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’

Latest truck crackdowns sidelines 48 drivers, 159 vehicles across US

State police agencies in New York, Nevada and Arizona have stepped up commercial vehicle enforcement in recent weeks, issuing hundreds of violations and placing scores of trucks and drivers out of service.

The actions ranged from a bridge-strike prevention campaign along the New York State Thruway to increased roadside inspections in Nevada following a rise in commercial vehicle crashes and targeted enforcement against truckers in Arizona.

New York inspection campaign finds nearly 1,000 violations

New York State Police said Tuesday that its Troop T Commercial Vehicle Enforcement Unit conducted 348 commercial vehicle inspections during the state’s “Check Your Height, Know It’s Right” campaign at the end of July.

The initiative was aimed at reducing bridge and overpass strikes involving commercial vehicles through enforcement and driver education. Of the 348 vehicles inspected, 126 were immediately placed out of service for safety-related violations.

Troopers issued 966 violations, including five involving over-height vehicles. The enforcement effort also resulted in 189 uniform traffic tickets for offenses including speeding, seat belt and restraint violations, cellphone use and registration and license issues.

State police said more than 375 bridge strikes have occurred on the system during the past five years. The agency said recent incidents involving over-height commercial vehicles in downstate New York and Western New York highlight the importance of drivers knowing their equipment’s height and planning routes around low-clearance structures.

Nevada puts 45 drivers, 33 trucks out of service

Nevada State Police Highway Patrol has also intensified commercial vehicle inspections following what the agency described as a recent increase in crashes involving CMVs around U.S. 50 and U.S. 395.

The Highway Patrol’s Commercial Enforcement Section increased inspections and enforcement in the affected area, according to Carson Now.

During a two-week enforcement period, inspectors:

Conducted 102 roadside inspections;
Documented 286 violations;
Placed 45 drivers out of service; and
Placed 33 commercial vehicles out of service.

Violations involved driver documentation, equipment and mechanical condition, motor carrier operating authority and drivers’ daily logbooks.

Recent commercial truck enforcement actions in New York, Nevada and Arizona

State	Roadside/CMV inspections	Documented violations	Vehicles out of service	Drivers out of service
New York	348	966	126	Not reported
Nevada	102	286	33	45
Arizona	Not reported	Not reported*	Not reported	3
Total reported	450	1,252	159	48

Sources: New York State Police, Nevada State Police Highway Patrol and Arizona Department of Public Safety.

Arizona troopers target false logbooks, left-lane violations

Arizona Department of Public Safety troopers recently conducted two smaller targeted enforcement actions involving commercial drivers.

On July 31, troopers found three commercial drivers parked near Arizona State Route 202 and Elliot Road despite more than six posted “No Parking” signs.

Commercial Vehicle Enforcement Unit troopers contacted the drivers and discovered that all three had false logbooks, according to Arizona DPS. The drivers were cited and placed out of service.

On July 31, Arizona Highway Patrol troopers found three commercial drivers parked near Arizona State Route 202 and Elliot Road despite more than six posted “No Parking” signs. (AZDPS)

Five days later, Arizona Highway Patrol troopers conducted a targeted traffic enforcement detail along Interstate 10 in an active construction zone between Phoenix and Tucson.

Troopers took enforcement action against five commercial vehicles for violating a posted requirement that commercial trucks remain in the right lane.

Each of the trucks was observed traveling in the left lane for distances ranging from 1.5 miles to more than 4 miles, according to DPS.

DPS said the violations caused traffic to slow and bunch behind the trucks, followed by unsafe accelerations after the CMVs returned to the right lane. The agency said commercial vehicles must remain in the right lane in construction zones when signs requiring them to do so are posted.

Why it matters: The latest actions show commercial truck enforcement broadening beyond traditional roadside inspections, with states increasingly using targeted operations to address specific risks including bridge strikes, crash-prone corridors, falsified logbooks and unsafe driving in construction zones.

The boring press release machines learned to love

Kara Brown, CEO and co-founder of LeadCoverage, speaks on stage about intent data and AI-driven marketing at a supply chain conference

The humble press release was, for most of the past decade, the chore nobody in freight wanted. It sat near the bottom of the marketing budget. It was filed as an obligation. Executives who would sign off on a six-figure trade show booth without blinking balked at 500 words crossing the wire.

That was the status quo until the machines started reading them.

A quarter-long field test by LeadCoverage, found that press releases leading with a specific, economically relevant number earned 3.5 times more AI citations than releases without one.

Over the quarter, the Atlanta go-to-market freight and supply chain agency published one release a week and logged 1,058 AI citations, up from nearly zero. ChatGPT accounted for roughly 90% of them.

What the results mean for carriers, brokers and 3PLs is not an abstraction. An example: When a shipper asks a large language model (LLM) which provider handles omnichannel distribution out of Florida, the answer arrives before anyone visits a website. Whoever published a number wins and gets named. To those unaware, they missed out on a conversation they never knew was happening.

“AI Cannot Invent a Number”

The finding is narrower than “send more press releases.” Luckily, that narrowness is the point. Ordinary releases built around company announcements, personnel changes or awards generated minimal citations. The releases built around a hard figure carried the whole result.

“AI cannot invent a number, so it cites whoever published one,” said Kara Brown, CEO and co-founder of LeadCoverage, in an interview with FreightWaves.

That constraint explains the mechanics behind the magic. Language models can only generate; they do not report. When a query demands a figure, the model reaches for a source that supplied one, and wire copy is unusually easy to reach. Every release on GlobeNewswire shares the same skeleton: headline, subhead, data, and quotes. AP style, uniformly applied, turns out to be machine-readable by accident.

Brown’s warning to companies sitting on proprietary data doesn’t mince words.

“The companies that publish specific, useful data on a consistent schedule are the ones AI cites most, and that citation is often the first impression a prospect gets before they ever visit your website,” she said. “The companies sitting on their data simply aren’t getting citations, and they never see the potential prospects and deals that pass them by.”

Why AI Citations Favor the Middle Market

Google was always an auction. That is the part freight marketers understood, and the part that priced most of them out.

“If you pay Google money, they will put you at the top of the answer whether or not it’s organic or paid,” Brown said. “If you don’t pay Google, they will diminish your visibility on Google.”

She has a word for the arrangement: mercenary. Google has advertisers to serve and a business reason to serve them. The LLMs, at least for now, run on different incentives. There is no keyword auction on a citation.

For a mid-market 3PL, broker, forwarder or tech vendor with a specific niche, that gap is the entire opportunity, because the traditional route is closed.

“You can’t compete with Old Dominion on LTL,” Brown said. “They already own the search volume for LTL. Trying to outrank them on that term isn’t a fight worth picking.”

The opening has a clock on it. Brown describes the citation effect as a flywheel with a half-life: early participants accumulate weight the way compound interest does, and latecomers spend their budget fighting incumbents who started first.

“The earlier you start, the more time you have to let this half-life percolate with the LLMs,” she said. “The later you start, the more you’re competing with the folks that have already started.”

Money is no longer solving it in a post-search world. The old escape hatch, outspending the field on keywords, does not exist inside an answer engine.

Trade Press, Reweighted

Two figures from Muck Rack are reframing where the effort should go.

About 1% of all answer engine optimization citations come directly from a press release, which works out to roughly 33,000 searches a day resolved by wire copy. Separately, 27% of industry-specific searches are answered by trade publications.

That second number matters more in freight than almost anywhere else, because freight queries are never generic. Nobody asks an LLM for a dentist nearby. They ask which 3PL runs omnichannel distribution near a Florida headquarters, and the model looks for a publication that has already answered.

Brown’s order of operations follows directly: wire first, trade press second, website third. The sequencing runs against the instinct of most supply chain marketers, who default to redesigning the site.

“The LLMs don’t care about your website. They’re not going to your website,” she said. “The content on your website is important, but the order of operations is: send more press releases, get picked up by the trade media, and then make sure that you have pretty good content on your website.”

The reasoning is arithmetic and not aesthetics. No model is going to crawl 50,000 broker websites to find the one that answers a niche question in the fraction of a second it has to respond. It will reach for the wire and the trade desk that already did the work.

The consequence for an industry that has spent 10 years writing trade coverage off as legacy media is uncomfortable. “Trade press is more important than it was a year and a half ago,” Brown said.

The Index Is Where the Number Comes From

If the rule is to publish a number, the operational question becomes where the number comes from. Brown’s answer is an index, and she recommends one to nearly every company she talks to.

Two structures have worked. The first is mode-specific, and the discipline lies in picking a lane nobody owns.

An example she gave: Competing with DAT on macro rate data is a losing proposition, and the talent that built that advantage has since spread across the industry. Ken Adamo, DAT’s former chief of analytics and general manager of its shipper business, joined EASE Logistics as chief strategy officer in May. “He’s crushing it,” Brown said.

Competing on a mode that has not been claimed is a different proposition entirely.

ITS Logistics built its Port/Rail Ramp Freight Index into effective ownership of drayage commentary, to the point that Paul Brashier appears in the news whenever something breaks at a port. Brown points to heavy and light final mile as territory still sitting open.

The second structure is industry-specific, and the math is smaller than most marketers expect. One LeadCoverage client draws roughly 30% of its book from steel.

There are 123 steel manufacturers and distributors in America.

“The niche inside the niche is so small,” Brown said. The program reaches 1,200 to 1,400 people a month with an index on what is moving steel transportation rates: energy prices, fuel, disruption in the Middle East. One new customer a quarter clears the bar.

The origin story she returns to is Redwood Logistics, a client since 2020. Redwood had an internal cross-border newsletter, something built for internal use, not for outside eyes. It was a straightforward rundown of numbers and shipping data, nothing designed to be published.

Brown and her team saw an opportunity in it. They proposed repurposing that internal newsletter into something external: an index the industry could actually use. That idea became Redwood Mexico, which eventually brought CNBC to the company’s Laredo operation for a mini-documentary.

“The PR works if you are sharing regularly with the press a point of view with an economic perspective that matters to the shipper,” Brown said.

The Measurement Trap That Kills AI Citation Programs

The uncomfortable part is that the industry cannot yet prove any of this the way a CFO wants it proved.

Attribution tracking for citations is, by Brown’s own assessment, not yet reliable, and she is candid about the gap. The tooling is roughly six months old. Agencies can see citation volume and which model delivered it. What happens next is dark.

“We can tell you how many times you’ve been cited, but we can’t tell you what happens after that,” she said.

A buyer might click. A buyer might write the name down, or drop it into an analysis that goes to a boss. None of that is visible today.

Meanwhile, the numbers that are visible look wrong to anyone still grading on the old scoreboard. LeadCoverage’s search impressions rose 83% during the test. Google clicks fell, because AI answers were resolving buyer questions before a click could happen. Direct and brand traffic kept climbing, which is what it looks like when buyers find you somewhere other than search.

Read that dashboard with 2019 assumptions and it reads like failure. Brown expects that misreading to be the industry’s costliest mistake.

“The most common mistake we expect to see is companies grading these programs on clicks and shutting them down right as they start working,” she said. “Clicks are declining across the board. The measure that matters now is whether AI cites you when a buyer asks about your category. The source cited today is hard to unseat tomorrow, because these systems reward freshness and repetition. This is a position to claim before a competitor claims it.”

Werner not deterred by July slowdown

a white Werner tractor-trailer on a highway

Executives from Werner Enterprises sounded unfazed by the seasonal slowdown in truckload spot market trends during July. Chairman and CEO Derek Leathers told investors Tuesday that the supply-led recovery shows no signs of slowing as the current administration is not backing off its crackdown on bad actors.

Tender rejections peaked in June and spot rates have continued to slide from the Fourth of July (holiday) high. The summer lull has investors jittery. Second-quarter earnings reports were solid, but shares of most carriers have sold off by mid-single to mid-teen percentages since.

“There’s no concern, if you will, from my perspective about … some of these little snippets of news that we’ve seen in July,” Leathers said at Deutsche Bank’s Chicago Industrials Summit.

SONAR: Outbound Tender Rejection Index (OTRI.USA) for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line). A proxy for truck capacity, the tender rejection index shows the number of loads being rejected by carriers. Current tender rejections show a tight truckload market. *To learn more about SONAR, click here.*

The top of the funnel has been significantly constricted. Leathers estimates that 850 to 900 CDL schools have been forced to close due to insufficient training standards. That’s in addition to roughly 10,000 training programs that have been removed from the FMCSA’s Training Provider Registry.

Capacity has been significantly impacted by a crackdown on ELDs allowing operators to alter hours of service. As Leathers noted, “10 trucks were able to behave like 15.”

Well before regulatory enforcement ramped up last year with stricter oversight of English-language proficiency and non-domiciled CDL restrictions, carriers were exiting the market due to weak economic conditions. After an extended downturn, numerous fleets continue to struggle to stay afloat, meaning the recent uptick in rates might have arrived too late for some.

Leathers also believes more enforcement is on the way as the FMCSA is likely to see an increase in funding from its annual budget allocation in October.

Even with only modest demand, Leathers said a supply-driven recovery has legs. “Christmas is still going to come. Peak season is still going to be a reality.”

He noted an “increased acceptance” from shippers that the supply crunch “is real,” which bodes well for an industry that “hasn’t been reinvestable in several years.”

Inventories at some of Werner’s retail customers are a little lean while others are holding satisfactory stock levels. The company sees a normal peak season this year. But unlike last year’s, this year’s peak will have the benefit of significantly higher rates.

SONAR: National Truckload Index (linehaul only – NTIL.USA) *for 2026 (blue shaded area), 2025 (yellow line), 2024 (green line) and 2023 (pink line)*. The NTIL is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Rates remain significantly higher on a y/y comparison *in August.*

During the second quarter, Werner’s (NASDAQ: WERN) one-way TL fleet saw a big turnaround following a restructuring.

Revenue per truck per week (excluding fuel surcharges) jumped 28% year over year, as miles per truck were up 16% and revenue per total mile increased 10%. The rate increase was notable as Werner had only half the spot market exposure it had a year ago, and length of haul was up nearly 100 miles. (Longer lengths of haul usually accompany lower per-mile rates.)

Under the restructuring plan, the company exited non-profitable accounts, and repurposed or disposed of under-utilized trucks. The one-way fleet was 34% smaller y/y at 1,700 units at the end of the second quarter. Higher pricing and better utilization pushed the total TL segment’s adjusted operating ratio (inverse of operating margin) to 94.5%, 270 basis points better y/y.

Werner expects one-way rate per mile to increase by 10% to 13% y/y in the third quarter. With the turnaround largely complete, the company will now look to grow this fleet again.

SONAR: Van Contract Rate Per Mile Index (VCRPM1.USA) for 2026 (blue shaded area), 2025 (yellow line), *2024 (green line) and 2023 (pink line).* The index shows a 7-day moving average of the initial reporting of dry van contract rates without fuel or accessorial charges.

The dedicated fleet, 80% of Werner’s total TL network, is capturing low- to mid-single-digit contractual rate renewals. Revenue per truck per week (ex-fuel) was 5% higher y/y in the second quarter. Werner acquired dedicated carrier FirstFleet for $245 million in January. Excluding FirstFleet from the results, Werner’s legacy dedicated operation recorded an 8% increase in revenue per truck per week. The metric is expected to increase by 3% to 5% y/y for full-year 2026.

While the consolidated TL margin was more than 10 percentage points worse than the prior peak, it was the unit’s best performance since the 2023 fourth quarter. Management reiterated a path to low-double-digit margins during the middle of the freight cycle, which it said could occur next year. Higher rates, better demand, truck additions to existing dedicated accounts (no start-up cost offset), higher gains on sale as used prices rise (150 bps of margin alone), and automation and cost takeout initiatives are the levers.

Shares of WERN were down 0.7% on Thursday compared to the S&P 500, which was off 0.3%. Werner’s stock is up 57% since spot rates first inflected positively ahead of Thanksgiving.

Why it matters? Werner’s Tuesday presentation provided key insights into how current market and regulatory forces are driving improved financial results.

More FreightWaves articles by Todd Maiden:

Ex-CBP officer used emoji code to let 477 kilos of Sinaloa Cartel drugs cross

Drug-filled vehicles approached California’s Tecate Port of Entry and reached Jesse Clark Garcia’s inspection lane. The U.S. Customs and Border Protection officer knew when smugglers were coming. He allowed each driver to enter the United States without required checks. Prosecutors say every passage brought him at least $10,000.

Garcia supplied a Sinaloa Cartel-linked trafficking organization with duty schedules and lane assignments. He sent those details through text messages using a secret emoji-based code. The group then routed cocaine, methamphetamine and fentanyl toward the designated checkpoint. That arrangement began by 2021, according to court records.

The U.S. Attorney’s Office for the Southern District of California announced the punishment Aug. 7 in San Diego. A federal judge sentenced Garcia to nine years in prison. The result followed a long-term investigation involving several agencies. The corruption case also included then-CBP Officer Diego Bonillo.

Emoji code guided cartel vehicles

Garcia exploited CBP’s flexible duty-switching policies to reach lanes outside his assigned schedule. On other occasions, he falsely claimed technical problems blocked mandatory checks. Those excuses let drug shipments continue despite system alerts. His plea agreement detailed both methods.

On July 8, 2025, the former officer pleaded guilty to nine felony counts. His admissions included conspiracy to import controlled substances, importation, and aiding and abetting. Garcia accepted responsibility for facilitating at least 100 kilograms of fentanyl, 107 kilograms of methamphetamine and 270 kilograms of cocaine. Combined, the three amounts reached a minimum of 477 kilograms.

Diego Bonillo joined Garcia in pleading guilty during July 2025. A federal judge sentenced the co-defendant to 15 years on Nov. 7. Investigators identified both men as participants in the same corruption scheme. Both defendants used coded messages to share schedules and assignments.

Bonillo admitted allowing no fewer than 15 vehicles to cross without inspection between October 2023 and April 2024. Those loads carried at least 75 kilograms of fentanyl and 11.7 kilograms of methamphetamine. The shipments also contained more than one kilogram of heroin. Agents discovered a second phone that he used to send traffickers his lane assignments and working hours. The Mexico-based organization used that information to direct smugglers toward his checkpoint.

Illegal proceeds funded luxury purchases

Evidence showed Garcia’s spending far exceeded income from government work. Illegal proceeds funded luxury purchases, a high-end vehicle and a San Diego residence. The money also supported his co-ownership of an equine racing business. Authorities connected additional funds with ranch construction in Mexico.

As the investigation progressed, Garcia tried to evade law enforcement. He stopped reporting for duty and ignored inquiries from CBP supervisors. Agents watched him drive into Mexico during late March 2024. Prosecutors described the vehicle as fully packed.

Mexican authorities arrested Garcia on May 2, 2024, after receiving a U.S. request. A federal warrant authorized the action. Officials transferred him into American custody later that evening. The prosecution then continued in San Diego.

Nine felony counts carried life maximum

Federal records identify Garcia, 38, as a San Diego resident in case 24-CR-0908-RBM. His conspiracy charge cited Title 21 sections 952, 960 and 963. Importation counts relied on the first two provisions. Federal law set a maximum life sentence and 10-year mandatory minimum for each charge category. The DOJ release did not explain why Garcia received less than that minimum.

“Officer Garcia betrayed his oath, his fellow officers, and his country,” U.S. Attorney Adam Gordon said. “Officer Garcia’s conduct warranted this significant sentence.” DHS Inspector General Joseph V. Cuffari also addressed internal corruption after the sentencing. “The Office of Inspector General will continue to relentlessly root out corruption,” he added. The inspector general also thanked DHS OIG’s law enforcement partners.

FBI Special Agent in Charge Mark Remily said Garcia “knowingly and repeatedly allowed” narcotics into the country. “The corrupt few do not represent the whole of the federal law enforcement workforce,” Remily added. CBP Special Agent in Charge Sara Esparagoza called her office’s commitment to high standards “unwavering.” Her statement also emphasized “rooting out corruption” and internal accountability.

The FBI Border Corruption Task Force participated with the Department of Homeland Security Office of Inspector General. CBP professional responsibility personnel and Border Patrol’s San Diego Sector Intelligence Unit also investigated. Homeland Security Investigations teams from SDNET and the Hermosillo Attaché supported the work. The Drug Enforcement Administration joined those agencies. Assistant U.S. Attorneys Shauna R. Prewitt, Sean Van Demark and Bianca Calderon-Peñaloza prosecuted the case. The U.S. Attorney’s Office told FreightWaves it had no further information or comment beyond the public record.

Why it matters

Border controls fail when trusted insiders manipulate assignments, ignore alerts and wave vehicles through unchecked. Freight and security leaders should watch for employees who repeatedly bypass required processes.

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

CBP finds $1.17M in cocaine after inspecting bell pepper truck at Texas border – FreightWaves

Stolen trailer investigation leads police to nearly $800K in cargo and vehicles – FreightWaves

Police: Little Debbie snack fraud scheme involved deliveries that never happened – FreightWaves

New harbor commission president backs Long Beach port plans

Newly installed Long Beach Harbor Commission President Steven Neal said Monday he will prioritize the infrastructure, sustainability and technology programs underpinning the Port of Long Beach’s long-term “Port of the Future” strategy.

At his first meeting as board president, Neal said the commission would maintain progress on initiatives intended to reinforce the Southern California gateway’s position in cargo handling, rail connectivity, customer service and environmental performance.

The agenda includes the port’s recently launched objective of doubling annual container throughput to 20 million twenty foot equivalent units (TEUs) by 2050 while transitioning to a fully zero-emissions seaport.

“Innovation has always defined the Port of Long Beach,” Neal said. “From pioneering environmental initiatives to building world-class infrastructure, we have never been afraid to explore bold ideas. Today, we are continuing that legacy by responsibly evaluating technologies that could redefine how ports operate for generations to come.”

A central infrastructure project is the Pier B On-Dock Rail Support Facility, which is designed to triple the port’s on-dock rail capacity, strengthen connections to the national rail network and reduce rail dwell time from about four days to 24 hours. The project is also intended to reduce truck traffic and associated emissions in and around the harbor complex.

This week, the port purchased a 13-story office building in downtown Long Beach for $36 million, with plans to create a maritime business hub.

Neal also highlighted the port’s efforts to expand the use of electricity, hydrogen and methanol as lower-emission energy sources. He pointed to a recent partnership with the U.S. Department of Transportation’s Maritime Administration aimed at developing operational, safety and security standards for potential nuclear-energy deployment in port operations.

“As global trade continues to expand and the demand for reliable, clean energy grows, we have an opportunity to lead — not simply by adapting to change, but by helping shape it,” Neal said.

Neal is serving his second six-year term on the Harbor Commission after first joining the board in 2019. He previously chaired the commission from 2021-2022 and has served two terms as vice president. Before joining the commission, he represented North Long Beach on the Long Beach City Council from 2010-2014.

Under the city charter, the five-member Harbor Commission establishes policy for the port and oversees Chief Executive Officer Noel Hacegaba, who leads an organization of about 600 employees.

Read more articles by Stuart Chirls here.

Asia-US East Coast box rate hits new high of $9,400

After massive Q1 loss, Maersk returns another service to Suez

Sale of major shipping line in U.S. trade on the rocks: Report

Asia ocean line in $135M expansion of US box terminal

Trucking M&A: 3 Reasons Private Equity Struggles With Assets

The freight market is showing signs of recovery, reigniting interest in M&A across the logistics sector. But while non-asset brokerage deals have historically attracted private equity, asset-based trucking presents unique challenges. Craig Decker, Managing Director at Brown Gibbons Lang & Company, explains why financial engineering alone isn’t enough in asset-heavy operations and how a lack of understanding of replacement cycles and operational complexities can lead to ‘miserable’ investment outcomes. Discover what investors are now looking for in the evolving M&A landscape.

Private equity’s persistent losses in asset-based trucking come down to three compounding failures: overleveraged balance sheets, misread freight cycles, and underestimated operational complexity. Speaking on FreightWaves, Decker said the industry is now seeing a resurgence in M&A interest that began in the third quarter of last year as truckload rate indexes shifted and regulatory changes began tightening capacity — but warned that old mistakes could repeat.

Strickland argued that the core financial error is leverage. Asset-intensive trucking businesses carry fleet replacement cycles of three to five years for truckload and seven years for LTL, meaning depreciation and amortization is a real cash expense, not a paper one. When PE firms load debt onto those businesses, debt service competes directly with capital expenditure. “What they might do is extend the trade cycle on their equipment or defer some maintenance,” Decker said. “When you start doing that, that just really, really deteriorates your business, whether it be from your assets not running at the right OR to your customer satisfaction rate going down.”

A decade-plus of near-zero interest rates made the leverage math appear manageable. Decker noted that investment professionals who entered PE after the 2008 financial crisis modeled businesses against LIBOR rates of around 50 basis points — effectively 1.5% to 2% all-in borrowing costs. Those same professionals are now senior decision-makers who have not been tested in a real rate environment, making the current high-cost-of-capital era a rude adjustment.

“It’s not a good business within their holding period. Part of it is that their lifespan of their investment or their thesis on that is 3 to 5 years. It’s really too short,” Decker said.

Operational unfamiliarity compounds the balance-sheet problem. Decker cited driver turnover as one variable that PE spreadsheets routinely underestimate — the industry average runs roughly 1.8 to 2 drivers per truck per year at approximately $10,000 per driver to test, seat, and train. Insurance incident rates, weather disruptions, and customer service failures cascade in ways that cannot be modeled, he said, and PE firms that try to manage trucking companies by spreadsheet rather than through experienced operators tend to spiral downward.

The cycle timing problem is equally punishing. Decker said acquirers frequently rely on trailing-12-month financials without accounting for where a carrier sits in the freight cycle. Because of the operating leverage embedded in trucking, a 12-month snapshot at the wrong point in the cycle is, in his view, essentially irrelevant for underwriting a multi-year hold.

Where PE can succeed, Decker said, is in specialized or dedicated segments — cold chain serving pharma, hazmat, or other end markets with low price elasticity and sticky margins — rather than commoditized truckload. He pointed to the growing investor interest in those niches and noted that port diversification is adding another layer of complexity for investors, with freight increasingly routing through Savannah, Gulf ports, and Norfolk rather than solely through Los Angeles-Long Beach. “66% of our population is east of the Mississippi,” Decker said, arguing that Mid-Atlantic and Southeast logistics hubs offer lower labor costs, fewer union constraints, and better highway access than California gateways. Decker said deals are now beginning to close after what he called “4 very, very long years” of a freight recession, with brokerage transactions leading and asset deals starting to follow.

PE firms overleveraging asset-based trucking carriers — with fleet replacement cycles of 3 to 7 years — leads to deferred maintenance and deteriorating operations when debt service crowds out CapEx.
A generation of PE professionals who modeled deals at ~1.5–2% interest rates lack experience managing heavy-asset businesses in a high-cost-of-capital environment.
M&A activity is rebounding after four years of freight recession, with investors targeting specialized niches like cold chain pharma and dedicated transport over commoditized truckload.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.

Supply Chain Shock: Why Halloween Candy is Out in Summer!

Get ready for “Summerween”! Retailers are stocking Halloween candy in August, but it’s not just an anomaly. Sotira CEO Amrita Bhasin joins FreightWaves Today to reveal how macro challenges like tariffs and changing consumer habits (hello, GLP-1 drugs!) are pushing inventory planning earlier and creating massive overstock issues. Discover why the reverse logistics of returns is a growing sustainability problem and what brands are doing to adapt their products and marketing to these disruptive trends.

Halloween candy appearing in grocery stores in early August is not a supply chain anomaly — it is a deliberate retailer strategy driven by tariff uncertainty and front-loaded import cycles, according to Amrita Bhasin, CEO of inventory liquidation company Sotira. Bhasin, speaking on FreightWaves Today, said May was the peak month for imports in 2025 and that she expects volumes to decline for the rest of the year, a view that puts her at odds with Port of Los Angeles Executive Director Gene Seroka, who has projected a robust second half for imports.

The early-season stocking trend — dubbed “summerween” by retailers — reflects a broader shift in inventory planning as brands scramble to get goods into the country while tariff conditions are more favorable. Bhasin said the dynamic now spans nearly every consumer goods category, with Christmas decorations also expected to hit shelves significantly earlier than in prior years. “Everything is getting pushed out earlier across pretty much all consumable or consumer good categories,” she said.

The candy and chocolate category illustrates the pressures compounding at once. Bhasin said a small bag of candy at convenience stores reached upward of $20 in some ZIP codes last year, driven by spiking cocoa prices. Manufacturers responded by overbuying, leaving excess stock that now needs to move. At the same time, GLP-1 drug adoption, consumer concern over food dyes — with some manufacturers pledging to phase out certain dyes by end of 2026 — and declining appetite for high-sugar products are all suppressing demand in the category.

“I think last year we saw a big return season. Returns the last few seasons have been high. Retailers are coming up with new policies,” Bhasin said, noting that some e-commerce platforms now track return thresholds and may ban repeat offenders regardless of the dollar value involved.

The returns challenge is costly across the supply chain. Bhasin said warehouses pay $1 to $2 just to scan a single returned unit back into inventory — a significant burden when the item’s MSRP may be only $8. She added that data shows 45% to 50% of e-commerce returns go directly to landfill without ever returning to a warehouse shelf. Sotira is working with retail partners to route excess and returned goods to nonprofits via backhaul on existing truck lanes, generating tax deductions for brands and producing impact reports that companies use in investor disclosures.

Overstock is concentrated in packaged food and beverage, Bhasin said, including cereals, protein and nutrition bars, and chocolate-heavy CPG items, across the past 18 months. The firm also sees growing excess in ultra-luxury goods — handbags and prestige perfumes — as consumers question whether elevated price points justify quality. Categories performing well include fiber-enriched beverages, high-protein products, and clean beauty items, where consumers have shown a willingness to pay a premium.

On the demand side, Bhasin pointed to GLP-1 adoption as a structural shift affecting not just food but broader consumer behavior, including reduced impulse buying. She said the behavioral changes tied to these drugs are “underappreciated” and could reshape how brands market and procure products well beyond the grocery aisle. With overstock volumes already elevated and consumer spending pulling back in recent months, she argued that the inventory already sitting in U.S. distribution centers may be sufficient to supply demand through the remainder of the year.

Sotira CEO Amrita Bhasin says May 2025 was the peak for U.S. imports and expects volumes to decline through year-end, as tariff-driven front-loading has already stocked domestic warehouses.
Halloween candy and seasonal goods are hitting shelves in summer as retailers compress planning cycles to hedge against tariff costs and weakening consumer spending.
45% to 50% of e-commerce returns go directly to landfill, and warehouse processing costs of $1 to $2 per unit are pushing brands to explore backhaul donation routes for excess inventory.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.

Freight Market Shift: Why RXO’s Scale Wins Big on Insurance & Ops

RXO CEO Drew Wilkerson reveals how recent market shifts and regulatory changes have made financial stability and extensive insurance coverage non-negotiable priorities for shippers. He explains why these factors, alongside continuous innovation and strong client relationships, are positioning RXO to capture outsized market share in both spot and contract freight, even as the market remains dynamic.

RXO’s excess liability coverage exceeding $100 million has become a front-line sales advantage as shippers tighten carrier and broker vetting in the wake of the Montgomery ruling, CEO Drew Wilkerson said in an interview with FreightWaves. Wilkerson said financial stability and insurance coverage now open every enterprise customer conversation — a shift that accelerated sharply over the past few weeks.

“I only know of 2 that have excess liability of $100 million or more” among the top 5 to 10 brokers, Wilkerson said, adding that the field of providers capable of serving large enterprise shippers at scale is narrowing quickly. He noted that the coverage threshold is not something competitors can build overnight.

“We don’t want to just scrape by on this. We don’t want to just scrape by for our customers. We want to make sure that we’ve got more than enough to be there for our customers.” — Drew Wilkerson, CEO, RXO

The liability discussion comes as RXO reported truckload spot mix of 42% of volume, with spot loads rising 900 basis points sequentially and roughly 1,000 basis points quarter over quarter — the kind of flex the company had promised investors since its spin from XPO. Wilkerson attributed the gross profit per load improvement to that spot mix shift, along with a pickup in higher-margin project and mini-bid freight and technology-driven productivity gains. Truckload volume was up 2% year over year in the second quarter, with low-to-mid single-digit year-over-year growth expected in the third quarter.

On the technology side, RXO rolled out a spot-quote agentic email tool that Wilkerson said allowed employees to process five times the number of orders quarter over quarter. He said the best-performing technology investments check all three of the company’s internal criteria: growing volume, increasing margin, and improving productivity. An AI agent now reviews installation photos from independent contract drivers in the last-mile business, though Wilkerson noted that tool primarily addresses productivity rather than margin or volume.

Wilkerson said the company keeps staffing levels calibrated to absorb 15% to 20% volume growth overnight, a posture it has maintained for the past three years heading into peak season. He described the current freight recovery as early-stage, pointing to tender rejections running at 14% to 16% on SONAR — well below the 25% to 30% levels seen in a robust upcycle — while demand remains down year over year according to Cass data. He said the company is two years into integrating the Coyote acquisition and is now focused entirely on innovation rather than integration.

On food and beverage, Wilkerson pushed back slightly on the notion that the sector is a drag, saying RXO saw year-over-year increases with those customers — though he credited market share gains rather than underlying volume growth. He cited two factors weighing on the category broadly: GLP-1 drug adoption reducing consumption and deportations shrinking the U.S. consumer base. RXO’s top customers have been with the company an average of 16 years, Wilkerson noted, a relationship depth he said is central to winning outsized spot and project volume as shippers pare down their provider lists.

RXO carries excess liability insurance exceeding $100 million, a threshold Wilkerson says only 2 of the top 5 to 10 brokers can match, making it a decisive factor in enterprise shipper conversations post-Montgomery.
Spot mix hit 42% of truckload volume, up ~1,000 basis points quarter over quarter, with a new agentic spot-quote tool enabling 5x more orders processed per quarter.
Wilkerson says the freight recovery is early-stage, with tender rejections at 14%-16% on SONAR versus the 25%-30% of a robust cycle, and Q3 truckload volume growth guided to low-to-mid single digits year over year.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.

Spot vs. Contract Rates: Don’t Be Fooled by Short-Term Declines

The gap between spot and contract freight rates is widening, with contract rates up almost 20% year-over-year while spot rates see a monthly dip. Dive into SONAR data to understand why this isn’t just seasonal softening. We’ll explore the strategic shift to intermodal in key markets like Indianapolis and what it means for your procurement teams.

Van contract rates have climbed 19.3% year over year while NTI spot rates have dipped roughly 5% month over month — a divergence that FreightWaves’ Craig Fuller says procurement teams should not mistake for a softening market. Fuller, presenting the SONAR Update on Tuesday, Aug. 12, warned that the spot decline reflects some seasonal softening but more significantly signals that carriers and brokers are pricing forward risk into committed rates as new mini-bids and contract renewals roll in.

“Don’t get fooled by the short-term spot bit of decline,” Fuller said. “The contract rates rising is a huge part of that.” He added that procurement teams need to keep benchmarking against contract rates and prepare for the continued double-digit increases that major carriers have flagged in recent earnings calls.

Modal conversion is emerging as the market’s leading indicator, Fuller said. Truckload tender volumes are down about 2% overall, yet intermodal container volumes are up 2% in the same window — a simultaneous shift that points to deliberate shipper strategy rather than demand destruction. The 32% cost spread between intermodal and truckload rates is a primary driver, according to Zach Strickland.

“The fact that you see a 32% spread on the cost is — you can’t ignore it,” Strickland said.

Intermodal growth is concentrated in an unexpected geography. While Los Angeles volumes are up year over year, Atlanta and Chicago are posting significantly larger growth rates, suggesting the capacity crunch is pushing freight onto eastern rail corridors more than traditional west-coast import lanes, Julie Van de Kamp noted. She pointed to BNSF’s strong recent earnings and JB Hunt’s commentary as confirmation that rail is capturing meaningful share from truckload.

Van de Kamp and Strickland also emphasized that the intermodal shift may be structural rather than cyclical. Large intermodal providers have told FreightWaves that shippers who had never used intermodal are now trying it and staying. “It’s sticky. It’s very sticky, ’cause it’s not like somebody’s gonna just pull that infrastructure right back off,” Strickland said.

Indianapolis offers a case study in why headline numbers can mislead. Van rejection rates in the market have eased modestly, but the HAL Index remains above 90 and Indianapolis registers deep blue on the SONAR map — well above the national average. Reefer rejections in the market are actually still rising, reflecting the city’s heavy concentration of grocery, refrigerated, frozen, and fulfillment operations, including major Amazon and FedEx facilities. Spot rates out of Indianapolis continue to increase. “From everything I can see, Indy is still quite hot,” Fuller said.

Van contract rates are up 19.3% year over year even as NTI spot rates fall ~5% month over month, a gap carriers and brokers are pricing with forward risk in mind.
Intermodal container volumes are up 2% while truckload tender volumes are down 2%, driven by a 32% cost advantage that industry participants say is creating sticky, long-term modal shifts.
Indianapolis’s HAL Index remains above 90 and reefer rejections are still rising despite a modest dip in van rejections, underscoring the need for market-level context beyond headline data.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.

Beyond the Hype: How Overroute’s AI Transforms Trucking Operations

Overroute CEO Alex Reed explains their partnership with JB Hunt, focusing on how their AI agents are automating workflows and optimizing asset utilization. Discover Overroute’s unique “carrier-native” approach, prioritizing user adoption and empowering frontline operators with AI for maximum ROI in trucking logistics. This deep dive into supply chain innovation reveals how practical, user-focused AI is changing the game.

Overroute, an AI software company incubated through JB Hunt’s UpLabs program, has deployed its platform across hundreds of JB Hunt users spanning the carrier’s intermodal, over-the-road, and dedicated business units, Chief Executive Officer Alex Reed said in an interview with FreightWaves. The tool surfaces internal data and helps customer-facing representatives respond to requests, build reports, and manage service exceptions — work Reed described as the first phase of a broader push into asset utilization.

The deployment matters to carriers and shippers alike because it targets the hardest layer of trucking technology to crack: asset-side operations. Rather than building for brokers — typically the earliest adopters of freight tech — Overroute is working directly with one of the largest asset-based carriers in North America, giving it an unusually detailed view of enterprise workflows from the start.

Reed said the current rollout is deliberately focused on lower-risk automation. The company is piloting appointment-setting capabilities and has already tested what he called “operationally focused data gap calling.” The next phase, expected over the coming months, will move toward helping frontline transportation managers and operations managers make better decisions about driver and asset positioning across JB Hunt’s network.

“I think what I’ve seen coming in is if you look at how these decisions are getting made across the network, the most impactful place you can be is really at the frontline, the transportation managers, the ops managers, where they move the assets, they move the drivers,” said Reed.

Reed framed Overroute’s approach to automation in three tiers: tasks that can be fully automated, tasks that require human approval, and tasks that will always require a human in the loop. Track-and-trace monitoring and customer response fall into the first category today. Asset routing and driver assignment decisions are firmly in the third, at least for now. “Those decisions then compound across the network,” Reed said, arguing that improving frontline decision quality produces outsized downstream effects on backhaul positioning and network balance.

On change management — a persistent obstacle for enterprise AI deployments — Reed said Overroute focuses on demonstrating value at the individual user level before seeking executive buy-in. He likened frontline freight work to Maslow’s hierarchy of needs, with operators spending disproportionate time on low-level, repetitive tasks. “The easiest way we found is to actually show people how we can make their lives better. And then once they actually see that and they have that aha moment, then they’re able to do that,” Reed said. He added that once workers buy in, they often surface new use cases the vendor had not anticipated.

Asked about success rates for AI implementations — a sector where most projects are widely reported to underdeliver — Reed set a demanding internal standard. He said vendors entering enterprise accounts must win early and win consistently, taking on more complex and riskier use cases only after establishing a track record. “You gotta deliver because we’re all looking at this for ROI and we all know that we’re not gonna be around if we can’t deliver ROI with AI,” he said. He acknowledged that once trust is established, carriers and vendors can jointly take on higher-risk projects where occasional failures are mutually accepted.

Overroute is also in early conversations with additional carriers beyond JB Hunt. Reed said the lessons learned inside JB Hunt’s network — particularly around tool adoption at the user level rather than the executive level — are shaping how the company approaches those new relationships.

Overroute has deployed its AI platform across hundreds of JB Hunt users in intermodal, OTR, and dedicated operations, focusing initially on customer exception handling, data retrieval, and report generation.
Asset utilization optimization — targeting frontline transportation and ops managers making driver and load routing decisions — is the company’s stated priority for the next several months.
Reed said AI vendors must aim for near-perfect early win rates when entering enterprise accounts, taking on riskier use cases only after establishing credibility and organizational buy-in.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.