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

truck fallen over

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A convenient time for a vacation, indeed

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

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

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

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

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

BALTHROP: “One-vehicle fleets.”

FREIGHTWAVES: OK, that’s interesting.

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

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

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

How a truck driver gets stopped for inspection

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Time to start inspecting in the winter

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

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

FREIGHTWAVES: That makes sense.

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

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

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

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

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

Why the Northeast is quietly running out of diesel

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

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

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

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

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

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

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

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

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

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

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

Here’s a breakdown:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The ‘everything shortage’ endures

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

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

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

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

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

Exclusive: Central Freight Lines to shut down after 96 years

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

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

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

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

Kalem agreed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Watch: Central Freight Lines’ impact on the LTL market

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

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

Central Freight Lines statement

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

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

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

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

Brief history of Central Freight Lines

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

Warehouse cramming is about to begin — Freightonomics

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

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

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

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

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

Seasonality pushing rejections and rates higher ahead of the Fourth

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

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

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

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

The Pricing Power Index is based on the following indicators:

Load volumes: Absolute levels positive for carriers, momentum neutral

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

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

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

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

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

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

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

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

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

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

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

Tender rejections: Absolute level and momentum positive for carriers

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

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

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

SONAR: Capacity Trend Market Score (Carriers – VAN)

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

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

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

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

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

Freight rates: Absolute level and momentum positive for carriers

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

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

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

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

Economic stats: Momentum and absolute level neutral

Several economic releases this week are worth noting.

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

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

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

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

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

SONAR: IJC.USA

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

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

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

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

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

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

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

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

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

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

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

Project44 acquires ClearMetal to strengthen predictive tools

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

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

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

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

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

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

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

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

Click here for more articles by Grace Sharkey.

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Einride to go public via SPAC through merger with Legato Merger Corp. III

A futuristic white cabless autonomous electric truck from Einride drives on a public road in an industrial area, with wind turbines, cranes, and buildings in the background, under a partly cloudy sky. A small gray car follows behind, and yellow cones line the lane near a green "SCHOOL" marking on the pavement.

Swedish-based Einride announced Wednesday plans to go public via a special purpose acquisition company through a merger with Legato Merger Corp. III. The company, headquartered in Stockholm, specializes in both electric and self-driving vehicles. The transaction, which values Einride at $1.8 billion in pre-money equity, is expected to provide approximately $219 million in gross proceeds before accounting for potential redemptions and transaction expenses.

Founded in 2016 and headquartered in Stockholm, Einride was an early pioneer in the freight technology sector with operations across seven countries. The company’s accolades include being first globally to receive permits for cabless heavy-duty autonomous vehicle operations on public roads in 2019 in Europe and in 2022 in the United States, while maintaining zero traffic incidents across all operations.

According to the release, the company serves more than 25 enterprise customers, manages a fleet of approximately 200 electric vehicles, and has advanced autonomous deployments with customers including GE Appliances and Apotea, Sweden’s leading online pharmacy.

The transaction is expected to close in the first half of 2026, subject to customary closing conditions and regulatory approvals. Existing shareholders of Einride are expected to own approximately 83% of the pro forma equity after closing, assuming the company raises a planned $100 million PIPE investment.

“Today marks a defining moment for Einride and for the future of freight technology,” said Roozbeh Charli, CEO of Einride, in a press release. “We’ve proven the technology, built trust with global customers, and shown that autonomous and electric operations are not just possible, but better. This Transaction positions us to accelerate our global expansion and continue to deliver with speed and precision for our customers.”

Einride’s two-pronged business approach focuses on both a Freight-Capacity-as-a-Service (FCaaS) and Software-as-a-Service (SaaS) model powered by its proprietary AI platform. This platform encompasses the entire ecosystem needed for electric and autonomous operations, from charging infrastructure optimization to battery management systems.

The company’s growth platform includes a contracted ARR base of $65 million and over $800 million in potential long-term ARR through joint business plans with customers. Einride is also deepening its commitment to the United States, which represents its second-largest market, with plans to expand its American footprint to better serve U.S. customers.

Part of that growth includes building on its U.S. headquarters in Austin, Texas. The company plans to invest in accelerating deployment of autonomous systems, establishing domestic hardware supply chains, bolstering R&D efforts, and creating jobs across key logistics and technology hubs.

Einride’s vehicles have logged, to date, over 1,700 driverless hours in contracted customer operations, more than 11 million electric miles driven, and over 350,000 executed shipments. With a current run-rate annual recurring revenue (ARR) of approximately $45 million and a total contracted base of $65 million ARR, the company believes that it has achieved strong validation from blue-chip global transport buyers.

“This transaction with Einride aligns with our vision to bring industry-leading, innovative technology to the public markets,” added Eric Rosenfeld, chief SPAC officer of Legato. “Einride’s proven customer relationships, regulatory achievements, and technology platform position the Company to be a leader in the transformation of the freight industry.”

Bot Auto partners with Marsh for custom autonomous truck fleet insurance

A Bot Auto autonomous semi-truck with rooftop sensors drives on a Texas highway at dusk, highlighting driverless trucking technology in operation near Houston.

Bot Auto, an autonomous trucking company and Transportation-as-a-Service (TaaS) provider, announced Wednesday that it has secured a comprehensive insurance program for its driverless fleet. What is notable is that this program will scale as the company ramps up deployment of its autonomous truck fleet. Compared to a regular fleet of all human drivers, an autonomous truck insurance policy requires new benchmarks for transparency, insurability and operational accountability.

To do that, Bot Auto enlisted the help of Marsh, an A-rated insurance carrier and a global name in the insurance brokering and risk management space. The specialized plan provides Bot Auto with auto liability, property, general liability, cargo and inland marine protection, complemented by a separate cyber policy, according to the release.

Autonomy-native fleet operations also require a fundamentally different risk profile in the eyes of an insurance company. Compared to traditional trucking operations, which currently face increasing legal, financial and reputational exposures, autonomous trucking companies can show more data, partly because their trucks are covered in an array of cameras, radar, lidar and other sensors.

“Safety isn’t a feature we layer in, it’s the foundation of how we operate,” said Brian Moore, chief policy officer at Bot Auto. “Our autonomous trucks are engineered to behave predictably, operate within strict parameters, and log everything. That allows us to respond faster, explain outcomes clearly, and continuously improve our systems.”

This transparency represents a truckload-sized shift. Questions that once devolved into contentious courtroom debates—What happened in the moments before a collision? Was the driver distracted? Did fatigue play a role?—can now be answered definitively through incontrovertible data streams. Risk becomes something measurable, traceable and actively managed.

With insurance coverage now in place, Bot Auto operates daily commercial loads between Houston and San Antonio, with additional lane expansions planned. This follows the company’s successful completion of driverless runs on public roads in Houston.

“Qualifying for Marsh’s AV insurance program requires a comprehensive risk mitigation approach that goes beyond standard industry practices,” Owen Oakley, managing director at Marsh, said in the release. “This placement of Bot Auto’s insurance program thus marks another milestone in the advancement of autonomous trucking in the U.S. and underscores the important role the insurance industry plays in its development.”

ST Engineering leasing arm buys 2 B737-800 converted freighters 

A standard-size jet with dark-and-light blue accents sits on the tarmac on a sunny day.

Titan Aviation Leasing, a joint venture between the leasing arm of New York-based Atlas Air Worldwide and Bain Capital, on Tuesday announced the sale of two Boeing 737-800 converted freighter aircraft to ST Engineering, a global technology, defense and engineering group headquartered in Singapore. 

The aircraft, which were converted in 2022, are currently on long-term lease to Georgian Airlines and ASL Airlines.

ST Engineering has a large aircraft maintenance and repair business, which also converts used passenger aircraft into cargo aircraft. In 2021, it formed a joint venture with state-owned investment company Temasek Holdings for leasing freighter aircraft.

Titan said the sale enables it to redeploy capital from mature assets to new aircraft acquisitions while the aircraft remain on lease to established operators, maintaining cash flow continuity and delivering risk-adjusted returns to shareholders. 

“Our collaboration with Titan adds two important lessees and narrowbody freighters as we continue to build up our portfolio of next-generation green freighter aircraft, underscoring our commitment to maintaining fleet flexibility and creating long-term value in a dynamic cargo market,” said Ramesh Krishna, head of aircraft leasing at Aviation Asset Management, ST Engineering.

Atlas Air Worldwide is the holding company for all-cargo airline Atlas Air.

Write to Eric Kulisch at ekulisch@freightwaves.com.

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

ST Engineering forms freighter-leasing joint venture 

Proficient’s stock soars, and cash flow at the carrier might be a reason

(A recap of some of Proficient Auto Logistics’ key financial metrics can be found here.)

Proficient Auto Logistics has found its road to profitability challenging since it went public in spring 2024 as a standalone auto carrier. But on its third quarter earnings call with analysts, it received praise for another metric: its cash flow.

Proficient’s (NASDAQ: PAL) earnings calls have yet to draw a big crowd. A transcript of the call provided by Proficient shows only four analysts on the Tuesday gathering, far less than for most publicly-traded LTL or truckload carriers. 

But Alexander Parris, a research analyst with Barrington Research, questioned why the company’s stock has been a laggard when Proficient is generating strong cash flows.

The company reported free cash flow–EBITDA minus capital expenditures–of $11.5 million in the third quarter.

“You generate on a free cash flow basis more than any other company in the group, whether truckload or LTL,” Parris said. With a market cap that on Wednesday stood at about $182 million, per Barchart data, a full-year free cash flow at the top of the company’s estimate of $30 million to $40 million for this year would be a cash flow yield of 20% or more, measured as cash flow to market capitalization. 

Better than the rest

Parris said the “next closest” in the trucking sector would be about 5% to 6%. “What’s it going to take to get the market to recognize this free cash flow characteristic?” Parris asked.

Parris may have spoken too soon. On the back of the Proficient earnings, the company’s share price shot higher. At the close of trading Wednesday, it was up $1.97 to $8.55, an increase of almost 30%. 

Proficient stock already had been trending higher. With the gains Wednesday, it was up more than 46.2% in the last month and 14.8% for the three months. However, even with the Wednesday increases, Proficient stock was down about 8% in the last 52 weeks and down 25.3% from a 52-week high February 11.

Proficient CFO Bradley Wright said in discussions he has held with investors, “I think most of them appreciate the fact that the business is kind of an outsized cash flow return.” Looking forward to “working off some of these other deprecation levels and amortization,” Wright said the impact on earnings when those are behind Proficient may “wake other people up.”

“But I know, Alex,” Wright said. “We’re as flummoxed by it as you are.”

Net numbers aren’t good

On a net basis, Proficient has regularly been unprofitable on a net income basis, though other metrics, like operating income, have been positive at times. In its 10-K filing with the SEC earlier this year, the company formed in the spring reported a net loss of $8.5 million for the 12 months. 

The earnings call touched on several other market conditions. Amy Rice, the company’s president, said “pricing dynamics are pretty weak right now.” “We would like to see a more constructive market for pricing with supply and demand a bit more balanced,” Rice said. But she did say that the revenue per unit (R{U) metric, a key barometer in hauling authors, is expected to be “stable.”

Rice added that Proficient has several contracts with OEMs that are “awaiting awards and sort of in the process of being resolved.”

“You should expect to see more consistent RPU year-over-year,” she said.

Comparisons to the third quarter of 2024 are impacted by the acquisition of Brothers Auto Transport in April. But Rice said even taking that into account, October business was “slightly improved” from 2024’s third quarter.

In the auto hauling business, Rice said November and December are typically strong as dealers seek to empty their lots of the prior year’s model cars and make room for new ones. But November so far, she said, has been marked by “sluggishness.” The expected uptick is not being seen this year by Proficient, Rice said.

Proficient’s operating ratio was 96.3% in the third quarter. That was a slight improvement from the 96.7% in the second quarter of this year, but a more notable improvement from 98.8% a year ago. On the call, CEO Richard O’Dell said the company’s target is to improve the OR by “at least” 150 bps in 2026 over its 2025 level.

Three of seven opcos are 90% of better ORs

Wright reiterated a statement he made on the second quarter earnings call that three of the seven operating companies that make up Proficient Auto were posting an OR that is 90% or better. He added that “generally there has been a pretty broad improvement across almost all the operating companies” even as revenue has stayed mostly constant. 

Third quarter revenue was $114.3 million. Sequentially, that is slightly down from $115.5 million. Comparisons to the third quarter of 2024 are not an apples-to-apples basis given the acquisition of Brothers.

O’Dell, discussing the ongoing efforts to have greater cooperation among the seven operating companies, said load sharing among the companies rose to 11% of revenues in the quarter, up from 9% sequentially, “reducing empty miles and contributing to improved asset utilization.” 

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Houthi Red Sea stand down: ‘Seismic’ impact on shipping

The Houthis have seen enough.

The tenuous Gaza ceasefire has led the Yemen-based militia to announce a pause in attacks on merchant vessels in the Red Sea, raising hopes for a return of large-scale container shipping to the Suez Canal trade route for the first time since 2023. 

The rebels, who control 40% of Yemen, communicated their intentions this week in a letter to Hamas, the Palestinian governing body in Gaza.

Expectations were further heightened at a recent summit of ocean carriers hosted by Suez Canal officials in Egypt. Waterway tolls have crashed as much as 60% as vessel operators divert the largest container ships and crude oil tankers away from the region and on longer, more expensive voyages around Africa’s Cape of Good Hope.

While the Gaza peace talks have seemingly accomplished what two years’ of U.S. military attacks on the Houthi failed to, analysts warn a return of global container shipping depends on assurances that will satisfy carriers – and their insurers. 

“Details are sketchy and you cannot base the safety of crews, ships and cargo on the word of Houthi militia,” said Peter Sand, chief analyst at shipping data platform Xeneta. “Carriers need far more assurance than that and, perhaps more importantly, so do insurance companies.”

Sand said that risk tolerance varies among carriers. CMA CGM of France, for example, stoked conspiracy theories in the shipping community when it continued to operate scheduled commercial services in the Red Sea despite ongoing Houthi violence. The liner further tested tolerances this month as the mega-capacity CMA CGM Zheng He and CMA CGM Benjamin Franklin transited the region, the largest vessels to ply the route since 2023.

Chart showing Suez Canal transits by carrier (and flag) in 2025. Maersk and MSC include services under contract to the U.S. government. (Alphaliner)

“Transits may start to increase if there is a perceived lower risk, but we are unlikely to see an imminent return to 2023 levels,” Sand said.

Xeneta estimates the longer routes around Africa currently absorb around 2 million twenty foot equivalent units (TEUs) of global container shipping capacity, increasing transport demands on the world fleet.

A full-fledged return to the Red Sea – a key trade route connecting Asia with  Europe, the Mediterranean and North America – would ease the stress on the ocean supply chain and potentially cause freight rates to plummet, unless carriers take drastic measures such as idling, scrapping, slow-steaming and blank sailings.

“Carriers now face a dilemma: Follow and accept the remaining security risks, or stay around the Cape and risk losing market share,” wrote Luuk de Gruijter, senior investments manager for APM Terminals, in a LinkedIn post. “If more carriers follow and the Red Sea fully reopens, capacity on the Asia-Europe trade will likely surge and freight rates could drop. Insurers will also be watching closely, with premiums staying elevated until multiple safe transits confirm stability.”

Vincent Clerc, chief executive of A.P. Moller-Maersk (MAERSK-B.CO), parent of APM and Maersk, on an earnings call said that his company must ensure that the Gaza ceasefire “is entrenched and stable”. He added that the shipping industry must assess the Houthis’ position to determine when it’s safe to begin Red Sea passages.

While container lines reaped billions in windfall profits on record demand in 2024, current economic uncertainty has weakened consumer confidence and tamped down industrial development.  

“Average spot rates from Far East to North Europe, Mediterranean and U.S. East Coast – three trades that would ordinarily transit the Red Sea – are all down more than 50% since the start of this year,” Sand said. “A largescale return of container ships to the Red Sea would flood the market with capacity and cause freight rates to plunge even lower across trades at a global level, not just those directly impacted by the diversions.”

He warned that carriers are heading into loss-making territory and freight rates are expected to fall up to 25% globally in 2026, Red Sea or no.

“Shippers should also be making contingency plans because a largescale return would cause severe disruption across global ocean supply chains as services transiting Suez Canal are reinstated.

“There are still many questions to be answered, but the impact of a largescale return would be seismic for shippers and carriers.”

Find more articles by Stuart Chirls here.

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ELD loopholes fueling fraud, driving good carriers out of business, experts warn

The U.S. trucking industry is confronting what multiple fleet executives call a systemic failure in electronic logging device (ELD) oversight, driven by a regulatory framework that allows ELD manufacturers to self-certify their compliance with federal hours-of-service rules. 

The lack of oversight by FMCSA on electronic logbook providers has enabled a shadow market of devices that allow companies to edit driver logs regularly, which allows fleets to drive long past the established hours-of-service regulations.

“The only compliance necessary to create an E-Log is for the E-Log creator to just check a box saying “self-certifying” that the E-Log will follow the rules — there’s no government oversight here,” Zach Meiborg, president of Meiborg Trucking in Rockford, Illinois and 25 year industry veteran, told FreightWaves. “There’s no certification process. And because of that, the market has been flooded with ELDs that allow logbook edits. It’s widespread and has caused the glut of capacity of illegal operators.”

Meiborg calls the result a “two-platform trucking market” — compliant fleets that run 2,000 to 2,500 miles per week, and fleets that use manipulated ELD logs to run 4,000 to 5,000 miles.

“Remember the cost per mile decreases with every additional mile a truck runs, because you can dilute your overhead and fixed costs,” Meiborg added.

“These illegal operators are running around at a cost of $1.80 per mile, while the compliant fleets are operating in the $2.30 per mile range. What this translates to: the compliant fleets are losing $1,000 per month per truck and the noncompliant fleets are making $2,000 per truck per month. It’s not sustainable if we want to have compliant fleets on the road.”

Those cost differences are reshaping which carriers win freight — and which close.

“Good, legacy fleets — 40-year companies — are shutting down,” Meiborg said. “Meanwhile, the fleets running illegal logs are expanding.”

For Dave Moss, a 40-year trucking industry safety veteran, the issue became personal.

“At my last company, logs were being edited overseas. They were shaving time so drivers could keep running,” Moss told FreightWaves. “When I raised it, management said, ‘We have to do this to make money.’ That’s when I resigned.”

Audit reports from the company’s own ELD software showed what was happening, Moss said.

“If we had a crash — even if it wasn’t our fault — a plaintiff’s attorney would find those edits, and the company would be done. I wasn’t going to be the safety director who signed off on that,” Moss said. “This is a management problem. Drivers do what they’re allowed to do. Safety starts at the top.”

The economic squeeze: “There’s nowhere left to cut”

Joshua Kreyer, operating manager at carrier Silver Arrow Express, said the dynamic is fundamentally economic: the rise of fleets running illegal logs has pushed freight rates down so far that compliant carriers have almost no margin left.

Rockford, Illinois-based Silver Arrow Express is a trucking company with 92 power units and 84 drivers. The carrier is part of the Meiborg Cos. 

“At least 30% of trucks on the road are running non-compliant,” Kreyer said. “When those carriers cut their rates, everyone else has to figure out how to make that money up.”

Margins that once sat near 28% to 29% for small and mid-sized fleets now sit around 8% to 9%, he said.

“There’s nowhere left to cut costs. The only difference between a profitable truck and a losing truck right now is whether you’re using a non-compliant ELD,” Kreyer said.

Kreyer also described how ELD jailbreaks and work-arounds remain accessible.

“Years ago, I reached out to an ELD manufacturer and asked for the jail-broke version. It cost $500 a truck. Drivers could fully edit their logs,” he said. “If it happened to me, how many others have done it?” 

According to statistics from the FMCSA and industry sources, the number of commercial trucks (heavy and light/duty) in the U.S. is over 13.5 million trucks with gross vehicle weight over 10,000-pounds.

Not every truck driver is required to use an ELD, but most drivers who operate under the FMCSA hours–of–service rules are. 

As of Oct. 17, FMCSA lists 1,133 registered ELD devices currently approved for use by U.S. motor carriers. So far in 2025, FMCSA has revoked a total of 24 ELDs, the highest annual number since full enforcement began in 2018.

Carriers have up to 60 days to replace a revoked ELD with a compliant ELD.

Meiborg said ELDs that have been revoked by the FMCSA usually aren’t out of business for long.

“When [FMCSA] comes in and shuts down these noncompliant logbooks … What happens is the companies that create those logbooks, they literally just copy and paste the code and go create a new E-log book with a different name, and they’re right back up and operating,” Meiborg said.

Proposed solutions: certification and rule reform

The three industry veterans offered clear recommendations:

  1. Require third-party testing and certification of ELD systems before approval.
  2. Audit metadata (ECM data, toll timestamps, GPS, fuel logs) to detect manipulation.
  3. Standardize enforcement across states and eliminate reliance on regional discretion.
  4. Reevaluate the HOS framework, especially the 14-hour continuous on-duty clock.

Meiborg supports revising HOS rules entirely.

“A 14-on, 10-off model would remove the incentive to cheat,” Meiborg said. “Right now, the rules themselves are what make cheating profitable.” 

Kreyer proposed forming a cross-industry oversight committee — separate from FMCSA — to review and recommend compliance standards.

“There needs to be an independent party or an independent organization,” Kreyer said. “It needs to be a group, a committee of safety analysts, a committee of large trucking company owners, and a committee of small companies. There needs to be a vote that way.”

Moss added that enforcing responsibility should occur at the ownership level, not only drivers. “Until cheating carries real consequences for management, this will continue,” he said.

Meiborg believes the stakes extend beyond market fairness.

“If compliant fleets disappear, what we’re left with are carriers that don’t follow the law — or automated trucking systems meant to replace drivers entirely,” Meiborg said. “This is one of the most important sectors in the U.S. economy. And we are letting it be hollowed out.”

Sonoco Products Company finalizes acquisition of ThermoSafe

Sonoco Products Company has finalized the sale of its ThermoSafe business unit to Arsenal Capital Partners for up to $725 million, with $650 million paid at closing and the potential for an additional $75 million contingent on 2025 performance metrics. 

This marks a significant milestone in Sonoco’s ongoing portfolio transformation. By offloading ThermoSafe, the company has largely completed the move from a broad variety of businesses toward two core global segments, metal and fiber consumer and industrial packaging. 

Sonoco’s President and CEO, Howard Coker reflected on the journey: “The completion of the sale of ThermoSafe substantially concludes Sonoco’s portfolio transformation, which simplified our operations from a large portfolio of businesses into two core global business segments focused on metal and paper consumer and industrial packaging. Sonoco is proud of what we have accomplished in building ThermoSafe into one of the industry’s leading players. We thank the entire ThermoSafe team for their dedication and wish them and their new owners continued success in the future.”

ThermoSafe itself has been a prominent player in the temperature protection technology space, supplying packaging and systems that maintain controlled conditions, ranging from refrigerated to frozen to room temperature, for pharmaceuticals, biologics, vaccines, and other life sciences shipments. 

Through its ISC Labs arm, ThermoSafe also offers design and testing services, qualification and validation support, and sustainable packaging solutions to major healthcare and life-sciences firms.

Arsenal Capital Partners, the buyer, is a private equity firm specializing in building high-growth companies in the industrial and healthcare sectors. Since its inception in 2000, the firm has raised more than $10 billion of institutional equity, completed over 300 acquisitions, including platform and add-on deals, and realized more than 35 exits. The acquisition of ThermoSafe aligns well with Arsenal’s playbook of partnering with management teams and scaling market-leading companies. 

For Sonoco, the divestiture opens the door to sharpen its strategic focus and redirect capital toward its core operations, while simplifying its organizational structure and strengthening its balance sheet. While ThermoSafe, this ownership change promises fresh investment and growth opportunities under Arsenal’s stewardship in the high-demand cold-chain and life-sciences packaging sector.

Benchmark diesel price rises to its highest level 16 months

The wild ride of surging diesel prices has sent retail prices up to their highest level since summer 2024.

The average weekly retail diesel price published by the Department of Energy/Energy Information Administration (DOE/EIA) rose 8.4 cents/gallon effective Monday, published Wednesday (a day later than usual due to Veteran’s Day) to $3.837/g. The last time the price was that high was July 8, 2024, when it was $3.865/g. 

It’s the third straight week of higher levels in the price used for most fuel surcharges. During that time, the price has risen from $3.62/g to its current level, an increase of 21.7 cts/g. Before this latest run of increases, the price had not risen three consecutive weeks since July.

The strength of diesel in recent weeks has been attributed primarily to levels of global inventories.

The most transparent data on inventories is the weekly EIA report on stocks. For all non-jet fuel distillates–jet fuel is a distillate but is reported separately–the size of U.S. inventories fell from 123.6 million barrels in the week ended September 26 to 111.5 million barrels in the week ended October 31. The next report will be published Thursday, reflecting inventories through Friday, November 7.

About 88% to 90% of those distillate inventories are ultra low sulfur diesel (ULSD), which is the fuel consumed by trucks. 

This period on the calendar is normally a time when distillate inventories are building in anticipation of winter, as heating oil is a distillate. Instead, they are declining, helping to drive diesel higher at a rate that significantly exceeds increases in crude. It is likely, in fact, that recent  gains in crude are being driven by diesel dragging it higher. 

The performance of ultra low sulfur diesel (ULSD) on the CME commodity exchange has reflected the diesel strength in the petroleum complex–the oil-related contracts that trade on CME–in several ways.

  • ULSD settled at $2.4053/g on November 3, its recent low. In just six trading days, that price moved up to a Tuesday settlement of $2.5757, an increase of 17.04 cts/g, up 7%. 
  • During that time, Brent crude, the global benchmark, climbed just 0.4%, to a settlement Tuesday of $65.16/barrel from $64.89 on November 3.
  • The backwardation between first month and second month ULSD has risen from about 3 cents/gallon on October 23 to as wide as 5.94 cts/g on November 6 before easing back the past few days. Backwardation describes a market structure where the highest-priced commodity contract is the first month, which at present is for ULSD to be delivered into New York harbor in December. The second month is cheaper, the third month cheaper still until somewhere along the date curve the market flips into what is known as contango. A contango, with the price rising as the contract goes out into the future, is the structure of a perfectly balanced market, with the higher prices each month reflecting the costs of storage and the time value of money. Backwardation develops when inventories are especially tight, as they are now. 
  • A straight comparison of the front month price of Brent on CME versus the front month price of ULSD shot up to $1.02/gallon on Tuesday after normalizing the Brent price to gallons. It had not been at a plus-dollar spread since February 2024. Before that, it hadn’t “breached the buck” since October 2023.
  • The EIA releases a weekly gasoline average retail price as well as diesel. The spread between those two–the higher price of diesel compared to gasoline–was 91 cts/g this week. It’s the highest spread since the end of 2023/early 2024. 

And because markets are volatile, diesel Wednesday was going through a big selloff. ULSD Wednesday at approximately 11 a.m. was down 8.93 cts/g to $2.4864/, a drop of 3.47% from Tuesday’s settlement. That was near the low of the day. And while the ULSD decline was larger than the slide in Brent at that hour, which was down 3.15%, the difference is small enough that it does not suggest a significant unwinding of the Brent-diesel trading play that has grown the past few weeks.

What appeared to be driving oil prices lower Wednesday was the monthly report from OPEC. 

While the International Energy Agency has been forecasting a supply/demand scenario that would see the latter far exceed the former, OPEC/s monthly report had been more bullish. But in its latest forecast, the group said it expects supply and demand to be in balance, which is a more bearish stance than what it had been saying recently. That report was being seen Wednesday as the likely driver behind lower oil prices.

More articles by John Kingston

RXO faces a rate squeeze: what it means for the 3PL

Beautiful women, open doors and drivers: trucking cybersecurity risks proliferate

Aifleet’s bold move: cutting its fleet size to survive in freight recession

California cancels 17,000 CDLs following federal audit

trucks on highway

WASHINGTON — The California Department of Motor Vehicles (DMV) has cancelled 17,000 non-domiciled commercial driver’s licenses following a federal audit of the state’s CDL program, according to the U.S. Department of Transportation.

In a press statement on Wednesday, DOT asserted that state officials admitted to illegally issuing the CDLs “to dangerous foreign drivers,” and that DMV sent notices to the license holders that their license no longer meets federal requirements and will expire in 60 days.

“After weeks of claiming they did nothing wrong, Gavin Newsom and California have been caught red-handed,” said Transportation Secretary Sean Duffy.

“This is just the tip of the iceberg. My team will continue to force California to prove they have removed every illegal immigrant from behind the wheel of semitrucks and school buses.”

FreightWaves has reached out to California’s DMV for comment.

FMCSA Chief Counsel Jesse Elison notified Newsom and his DMV in a September 26 letter that a sampling of the roughly 62,000 drivers in California holding unexpired, non-domiciled CDLs or commercial learner’s permits issued by the state revealed that 26% – which extrapolates to roughly 16,000 – failed to comply with federal requirements.

“Even more concerning is the fact that, for three of the transactions, the DMV was unable to provide documentation showing that it validated the drivers’ lawful presence documents before issuing a non-domiciled CDL,” Elison stated. “Consequently, based on the documentation provided, it appears that the DMV issued a non-domiciled CDL to three drivers without validating their lawful presence.”

Duffy posted a statement on the day of Elison’s notification letter warning that “California must get its act together immediately or I will not hesitate to pull millions in funding,” starting at nearly $160 million in the first year and doubling in year two.

DOT reiterated on Wednesday that it “will continue to push California’s to revoke all illegal non-domiciled CDLs or pull $160 million in federal funds.”

Click for more FreightWaves articles by John Gallagher.

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