the railroad’s executive vice president of marketing and sales.

Industrial products volume increased 4%, while bulk traffic was up 12% thanks largely to higher grain and coal shipments.

The railroad’s key operations metrics improved for the quarter, with freight car velocity, locomotive productivity, workforce productivity, and train length all at record levels. UP’s train accident and employee injury rates improved for the quarter as well.

“Freight car velocity increased 9% to 235 miles per day. This performance was driven by best-ever terminal dwell of 19.7 hours, 11% better than last year and our second quarter below 20 hours,” said Eric Gehringer, executive vice president of operations. “Every day, we continue to challenge ourselves to find new and innovative opportunities to reduce car touches, leverage existing technology in our terminals, and implement new technologies.”

UP (NYSE: UNP) was able to reduce its active locomotive fleet by 4% in the quarter despite a 4% increase in gross ton-miles.

UP now has a positive outlook for its bulk and industrial products business segments for the remainder of the year. The intermodal outlook is negative due to lower imports and international traffic, while the automotive outlook is neutral as softer vehicle sales are being offset by the railroad landing a BMW contract.

The spike in fuel prices since the Iran conflict began will put pressure on the railroad’s profit margins in the second quarter, Chief Financial Officer Jennifer Hamann said. The railroad is paying over $4 per gallon for diesel fuel this month.

Fuel surcharge revenue will eventually offset the rise in fuel prices.

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Related coverage:

Norfolk Southern earnings slip as winter weather impacts rail volume

First look: Union Pacific Q1 earnings

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Intermodal rebounds in latest rail data

Norfolk Southern earnings slip as winter weather impacts rail volume

Norfolk Southern reported slightly lower first-quarter earnings on Friday morning as harsh winter weather took a toll on volume in February and fuel prices jumped in March.

“Working together, we successfully navigated another challenging winter with weather events that affected most of our territory, putting real pressure on the network and our volumes in the month of February,” Chief Executive Mark George said on the railroad’s earnings call Friday. “But as conditions normalized and our network recovered, we were able to capture the available volume in March and exited the quarter with solid momentum, all while staying focused on what matters most, operating the railroad safely.”

Adjusted for the ongoing financial impact of the February 2023 derailment in East Palestine, Ohio, and merger-related costs, Norfolk Southern’s operating income declined 2%, to $939 million, on flat revenue of $2.99 billion. Earnings per share declined 1%, to $2.65.

The railroad’s adjusted operating ratio was 68.7%, an increase of 0.8 points from a year ago.

“On costs, we remained disciplined,” George said. “Total adjusted expenses were up just 1% year-over-year despite inflationary pressures, storm costs, and sharply higher fuel prices.”

Overall volume declined 1% for the quarter due to a 4% drop in intermodal volume. Coal traffic was up 9%, while merchandise posted a 1% gain.

The intermodal decline was primarily due to a 9% drop in international traffic compared to last year’s tariff-related volume spike, but merger-related domestic intermodal business losses also contributed, Chief Commercial Officer Ed Elkins said. Some of NS’ domestic traffic has migrated to CSX (NASDAQ: CSX) thanks to its intermodal alliance with BNSF Railway (NYSE: BRK-B).

The jump in coal volume was due to a 27% increase in domestic utility shipments as natural gas prices rose and utilities sought to rebuild depleted coal stockpiles.

“Within merchandise, volume and revenue increased 1% from a year ago, and this was driven by continued share gains in our chemicals and our automotive markets,” said Elkins.

NS (NYSE: NSC) and UP (NYSE: UNP) plan to submit their revised merger application to federal regulators as planned on April 30. The original application was rejected as incomplete in January.

“The new application is going to confirm what we said in the original application on the logic of doing this deal and the benefits that a single-line transcontinental railroad will bring to the country and to our shippers,” George said. “In fact, we’re going to have a much stronger set of data that actually makes the case stronger.”

Operational metrics held up during a quarter with harsh and widespread winter weather that tested the network, Chief Operating Officer John Orr said.

Car miles per day increased 2.5% compared to a year ago, as terminal dwell improved by 3%. The railroad’s customer service metrics for intermodal and merchandise shipments were unchanged from a year ago.

The train accident rate improved 40% compared to the year-ago quarter, while the main line accident rate improved 51%. The personal injury rate was up 10% for the quarter.

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

Related coverage:

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CSX sees stronger first-quarter earnings as costs fall, volume rises

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A changed company at Ryder, but used vehicle sales are still a big driver

Ryder System’s stock price is up more than 80% in the last year–more than 23% in a month–for a business whose latest earnings report for 2026’s first quarter shows it has had to fight for growth.

There was nothing in the quarterly report that was particularly negative. It showed a company that is not getting that much of a lift from underlying freight market conditions, but had a solid performance on the back of its own initiatives and something it has little control over: used vehicle sales.

All that happened even as its Fleet Management Solutions (FMS) unit, its flagship leasing and rental operations, had just a 1% increase in revenue year-on-year; its contract logistics operations through Supply Chain Solutions (SCS) was up just 2% in revenue; and its Dedicated Transportation Solutions (DTS), which provides dedicated trucking, saw an 8% drop in revenue.

But with the help of used vehicle sales, FMS was able to push out a 6% increase in earnings before taxes. Those used vehicle sales, which come out of FMS, were cited near the top of the company’s earnings announcement as a reason for its performance.

A different company than eight years ago

In his first earnings call as CEO since he took over Ryder (NYSE: R) from the retired Robert Sanchez, John Diez made several comparisons to where the company stood in 2018, when its vehicle leasing and sales of those vehicles was far and away the key driver of profitability at Ryder. Now, SCS and DTS supply about 60% of revenue, compared to 44% in 2018.

But while the fundamental shift has provided long-term stability to the Ryder business, the company’s earnings call with analysts Thursday kept coming back to used vehicle sales, even as Diez said the company’s strategy in recent years has been to “derisk” its fortunes by “significantly reducing our reliance on used vehicle proceeds to achieve our targeted returns.”

The used vehicle sales were featured on the call for a simple reason: Ryder said those sales were key to why the bottom line at the company was strong. Ryder posted non-GAAP earnings of $2.54 in the first quarter, compared to $2.46 a year ago. That was also a 27 cents per share “beat” over consensus forecasts, according to SeekingAlpha.

Free cash flow rose to $273 million from $259 million, even as operating revenue was flat at $1.3 billion.

Cristina Gallo-Aquino, Ryder’s CFO, said on the call that the company expects to reap about $500 million in used vehicle sales proceeds this year, which would be in line with what it received in 2025.

Used vehicle market likely to stay firm

But although no meaningful increase in that figure is projected, Diez talked at several times during the call as if the used vehicle market might be stronger this year.

He said Ryder expected a “modest improvement in used vehicle market conditions.”

And looking to the future, Diez said that by “the next cycle peak,” without putting a date on when that might be, Ryder expected a potential $250 million increase in annual pretax earnings, which were just under $100 million for the first quarter. One of the drivers of that increase, Diez said: used vehicle sales.

“Our increased forecast reflects stronger-than-expected first quarter performance, a modest improvement in used vehicle market conditions and continued strong contractual performance,” Diez said on the call. .

Ryder, in its earnings announcement, increased its forecast for 2026 financial performance. One of the reasons for that, Diez said, was a projection of higher used vehicle sales results.

But while the impact of that was a small part of the forecast, Diez said, more may come later.

Inflation in the market for new vehicles also is a factor in the company’s projections. “We do expect later on this year that we’re going to see significant increases on new equipment, which will provide support for higher used vehicle sales pricing,” he said. “We just haven’t put that into the forecast because we need to see more development on that side to kind of get confident in that activity.”

Regulatory atmosphere and its impact on vehicle sales

But there’s a potential newer area of competition in used vehicle sales: trucks put on the market where the driver lost their ability to be behind the wheel because of various regulatory crackdowns.

Diez conceded “there’s some structural changes happening in the marketplace.”

But he added that the regulatory actions are mostly taking place in over the road driving, and that means a lot of sleeper cabs.

About 60% of Ryder’s used vehicle inventory is in trucks, like a box truck, with about 40% being tractors. It was improved tractor pricing that led to the used vehicle sales performance being higher than expected.

But Diez added that the biggest share of the tractors it owns that will be sold into the market are day cabs, “which is a different application than the over-the-road activity.”

“So I think we’re pretty well calibrated there,” Diez said. “We don’t think that’s going to be a meaningful impact even if there’s pressure on the sleeper class moving forward.”

The sales mix for Ryder was positive for the quarter compared to last year. Sales through retail outlets were 61% of the mix in the first quarter of 2026, versus 56% a year ago. Retail sales proceeds are generally better than wholesale outlets. But the retail percentage was 69% in the fourth quarter.

Ryder said retail pricing “remained stable sequentially.”

Actual vehicles sold were 4,600, which was down from a year ago but up 1,000 sequentially.

Applause for the performance

Even though some of the standard measurements like operating income and revenue didn’t move up significantly in the quarter, and a key driver of the first quarter profit growth–used vehicle sales–is something Ryder is trying to diminish in importance, there were positive analyst statements.

The transportation research team at Wells Fargo said the latest guidance from Ryder, up to an earnings per share target of $14.05-$14.80 from $13.45-$14.45, “feels conservative.”

Diez talked on the call about the company’s strategic plans, which includes continued focus on maintenance improvements. “Ryder expects $70m (+$1.24/share) of YoY benefits from strategic initiatives and a conservative $10m (+$0.19/share) from its cyclical businesses despite end market improvements,” Wells Fargo said.

That team also focused on sales in the Supply Chain Solutions segment, which is a contract logistics provider. Ryder, the analysts said, “inked record SCS sales activity and customers are finally signing long-term leasing contracts.”

Wells Fargo raised its price target to $260 per share from $236.

At approximately 2:45 p.m. EDT Friday, Ryder stock was at $251.56, up $8.97 for a gain on the day of 3.70%. Two days ago, the stock closed at $227.58.

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Maine lawmakers press USPS over $350K default to rural air carrier

A small single-engine plane seen from the side with sun rising in background.

Maine’s congressional delegation is seeking answers from Postmaster General David Steiner about why the U.S. Postal Service is nearly $350,000 in arrears to a small regional air service that delivers mail and packages to island communities.

Penobscot Island Air resumed carrying postal shipments to Vinalhaven, North Haven and Matinicus islands on Wednesday after the Postal Service agreed to start paying overdue bills stretching back to 2023 in response to a one-day work stoppage.

“We urge you to immediately resolve the outstanding back payments and provide clarification on how these payment lapses occurred, as well as how delays can be prevented in the future,” Maine’s two House members and senators said in an April 23 letter to the postal chief. The lawmakers, including Sen. Susan Collins, urged the USPS to fully and quickly compensate the carrier.

“Penobscot Island Air is one of many contractors in the state that deliver mail to island communities by air and sea. These contractors are part of the lifeblood of Maine’s rural communities. This incident raises concerns over whether the USPS is faithfully fulfilling the terms of all these contracts,” the lawmakers wrote. “While it is promising to hear that the USPS has reached a partial payment agreement to pay Penobscot Island Air … we need greater assurance from the USPS that Maine island contractors will receive fair and prompt compensation for the services they provide.”

The air carrier, which maintains a fleet of four single-engine Cessna 206 and 207 turboprop planes, said in a Facebook post on Tuesday that the Postal Service owed it $388,000 — about 20% of its annual revenue — and that it had been paid for a single delivery in 2026. The last payment received was on March 13. A company representative told FreightWaves that the Facebook post overstated the delinquent amount and that the carrier is owed $349,000.

In a post the following day, Penobscot Island Air said the USPS promised to pay about 25% of its outstanding balance on Friday. It’s unclear how, or when, the Postal Service intends to pay the remainder of its bill. Federal contracting rules generally require the government to pay interest on late payments for properly invoiced services.

In its message, Penobscot Island Air asked residents to call the regional postal office and let officials know how the cutoff would impact them. The pressure campaign picked up steam when local media outlets began covering the news.

“While our mission is to support the islands, PIA employees need a paycheck. We can’t operate as a business if almost a fifth of our yearly revenue is tied up in the bureaucracy of the United States government,” the company said in explaining why it originally suspended mail service. “It’s been 75 days this year alone that we have dutifully loaded up USPS mail and ferried or flown it out to the islands. It’s no secret that winter is our slow period, and without prompt payments, cash flow is bleak.”

The air carrier said it repeatedly met with the Postal Service’s financial department and the regional office in Rockport, Maine, to get necessary paperwork completed to resolve the matter. Stopping service was a last resort designed to get the Postal Service’s attention, the company said on Facebook.

“We know you rely on the mail for critical packages such as medications. We have no intention of dragging this out and will go back to work without payment if we must. What’s happening isn’t normal or okay. We’ve just run out of other avenues to show the USPS we can’t continue operating this way,” it said.

Rep. Chellie Pingree, a Democrat, roasted the Postal Service for the delinquent payments during a House Appropriations Committee session on Wednesday.

“What the hell is going on over there? What is going wrong? And why do we have to hear these complaints so often? Why should they have to put up a Facebook page?” she said, adding she’s heard for years from USPS employees and constituents about insufficient staffing, mail not being picked up or delivered for a week at a time in rural areas.

This is “yet one more institution under this administration that’s being poorly managed, poorly run, not delivering the mail, not fulfilling the requirement they have to make sure that whatever community you live in, your mail arrives,” Pingree said.

The Postal Service said it has moved to correct the problem.

“Postal Service transportation officials have been in contact with the air contractor and are finalizing a prompt resolution of the payment issue. We regret any inconvenience resulting from this unfortunate error, and we have taken steps to ensure future payments are issued timely,” the agency said in a statement to FreightWaves.

Penobscot Island Air also provides parcel delivery service for FedEx and UPS.

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

Contact: ekulisch@freightwaves.com.

Postal Service can proceed with 8% parcel surcharge, regulator says

Covenant sees tightening capacity, rate momentum building in 2026

Covenant Logistics Group executives struck a more optimistic tone on Friday’s earnings call, pointing to tightening truckload capacity, rising rate discussions and improving demand trends despite a weaker-than-expected first quarter.

The Chattanooga, Tennessee-based carrier reported first-quarter earnings earlier this week that missed expectations, with net income falling to $4.4 million, or $0.17 per share, as winter weather and fuel costs weighed on results.

But CEO David Parker said conditions improved meaningfully as the quarter progressed — and are continuing into Q2.

“We believe [conditions] will continue to improve throughout the year,” Parker said, citing a strengthening pipeline of committed truckload capacity and growing customer demand.

Covenant Logistics Group (NYSE: CVLG) provides truckload, expedited, dedicated, and logistics services across the U.S.

Capacity tightening, driver market shifting

A key theme from the call was tightening industry capacity — particularly among qualified drivers — after a prolonged downcycle.

“For the first time in 40 months drivers are starting to get tight out there,” Parker said, noting that driver pay discussions are reemerging across large customer accounts.

Executives said the combination of reduced fleet capacity and improving industrial demand is setting the stage for rate increases, though rising driver wages could offset some of that upside.

Parker added that the company is already seeing stronger engagement from shippers seeking dedicated capacity.

“We’re seeing more people want to talk about dedicated capacity almost since ’21 or ’22,” he said.

Dedicated, managed freight driving growth

Management emphasized that Covenant’s dedicated and managed freight segments are positioned to benefit first as the freight cycle turns.

Dedicated operations continue to expand, supported by specialized equipment and long-term contracts, while Managed Freight revenue surged nearly 60% year over year in Q1 following late-2025 acquisitions.

However, executives acknowledged that margin pressure remains in the near term, particularly in expedited trucking, which underperformed during the quarter due to lower utilization.

Pricing power returning — with caveats

While rate momentum is building, Parker cautioned that cost inflation — especially driver wages — will absorb part of the gains.

“Driver [costs are] 30% to 40% of total costs… what you get from the customer may not net the same as before,” he said.

That dynamic could temper margin expansion even as pricing improves, particularly if wage inflation accelerates alongside tightening labor supply.

Equipment strategy, tariffs in focus

Executives also addressed equipment costs and supply chain uncertainty, noting that pricing for new trucks remains elevated heading into 2027 due in part to regulatory and tariff-related pressures.

The company is taking a cautious approach to fleet expansion, focusing instead on optimizing utilization and shedding underperforming assets — a strategy that helped reduce net debt by $51 million during the quarter.

Parker said Covenant is actively engaging in Washington on issues including CDL standards and tort reform, both of which could impact capacity and operating costs across the trucking industry.

“We’re working on CDL schools… making sure they’re producing qualified drivers,” Parker said, adding that legal and regulatory reforms could also help address capacity constraints.

Airbus installs 1st cargo door for A350 freighter prototype

Machinists work to attach a large cargo door to an airframe at an Airbus plant.

Airbus has completed the manufacturing and assembly of the first main deck cargo door for the all-new A350 freighter at its facility in Illescas, Spain.

The component has been delivered to the manufacturer’s final assembly line in Toulouse, France, where it will be integrated into the fuselage of the first test aircraft and undergo testing in the coming weeks, the company said in a news release on Thursday. Airbus is manufacturing two A350F aircraft for flight testing in 2026 to 2027.

The A350F main deck cargo door is the largest in the industry. Featuring a 14.7-foot cut-out width and a 14.1-foot tall opening, it is designed to make loading and unloading operations easier, faster, and safer. Located in the rear fuselage to maintain an optimal centre of gravity during loading, the door is made from composite materials and features an electrical open/close actuation system.

Once serial production starts, the main deck cargo door will be delivered from Illescas to Hamburg, Germany, for integration into the aft fuselage and for the installation of the actuation systems. From there, that section of the fuselage will be transported to Toulouse for final assembly.

Airbus has registered 101 orders from 14 customers for the A350. All-Boeing operator Atlas Air last month placed an order for 20 aircraft, with options for an additional 20 units.

The A350F is designed to carry a payload of up to 122 tons and fly up to 4,700 nautical miles. Powered by the latest Rolls-Royce Trent XWB-97 engines, the aircraft will reduce fuel consumption and carbon emissions of up to 40% when compared to previous generation aircraft with a similar payload-range capability, in large measure due to a high content of advanced composite materials, according to Airbus.

Airbus is shooting for first commercial delivery in late 2027. Boeing is also developing a next-generation widebody freighter, called the 777-8, to compete with the A350. Boeing has said customer deliveries will begin in 2028.

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

Write to Eric Kulisch at ekulisch@freightwaves.com.

Atlas Air switches to Airbus, orders 20 A350 cargo jets

The Feds rescheduled marijuana. What happens in trucking?

Yesterday, an order signed by Acting Attorney General Todd Blanche on April 22 and effective April 23 moves two categories of marijuana from Schedule I to Schedule III of the Controlled Substances Act. The first category is FDA-approved drug products containing marijuana. The second is marijuana, subject to a state-issued license to manufacture, distribute, or dispense for medical purposes. That second category is the one that matters for the conversation about trucking, because it covers the dispensary down the road from your terminal that a driver with a state medical marijuana card can legally walk into in 40 states.

Everything else stays exactly where it was. Recreational marijuana remains Schedule I. Any marijuana that is neither in an FDA-approved product nor covered by a state medical marijuana license remains Schedule I. The guy smoking a joint in a state where adult use is legal is still in Schedule I territory. The driver who tested positive last week is still in the Clearinghouse. None of that changed.

What changed is the legal underpinning for DOT’s ability to require marijuana testing at all.

This is the part that most coverage of the rescheduling action either glosses over or gets wrong, and it is the part that Brandon Wiseman at Trucksafe has been raising since the Trump executive order dropped in December and has now put plainly in writing following yesterday’s order. The foundation for DOT’s mandatory testing authority flows through the Department of Health and Human Services. HHS issues the Mandatory Guidelines for Federal Workplace Drug Testing Programs. Those guidelines authorize regulated employers to test only for substances listed in Schedules I and II of the Controlled Substances Act. The Omnibus Transportation Employee Testing Act of 1991, the statute that gives DOT its testing authority in the first place, requires DOT to follow HHS scientific and technical guidelines.

If state-licensed medical marijuana is no longer a Schedule I or Schedule II substance, HHS’s statutory authority to include THC in the mandatory federal testing panel is at a minimum an open question. DOT’s 49 CFR Part 40 names marijuana specifically rather than referencing it by schedule, which some have argued insulates the testing program from a scheduling change. That argument has always been legally optimistic. If HHS cannot authorize testing for a Schedule III substance without new rulemaking, then Part 40 has to conform to that, whether it names the substance or not.

The most likely resolution is a congressional or administrative carve-out that explicitly preserves mandatory marijuana testing for safety-sensitive transportation workers regardless of scheduling status. That carve-out does not exist yet. The DEA order itself acknowledges the potential for significant economic impacts from the rescheduling action while simultaneously stating that its notice-and-comment exemption under the treaty-obligations pathway means it was not required to take public input before this went into effect. The trucking industry did not get a comment period on a rule that has direct implications for its drug testing program.

ODAPC’s most recent guidance on marijuana is dated December 19, 2025, written before rescheduling occurred, and states that marijuana remains unacceptable for safety-sensitive employees subject to DOT testing. That guidance is now technically pre-rescheduling guidance and has not been updated. The controlling practical answer for every fleet, every driver, and every MRO today is that 49 CFR Parts 40 and 382 have not changed, zero tolerance remains in effect, and a positive test still results in a driver being placed in the Clearinghouse. Do not use marijuana. That has not changed.

There is a difference between the practical answer and the structural answer, and the trucking industry needs both.

The conversation about marijuana and trucking has been almost entirely about CDL holders and the FMCSA Clearinghouse. The Clearinghouse currently shows 184,337 commercial vehicle drivers in prohibited status. Marijuana accounts for roughly 60 percent of all positive tests since the database launched. Those numbers are real and they are significant.

What the conversation has not addressed is the much larger and much murkier population of CMV operators who are not CDL holders.

Federal regulations under 49 CFR Part 391 cover drivers of commercial motor vehicles that require a CDL. But there is a separate and considerably larger population of drivers operating vehicles that qualify as CMVs under state or federal definitions without triggering CDL requirements. Straight trucks under 26,001 pounds. Cargo vans. Pickup trucks towing trailers in certain configurations. Passenger vehicles are used for-hire transportation in some jurisdictions. These operators are subject to varying levels of drug testing requirements depending on their specific regulatory classification, the state in which they operate, the type of cargo they carry, and whether they cross state lines.

For that population, the rescheduling creates genuine uncertainty about which standards apply, because their testing requirements are less uniformly codified than those in the CDL Clearinghouse framework. Some of those operators are covered by DOT-mandated testing programs with the same zero-tolerance standard as CDL holders. Others operate under state programs with different standards. A subset operates in gray zones where no one has clearly established which standard controls apply.

The rescheduling action does not change any of these standards today. But it creates a legal environment where challenges to those standards become easier to mount, particularly in states where medical marijuana is now a Schedule III substance under federal law and where a driver can argue that their prescribed use of a federally recognized Schedule III controlled substance should not disqualify them from operating commercial equipment.

That argument will lose in court today because Part 40 and Part 382 are still in effect and ODAPC guidance still says zero tolerance. But the argument becomes structurally stronger after yesterday in ways it was not before. And some of those challenges will be filed in jurisdictions where state courts are more receptive to them than federal courts, particularly in states that have been aggressive about protecting medical marijuana patients from employment discrimination.

The DEA order itself is a piece of legal engineering that warrants some respect. Acting AG Blanche used the treaty-obligations pathway under 21 U.S.C. 811(d)(1) to issue this as a final order without notice-and-comment rulemaking, bypassing the procedural pathway that got the Biden administration’s rescheduling effort killed by a D.C. Circuit stay last year. The Single Convention on Narcotic Drugs obligates the United States to schedule cannabis in a manner consistent with its treaty commitments, and the OLC opinion from April 2024 concluded that Schedule III satisfies those obligations. The order simultaneously establishes a nominal-price purchase-and-resale mechanism to satisfy the Single Convention’s requirement that a government agency serve as the exclusive purchaser of government-produced cannabis. This is not a casual policy move. It is a carefully constructed legal instrument designed to survive the challenge that killed the prior attempt.

Structural durability is relevant for trucking because it means this is unlikely to be rescheduled. The Biden administration’s rescheduling was stayed by federal courts almost immediately. The Blanche order was engineered specifically to avoid that outcome. Which means the industry needs to treat the legal question about DOT testing authority as a permanent structural question requiring a permanent answer, not a transitional issue that will resolve itself when the order gets struck down.

What the industry needs from federal authorities in the next 90 days is specific and can be stated plainly. ODAPC needs to issue an updated marijuana notice that explicitly addresses the post-rescheduling landscape and confirms the legal basis for continued zero-tolerance testing under 49 CFR Part 40. Congress or DOT needs to formally preserve the mandatory testing carve-out for safety-sensitive transportation workers regardless of scheduling status. And the DEA administrative hearing process, beginning June 29, which will address rescheduling of all marijuana rather than just the state-licensed medical category addressed in yesterday’s order, needs to produce an explicit analysis of the interaction between a hypothetical broader rescheduling and DOT’s testing authority.

Until those three things happen, the industry is operating on the practical answer while the structural answer remains open.

For now, the direction is clear. Zero tolerance. No medical exemption. A positive test is a Clearinghouse entry regardless of what the driver’s dispensary card says. The DEA changed a schedule. DOT did not change 49 CFR Part 40. Those two facts can coexist for the moment. The question is how long that moment lasts before the structural gap produces a legal challenge that the industry is not prepared to defend.

Descartes acquires fleet safety platform Idelic for $28M

a white tractor pulling a trailer on a rural stretch of highway

Descartes Systems Group announced it has acquired fleet safety solutions provider Idelic for $28 million. The AI-powered platform manages driver performance, allowing fleets to operate more safely. The deal adds another large dataset to Descartes’ Global Logistics Network.

Pittsburgh-based Idelic’s platform combines monitoring, reporting and training on one system, helping fleets identify and mitigate risky behaviors. The dataset includes over 40 billion miles of driving data along with more than 400,000 accident reports.

“Built on years of machine learning applied to predictive accident models across more than 150 fleets, Idelic’s AI capabilities are field-proven in predicting driver risk and optimizing safety training interventions,” a news release stated.

The deal will expand Descartes’ (NASDAQ: DSGX) Fleet Data Intelligence platform, combining existing route planning solutions with predictive safety capabilities.

“Productivity and safety are equally critical for fleet operators,” said James Wee, general manager of fleet management at Descartes. “This acquisition adds critical data to our GLN and enhances Descartes’ final-mile footprint by adding highly advanced fleet safety capabilities and deep domain expertise.”

Descartes funded the deal with cash on hand. A performance-based earnout of up to $12 million is based on various revenue targets in the two-year period following the closing.

The acquisition marked Descartes’ 36th since 2016.

Last week, Descartes introduced its Fleet Data Intelligence platform, which uses an AI agent and machine learning to improve fleet performance and reduce cost per delivery.

More FreightWaves articles by Todd Maiden:

Ghost Agents running America’s trucking legal infrastructure

There is a federal regulation whose entire purpose is to make sure you can sue a trucking company after one of its trucks kills your family member. The regulation requires every interstate motor carrier, freight broker, and freight forwarder in America to designate a process agent in each state where they operate before FMCSA will grant them operating authority. The form is called the BOC-3. BOC stands for Blanket of Coverage. The theory is that if a carrier’s truck runs a red light in Georgia and kills a pedestrian, the victim’s family can find a designated legal representative in Georgia who is required to accept service of process on the carrier’s behalf and forward the lawsuit to the carrier. That is the entire point. Legal accountability. Accessible justice.

After encountering issues with litigation in which we were unable to serve defendant trucking entities, we analyzed the complete BOC-3 dataset published by the FMCSA, which contains 1.69 million filing records covering every carrier, broker, and freight forwarder with active federal operating authority in America. What emerged from that analysis tells you a great deal about how the system actually functions, versus how it is supposed to. Eighty-nine unique agent entities control process agent relationships for 1.67 million American transportation companies. The top ten agents among the 89 collectively control process agent relationships for 942,962 carriers, representing 56.5 percent of the entire carrier population in the United States.

That concentration is not, in itself, evidence of fraud. National blanket agents have existed for decades and legitimate operations do serve enormous carrier books. Process Agent Service Company, based in Sioux Falls, South Dakota, serves 123,594 carriers. All-American Agents of Process, also based in Sioux Falls, serves 107,623 carriers. Truck Process Agents of America, out of Fargo, North Dakota, serves 128,038 carriers. These are volume operations, they are real businesses, and they exist precisely because the BOC-3 market rewards scale. A carrier getting started needs a $19 or $20 or $35 annual BOC-3 filing and the industry has built itself around delivering that at the cheapest possible price point.

The problem starts when you look at what happens at the margins.

Federal regulations under 49 CFR Part 366 define what a process agent must be. The agent must have a physical address, not a post office box, in every state of designation. The agent must be available at that address during normal business hours. The agent must be in a position to actually receive legal documents and forward them to the carrier in a timely manner. Those are the rules. They exist because a PO box cannot accept a summons. A ghost company cannot appear in court. A discount mill with no physical office and no one answering the phone cannot provide the accountability that the regulation was designed to create.

THE TEA data shows that among the 89 agents covering 1.67 million carriers, at least two operate from PO Box 5627 in Norman, Oklahoma. Agents of Process Services and 35 Dollar Process Agent Service, Inc. share that single mailbox. Neither entity could be verified as a legally incorporated business in any state through OpenCorporates or state Secretary of State searches. Combined, they carry 1,193 carriers on their books. For context, the national carrier population averages in the upper 60s. These are carriers that rank in the bottom 15 percent of American trucking, as determined by a model that incorporates crashes, out-of-service rates, violation history, and authority stability. The discount agent and the worst carriers found each other. The result is that FMCSA is unable to enforce, and Plaintiffs and their litigation Attorneys are unable to effect proper service of process. Litigation following catastrophic claims is unsuccessful simply because the defendant, a bad actor trucking company, can’t be served.

In Edmond, Oklahoma, 15 miles up the road, two more agents share a single address at 2524 North Broadway. Permits and Process Agents and Permits C and Process Agents LLC are nearly identical names operating from the same office with combined coverage of 6,059 carriers. The same carrier can appear under both registrations simultaneously.

FMCSA itself acknowledged in 2019 that it was getting reports from enforcement personnel about the inability to complete service of process in cases where the contractual relationship between a carrier and its BOC-3 agent had terminated without the carrier filing a new designation. The agency issued policy MC-RS-2019-0002 specifically to address situations in which the process agent on file refused to accept service on behalf of the carrier or was otherwise no longer available. FMCSA’s own enforcement staff was telling headquarters they could not serve carriers. In 2019. That problem has not gotten smaller.

The BOC-3 filing process itself creates the vulnerability. Only a process agent, on behalf of the applicant carrier, can file Form BOC-3 with FMCSA.FMCSA The carrier does not file it themselves. The agent files it. This means the agent’s name, address, and contact information are entered into the federal database as the authoritative contact point for legal services, and the carrier has limited visibility into whether that agent can actually fulfill the obligation. When you are a new carrier paying $19 for a BOC-3 filing because someone on Facebook trucking groups said it was the cheapest option, you are not doing due diligence on whether that agent has a real office, actual staff, and a functioning process for forwarding legal documents. You are buying operating authority clearance.

The attorneys feeling this most acutely are the plaintiff lawyers chasing crash cases involving carriers from the same networks the industry has been tracking for years. The Romanian chameleon carrier networks in the Chicago suburbs, the Moldovan freight operations spinning up new DOTs out of Elgin, Illinois, the carriers formed through Wyoming shell mills at addresses like 2232 Dell Range Boulevard in Cheyenne, where 14 separate carriers share a single normalized address. Those carriers need operating authority. Operating authority requires a BOC-3. The BOC-3 is filed by whichever agent is the least expensive and least likely to ask questions. When a plaintiff’s attorney tries to serve the carrier after a fatality crash, the BOC-3 agent either does not respond, has no physical presence to serve, or simply passes a letter to a virtual mailbox that no one checks.

The Wyoming shell mill connection is worth a separate examination. THE TEA formation address analysis shows that 2232 Dell Range Boulevard in Cheyenne currently hosts 14 FMCSA-registered carriers with poor performance histories. The Sheridan, Wyoming, address for Registered Agents Inc., 30 North Gould Street, appears in the BOC-3 dataset with 10,922 carriers and 97 revoked authorities. That address is the registered agent address that appeared on the Phoenix ELD LLC filing in December 2022, the Wyoming shell entity connected through phone number forensics to Incway Corporation and its federally adjudicated RICO principal, Lawyers Limited, has been documented providing entity formation services to trucking networks in the Chicago area.

The connection between shell entity formation infrastructure and BOC-3 agent infrastructure are two components of the same system. You form the Wyoming LLC through a document mill. You get your operating authority through FMCSA using that Wyoming address. You file your BOC-3 through a $19 discount agent who operates from a PO box and does not verify anything. You are now a federally authorized motor carrier with no real address, no real agent, no accountability footprint, and a 15-point safety score. You haul freight on America’s highways until you crash something, and then you dissolve, reform under a new DOT, and do it again.

FMCSA enforcement personnel and state partners have reported an inability to complete service of process for enforcement actions in some cases where the regulated entity has not filed a new designation, but the contractual relationship with the designated process agent has been terminated. FMCSA. That is the agency’s own language. Unable to complete service of process. For enforcement actions. Against carriers operating under active federal authority.

The regulation intended to make carriers legally accessible has become the mechanism by which the worst carriers make themselves legally inaccessible. The $19 BOC-3 is a shield.

What the FMCSA could do is straightforward in concept, though the agency’s appetite for reforming the process agent has historically been limited. Requiring process agents to verify their corporate existence as a condition of FMCSA registration would eliminate ghost agents immediately. Requiring physical address verification with periodic audits would eliminate PO box operations. Requiring agents serving more than a threshold number of carriers to carry errors and omissions insurance would ensure the function is actually being performed. Suspending operating authority when a BOC-3 agent cannot be reached, rather than waiting for a carrier to file a replacement designation, would close the gap the 2019 policy sought to address.

None of those reforms requires legislation. They require rulemaking under existing authority.

Until then, 89 agents control the legal access point for 1.67 million American trucking companies. Some of those agents are legitimate national operations. Some of them are PO boxes in Norman, Oklahoma. And somewhere in a courthouse right now, a plaintiff attorney representing a family that buried someone after a truck crash is trying to serve a carrier whose BOC-3 agent does not exist, whose address is a mail drop, and whose operating authority was granted by a federal agency that never verified any of it.

The BOC-3 was supposed to be the guarantee that you could always find them. Right now, for many carriers, it is a guarantee that you cannot.

Trojan Driver scam infiltrates legitimate trucking companies

The Transported Asset Protection Association is warning the industry about a new cargo theft method that does not rely on fake companies or stolen identities. Instead, it works by placing operatives inside legitimate trucking companies and using normal operations to move freight into position before it is taken. The group is calling this the “Trojan Driver Scam,” and it shows how theft is shifting into everyday activity instead of trying to break into it.

At a basic level, the approach is direct. Theft ring operatives get hired as drivers at real, fully vetted trucking companies. If they pass the hiring process, they run loads like any other driver. Nothing stands out during this stage because the goal is not to act right away. The goal is to gain access. Over time, that access puts them in position to be assigned a high-value load.

How the Trojan Driver model works

Once the right load is assigned, the process moves to the next step. According to TAPA, the driver is told to park the loaded truck at a set location during what looks like a normal break. During that stop, the driver is not present and a separate crew removes the freight. That detail is important because it makes the situation look like a routine theft, with the driver appearing to be a victim instead of part of the plan.

From there, the outcome follows a pattern. The trucking company terminates the driver for breaking protocol, which is exactly what would normally happen. In this case, that step is expected. Once removed, the operative moves on to another trucking company and repeats the process. TAPA describes this as a six-step model, which shows that this is not random. It is structured and repeatable.

TAPA outlines the Trojan Driver Scam as a six-step process:

Theft ring operatives secure driver positions with legitimate, fully vetted trucking companies
After passing hiring checks, they operate normally until assigned a high-target load
On instruction, the driver parks the loaded truck at a predetermined location during a routine break
A separate crew removes the freight while the driver is absent, making it appear opportunistic
The trucking company terminates the driver for violating protocol, as expected
The operative moves to another trucking company and repeats the cycle

This structure is what makes the model effective. It moves through normal operations without raising concern and resets itself after each event.

Why this is different

“This represents a dangerous evolution in cargo theft tactics,” said Scott Cornell, who first identified the scheme. “Criminal networks are no longer just creating fake companies they’re infiltrating real ones.” He explained that the strength of this approach comes from how it uses trust that already exists in the industry. A trucking company can have clean authority, strong reviews, and a good history, and still be part of a theft without knowing it because the problem is already inside the operation.

The warning comes at a time when cargo theft is already rising. Data from Verisk’s CargoNet shows 3,594 theft incidents last year, with an estimated $725 million in losses. Strategic theft methods, including double brokering and motor carrier number fraud, made up 1,839 of those incidents in 2025. TAPA noted that these numbers only reflect part of the problem because reporting is voluntary, which means the real total is likely higher.

“Cargo thieves are constantly pressure testing new methods, and we have already seen multiple instances of this tactic being deployed,” Cornell said. He added that while the industry has made progress, criminal groups are moving faster and adapting quickly. He stressed that better coordination across the industry is needed because these groups operate in organized networks.

What the industry needs to do next

Cindy Rosen said that dealing with threats like this requires a more consistent approach across the supply chain. “The industry can no longer combat sophisticated organized crime with fragmented, inconsistent approaches,” she said. She pointed to TAPA’s role in bringing different parts of the industry together and highlighted its security standards for facilities, trucking companies, and freight brokers as tools to help reduce risk.

TAPA is also recommending practical steps. One key move is for trucking companies to run thorough background checks and for brokers to work with their partners to require drivers to be with a company for six months to a year before handling high-value loads. This adds time and makes it harder for operatives to move quickly between companies.

Rosen described the warning as a reset point for how risk is viewed. “The Trojan Driver Scam is a wake-up call,” she said. “It reminds us that the industry needs to constantly reassess our assumptions about where vulnerabilities exist.” She added that supply chains are only as strong as their weakest link, which is exactly what this model is designed to target.

The key takeaway is that this approach does not break the process at the start. It moves through it. By the time the load is in motion, the conditions for theft are already in place, and the situation looks normal until the outcome is clear.

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