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

truck fallen over

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A convenient time for a vacation, indeed

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

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

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

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

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

BALTHROP: “One-vehicle fleets.”

FREIGHTWAVES: OK, that’s interesting.

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

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

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

How a truck driver gets stopped for inspection

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Time to start inspecting in the winter

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

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

FREIGHTWAVES: That makes sense.

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

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

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

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

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

Why the Northeast is quietly running out of diesel

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

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

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

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

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

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

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

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

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

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

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

Here’s a breakdown:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The ‘everything shortage’ endures

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

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

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

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

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

Exclusive: Central Freight Lines to shut down after 96 years

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

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

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

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

Kalem agreed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Watch: Central Freight Lines’ impact on the LTL market

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

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

Central Freight Lines statement

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

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

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

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

Brief history of Central Freight Lines

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

Warehouse cramming is about to begin — Freightonomics

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

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

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

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

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

Seasonality pushing rejections and rates higher ahead of the Fourth

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

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

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

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

The Pricing Power Index is based on the following indicators:

Load volumes: Absolute levels positive for carriers, momentum neutral

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

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

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

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

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

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

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

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

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

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

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

Tender rejections: Absolute level and momentum positive for carriers

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

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

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

SONAR: Capacity Trend Market Score (Carriers – VAN)

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

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

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

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

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

Freight rates: Absolute level and momentum positive for carriers

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

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

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

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

Economic stats: Momentum and absolute level neutral

Several economic releases this week are worth noting.

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

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

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

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

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

SONAR: IJC.USA

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

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

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

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

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

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

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

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

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

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

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

Project44 acquires ClearMetal to strengthen predictive tools

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

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

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

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

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

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

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

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

Click here for more articles by Grace Sharkey.

Related Articles:

Project44 expands real-time visibility into China

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

‘Project44’s vision has always been global’

Michigan semi stop uncovers 368 pounds of suspected heroin, 174 handguns

Michigan State Police Motor Carrier Officers stopped a semi-truck Thursday on Interstate 69 near Marshall, Michigan. The commercial vehicle stop happened around 2 p.m. on Sept. 24. Troopers soon discovered far more than a typical roadside inspection. Inside the truck, authorities found hundreds of pounds of suspected heroin and 174 handguns.

Police reported finding 92 bundles containing approximately 167 kilograms of suspected heroin. That equals roughly 368 pounds of narcotics. Officers also recovered 174 handguns from the commercial vehicle. Authorities reported that the firearms had obliterated serial numbers.

Driver arrested after I-69 discovery

Officers arrested the male semi driver following the discovery. Michigan State Police cited drug and weapons-related violations connected to the arrest. Authorities have not publicly identified the motorist. The investigation remains active as officials prepare for an expected prosecution.

The seizure occurred near Marshall in Calhoun County, about 45 miles southeast of Grand Rapids. Interstate 69 provides a major commercial route through southern Michigan. The highway connects the region with Indiana before continuing toward the Canadian border. Commercial trucks regularly use the corridor for regional and cross-border freight movements.

Investigation remains active

Michigan State Police provided FreightWaves with its original announcement and authorized use of the agency’s seizure photo. Investigators declined to release further details because the case remains sensitive. The agency cited concerns about compromising the investigation or expected prosecution. Officials also want to protect the safety of potential witnesses.

MSP has not released additional information about the driver, commercial vehicle or circumstances surrounding the stop. Authorities continue investigating the narcotics and weapons seizure. FreightWaves will update this story if additional details become available.

Why it matters

The discovery shows why commercial vehicle enforcement extends beyond equipment and safety violations. A single truck stop uncovered suspected heroin and 174 handguns with obliterated serial numbers.

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

FBI’s Memphis Cargo Theft Task Force warns cyber schemes put millions in freight at risk – FreightWaves

Federal indictments target nearly $600K in interstate cargo theft tied to Memphis – FreightWaves

Masked thieves cut trailer hinges, steal Black Angus beef in Philadelphia – FreightWaves

Trump to visit Texas plant to tout manufacturing agenda 

President Donald Trump will visit Peterbilt Motors’ manufacturing facility in Denton, Texas, on Thursday, where he is expected to tour the truck plant and speak to workers as the White House promotes its trade and manufacturing policies.

The White House said Trump will use the appearance to highlight his economic agenda and its impact on U.S. manufacturing, NBCDFW reported.

The stop puts one of the country’s best-known heavy-duty truck manufacturing facilities at the center of the administration’s argument that tariffs and other trade policies are encouraging companies to increase domestic production.

Trump is expected to discuss what he views as a U.S. manufacturing resurgence resulting from tariffs, tax policy and deregulation. White House spokeswoman Olivia Wales said the administration’s policies have generated more than 1 million private-sector jobs and trillions of dollars in announced investments.

The administration is also expected to highlight the 25% tariff imposed Nov. 1, 2025, on imported medium- and heavy-duty trucks, along with tariffs on non-USMCA-compliant truck parts.

A White House official told Fox Business that Peterbilt parent PACCAR (NASDAQ: PCAR) has increased U.S. truck production and employment since the tariffs took effect. 

The official credited the policy with more than 1,000 additional jobs at the Denton operation and more than 2,000 across PACCAR’s U.S. operations. Those employment figures were provided by the White House and were not independently confirmed in the materials reviewed by FreightWaves. 

The visit comes at a consequential time for the North American truck manufacturing industry, which is navigating tariffs, changing emissions regulations and a freight market that has constrained demand for new equipment.

Government employment figures also provide a more complicated picture of the broader manufacturing sector. Bureau of Labor Statistics data cited by Fox Business shows the U.S. economy added 807,000 jobs after Trump returned to office in January 2025, while manufacturing employment declined by 35,000 over the same period. 

The administration said the investments in new factories and other domestic projects have not yet been fully reflected in employment data.

Peterbilt’s Texas manufacturing hub

Peterbilt, a division of Bellevue, Washington-based PACCAR, manufactures medium- and heavy-duty commercial trucks. PACCAR also owns Kenworth and European truck manufacturer DAF and produces powertrains and truck components while offering financial and aftermarket services.

The plant started with 81 employees producing about 2.5 trucks per week. By 2016, its workforce had grown to approximately 2,000 and production capacity had increased roughly tenfold from the plant’s originally envisioned maximum of 16 trucks per day.

PACCAR has continued investing in Peterbilt and its Denton operations. The company’s 2025 annual report said Peterbilt held a 14.8% share of the U.S. and Canadian Class 8 market that year, while the Denton factory produced its 10,000th Model 589, according to PACCAR Inc.

Trump’s trip also comes just weeks before the November midterm elections. The White House has indicated the president plans an active domestic travel schedule as the administration promotes its economic record.

Why it matters: Tariffs intended to encourage domestic truck production can reshape where commercial vehicles and components are built while also influencing equipment costs and sourcing decisions for manufacturers and fleets.

Supply Chain Economy: Why Consumer Sentiment is CRASHING Despite Growth

The economy is expanding, yet consumer sentiment is dipping below Global Financial Crisis levels. Dr. Jason Miller breaks down the surprising disconnect, revealing how everything from AI CapEx and rising interest rates to local NIMBYism and GLP-1 drugs are shaping the freight market. Discover which sectors are booming and which are hurting, and what it all means for supply chain pros in 2024 and beyond.

Freight volumes are running about 1.5% above year-ago levels, but that growth is narrowly concentrated in machinery, fabricated metals, and steel — sectors tied almost entirely to the data center construction boom — leaving the broader freight market vulnerable if that buildout stumbles, according to Dr. Jason Miller, who appeared in a recent video interview.

Miller drew a direct parallel to the hydraulic fracturing boom that peaked in 2014 and collapsed into an industrial recession in 2015 and 2016. He said the next six to nine months of data center construction are already “baked in,” but beyond that window, community opposition, AI company finances, and rising interest rates could slow the pipeline. He cited Oracle declaring force majeure on a New Mexico project with Blue Owl Capital as an early warning sign, and noted that OpenAI and Anthropic face mandatory compute payments next year that their revenues may not cover.

“My concern is that if we start to see next year any type of significant slowdown in the data center ecosystem while we still have a very weak single-family housing ecosystem, that would be very bad news from a freight demand standpoint,” Miller said.

On the trucking capacity side, Miller described current conditions as a “Goldilocks zone” — tight enough to support contract rate increases for asset carriers, but not so overheated as to trigger a capacity surge. He cited tender rejection rates around 14%, well below the roughly 28% weekly-average peak seen during the 2021 boom. Three compounding forces removed supply: three consecutive bad years for carriers in 2023, 2024, and 2025; English-language proficiency and non-domiciled CDL enforcement actions; and the Supreme Court’s May ruling in Montgomery v. Carbide, which stripped broker liability protections under state tort law.

Diesel prices above $4 per gallon are acting as an additional brake on capacity re-entry heading into 2027, Miller said. Meanwhile, food and beverage freight demand is down 3% to 4% from a year ago — pressured by GLP-1 drug adoption, reduced discretionary spending, wheat prices at a three-year high, and retaliatory tariffs cutting U.S. export volumes. Miller said the dynamic mirrors 2011–2014, when freight demand grew but bypassed most consumers, keeping sentiment depressed even as GDP expanded.

“The vibes are not good for the consumer,” Miller said, pointing to Conference Board sentiment data that fell sharply in September. He attributed much of the malaise to housing affordability: the median home price is roughly $390,000 to $400,000, creating a gap between qualifying income and median household income that did not exist in 2017–2019. Flatbed carriers dependent on single-family housing starts should plan for a weaker spring 2026 ramp, he warned.

On the macro policy front, Miller said two additional Fed rate hikes — one in October and one in December — would effectively erase all the interest rate cuts made at the end of last year, risking a material freight demand slowdown materializing in 2027. He added that a return to large-scale military conflict involving Iran could push energy prices higher, force the Fed to raise rates further, and compound demand contraction across the freight market.

  • Freight volumes are up ~1.5% year-over-year, driven almost entirely by data center-linked sectors like machinery, fabricated metals, and steel, while food and beverage demand is down 3–4%.
  • Tender rejection rates sit around 14%, well below the ~28% weekly-average 2021 peak; diesel above $4/gallon, regulatory actions, and three straight bad years are constraining capacity re-entry into 2027.
  • Miller warns a data center slowdown beyond the next 6–9 months, combined with weak single-family housing, could be ‘very bad news’ for freight demand, especially if the Fed raises rates in October and December.

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

Diesel Hits Record High, Driver Pay Up 50%

Diesel prices soaring to new highs, driver pay increasing, and operating costs up 40-50% since 2019 are reshaping the freight landscape. David Parker of Covenant Logistics Group joins us to break down the latest SONAR data, discussing everything from tight drayage capacity to the surprising impact of NIMBYism on data center growth and its implications for the supply chain. Discover whether the trucking industry is truly in a “Goldilocks” environment heading into Q4, or if new challenges are on the horizon.

Diesel prices have climbed to an all-time record of $6.53 per gallon, compounding a cost crisis for trucking companies that are already absorbing significant fuel expenses outside their surcharge recovery programs, according to David Parker, founder and CEO of Covenant Logistics, speaking at a FreightWaves studio interview in Chattanooga.

Parker said Covenant Logistics purchases roughly 45 million gallons of fuel per year but recovers only about 80% of those costs through fuel surcharges. Idle time, out-of-route miles, and deadhead trips account for the unrecovered 20%, effectively erasing the margin that carriers once made on fuel. “I’m not saying if you had no idle time, no deadhead, if you had none of those issues, you could break even and make some money,” he said.

The fuel burden is one piece of a broader cost squeeze. Parker said non-fuel operating costs — including driver pay, health insurance, liability insurance, and physical damage coverage — have risen between 40% and 50% since 2019, while contract rates have not kept pace. “Since 2019, operating costs are up between 40 and 50%. My rates are not up 50% since 2019,” he said.

“The only thing I don’t feel bullish about is the operating costs. That we gotta do better, all of us, the whole industry does.” — David Parker, Covenant Logistics Group founder and CEO

On the capacity side, driver pay is rising rapidly, and Parker said the company is securing drivers as a result. He described drayage as one of the tightest pockets of the market, echoing remarks from JB Hunt about difficulty finding drayage capacity. Tender rejections stand at 13.74%, up from roughly 5.5% at the same point last year and compared to a year-end reading of 10.4%, which FreightWaves’ Craig Fuller characterized as indicative of a still-tight market despite being below the 17% peaks seen earlier in the cycle.

Spot rates are running around $3.50 per mile, up approximately 80 to 90 cents from a year ago. Parker noted that contract rates have recently begun surpassing spot rates, which she called a normal and healthy sign. He said his company’s rates are up double digits and expects that trend to continue into the fourth quarter, even as peak season demand signals have been mixed. Shippers began securing peak capacity earlier than ever — a pattern she said mirrors what Knight-Swift reported earlier in the year.

Parker expressed measured optimism heading into year-end, citing healthy tender rejection levels and strong demand from discount retail. He flagged insurance costs as a major unresolved risk, saying there is “no telling” where liability and physical damage premiums will ultimately settle. With new engine regulations on the horizon and OEMs signaling they may pay regulatory fines rather than absorb compliance costs, she warned the industry that additional expense pressure is coming and that rates will need to rise further to keep carriers solvent.

  • Diesel reached a record $6.53/gallon; Covenant Logistics recovers only ~80% of fuel costs through surcharges on 45 million gallons purchased annually.
  • Non-fuel operating costs are up 40–50% since 2019, driven by driver pay, health insurance, liability insurance, and physical damage coverage.
  • Tender rejections sit at 13.74% vs. ~5.5% a year ago, with spot rates near $3.50/mile — up 80–90 cents year over year — and contract rates now surpassing spot rates.

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

The Freight Market is Healthier Than You Think

David Parker, CEO of Covenant Logistics Group, discusses the evolving freight landscape, including the impact of emissions standards, the move away from commoditized OTR, and surprising insights into specialized markets like live chicken hauling. He shares his views on the future of electric and autonomous trucks, and how economic factors like GLP-1 drugs are affecting consumer freight.

The U.S. freight market is in better shape than many carriers believe, according to Covenant Logistics Group founder and CEO David Parker. Speaking in a live studio interview, Parker said load-to-truck ratios cooled from roughly 2-to-1 in the first half of 2025 to 1.3-to-1.5 starting in July and August — a shift he called healthier and more sustainable heading into peak season.

“This is not a bad environment and probably a healthy environment — more so than it was in the first 6 months. And so yeah, our customers are really excited about what they’re expecting for peak season,” Parker said.

Parker said the moderation matters because it is still tight enough to support rate increases without triggering a flood of new market entrants. He noted that in the second quarter, most truckload carriers posted double-digit rate increases, yet operating ratios as a group improved only about 1 point because costs rose just as fast. “We need another double-digit rate if this industry’s gonna stay healthy,” he said. Shippers, Parker added, are more focused on securing capacity than resisting rate hikes, provided pricing remains fair.

On the supply side, Parker reiterated that 2% to 3% of industry capacity has already exited and said more is still leaving, crediting FMCSA enforcement for removing bad actors. He said he will be in Washington, D.C., to get an updated read on regulatory activity. Looking further out, Parker forecast a 3-to-4-year supercycle anchored by domestic manufacturing investment and data center construction, with data centers projected to be under development through at least 2032 and servers requiring replacement every 3 to 5 years.

Covenant’s own growth strategy centers on exiting commoditized over-the-road freight — the company has roughly 100 solo OTR trucks remaining — in favor of high-service niches. A notable example is its 2023 acquisition of Lou Thompson, a live-haul chicken carrier that ran about 230 trucks at purchase and has since grown to 800 trucks. The division hauls birds an average of 48 miles from farms to processing centers, primarily in Arkansas, Delaware, South Carolina, and Georgia, where on-time delivery and weight preservation are critical metrics. Covenant’s fleet is now approximately 60% Freightliner and 40% Peterbilt.

Parker identified AI data centers as another high-value target, describing a new partnership with a large international freight forwarder that operates 400 solo trucks but has no experience with team operations. Covenant is working inside that company to match freight and maximize asset utilization. He said team operations must run in the mid-80s operating ratio to generate an acceptable return, a threshold that also requires trading trucks every 18 months due to high mileage accumulation.

On electric vehicles, Parker said Covenant tested Tesla Semis in California with strong results, but questioned the economics at an estimated purchase price of roughly $350,000 compared to $160,000–$200,000 for a conventional truck. “I have not found one customer willing to pay for that electric truck yet — not one, unless it’s California,” he said. He also flagged structural headwinds in food and beverage freight, noting that some bakery customers are reporting volumes down 10%, which he attributed in part to GLP-1 weight-loss medications changing consumer purchasing behavior.

  • Load-to-truck ratios eased from ~2-to-1 in early 2025 to 1.3-to-1.5 in July–August, which Parker called a healthier market headed into peak season.
  • Covenant’s Lou Thompson chicken-hauling unit grew from 230 to 800 trucks since its 2023 acquisition, with an average length of haul of just 48 miles.
  • Parker sees no customer willing to pay for a ~$350,000 Tesla Semi outside of California incentive programs, citing the cost gap vs. conventional trucks.

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

10 Blind Spots in Cold Chain Risk Management You Might Not Know You Have

Most shippers, by this point, tend to believe they have visibility into their cold chain. What “visibility” truly covers, though, is often little more than surface-level location data. The gap between knowing where a shipment is and knowing what happened to it along the way is where cold chain programs can come across some of their costliest failures, whether the cargo is a pallet of insulin or a truckload of frozen shrimp.

The industries built around temperature-sensitive freight don’t talk to each other much. Pharmaceutical logistics teams are managing global, multimodal shipments that can pass through dozens of handlers under enforceable federal regulation. Food and beverage teams are managing largely regional freight where a bad outcome typically results in spoilage on a relatively small scale. The various types of cold-chain operations have their differences, but ultimately the failures are similar: unconnected data, alerts that arrive too late or too often to act on, and incidents that occur due to a combination of security and quality control lapses.

We asked specialists at Overhaul (which works across temperature control and cargo security applications in life sciences, food and beverage) to walk through where cold chain programs are exposed without realizing it. Often, it’s the assumptions you take for granted that can cause some of the most devastating issues.

1. Location isn’t the same as condition.

The most common cold chain “visibility” tool is a GPS ping, but location alone is insufficient, particularly when it comes to temperature-sensitive loads. 

“GPS tells you where a truck is. It does not tell you whether the product inside still meets the temperature spec,” said Todd Thompson, Director of Enterprise Sales at Overhaul. Thompson works with food and beverage shippers and says that capturing, reporting, and reacting to ambient temperature, product temperatures, shock, and humidity allows for corrective actions to be applied while a shipment is still recoverable. A map pin doesn’t do that.

2. The custody record is unhelpful when it’s scattered.

Most companies aren’t missing chain-of-custody data, but they’re lacking a single place to find it. “Companies are compliant in capturing the data,” Thompson said. “The responsibility to provide this data is understood, but the problem is that the data is scattered in disparate systems and in different formats, therefore delaying responsiveness,” he said. 

Pharmaceutical shipments compound the problem. A single drug delivery to a pharmacy can involve roughly 50 different handlers across the supply chain, according to Melita Marks, Cold Chain Market Advisor at Overhaul.

3. More alerts can lead to poorer visibility through fatigue.

Modern sensors can unfortunately generate a lot of noise, and pharma logistics teams are often leaner than they used to be. “They’re getting disjointed information, with too many alerts,” Marks said. That pushes decisions from proactive to reactive. Left unaddressed, that fatigue becomes its own risk. 

“Pharma companies need smarter systems to pinpoint what to pay attention to,” Marks said, pointing to risk-scoring, shipment triage, and condition data with live events as the fix rather than simply adding more alerts.

4. Passing at the dock doesn’t mean nothing happened.

A shipment can drift out of range repeatedly in transit and still read clean on arrival because the product temperatures recovered before the receiving process started. Without the adequate temperature history combined with location information, it may be almost impossible to track down when and where a lapse occurred, if you’re even aware at all. 

“On frozen, a partial thaw and refreeze on a case of fries does not fail at the dock, it fails in the fryer,” Thompson said. The temperature abuse can surface long after the fact as a shortened shelf life or a store/restaurant claim further down the supply chain. 

5. Disruption response is a speed problem, not a lead-time problem.

Large, forecastable events like hurricanes give shippers time to plan around them. The harder cases are the sudden ones, as in a reefer failure or an unplanned closure. In those types of instances, the question isn’t whether to reroute, but how much product is still usable. 

“In mature cold chain programs, there have been responses, corrective action decisions, and rerouting if needed, that have happened in minutes,” Thompson said. “More typically you are looking at a few hours from alert to action based on product category,” he said. The constraint, he noted, is rarely the event itself, but instead in how fast and complete the condition data reaches the people who can act on it.

6. Entering a regulated lane is a financial decision before it’s a compliance one.

Carriers who might be eyeing an expansion from general reefer freight into pharma often underestimate what it costs to get there. Reefer trailers need to be temperature-mapped empty and loaded against seasonal extremes, and warehouses need their own seasonal temperature and humidity mapping across every storage zone. Typically, pharma customers require a Technical Service Agreement that spells out quality standards and operational responsibilities, backed by annual audits, on top of standing federal requirements like current Good Manufacturing Practices and 21 CFR Part 11 recordkeeping. 

“The real question is not the checklist, it’s the math,” Thompson said. Most of the set-up costs come before the first shipment, while the revenue is normally measured per shipment. So the decision is whether a carrier can win enough pharma volume, at the margin those shipments actually carry, to justify the cost of entry. “The trap is treating it as something you can do partially,” Thompson said. 

A carrier can run excellent food distribution and still lack the recordkeeping infrastructure pharma requires, simply because food never demanded it. That gap doesn’t close gradually on a few loads a month.

7. Carrier vetting hasn’t kept pace with fraud.

Freight theft tactics evolve constantly, and high-value, temperature-controlled loads are a frequent target. 

“The largest problem is double brokering and chameleon or phoenix carriers,” said Danny Ramon, Director of Security Intelligence and Response at Overhaul. Ramon pointed to practical tells that often get missed, including checking a tractor-trailer for remarking, ghost lettering, taped-over signage, or zip-tied license plates. It’s vital to verify not just who’s picking up a load, but also what physically shows up to do it.

8. A security incident and a quality incident are often the same event.

When a load is tampered with or diverted, the fallout is rarely isolated to one department. 

“A security incident, human or malicious, may trigger a quality risk exposure,” Marks said. “Quality ultimately needs to determine if a security or condition issue requires the product to be destroyed.” 

In the moment, logistics teams tend to focus on the operational fix while security wants law enforcement engaged. After the fact, security, quality, and logistics all have to reconvene to document what happened and prevent it from recurring. Ownership of that handoff, done poorly, is yet another point of failure. Liability shifts along the way. A pharma manufacturer, for instance, typically carries financial and regulatory responsibility up to the first wholesaler, at which point the risk and the compliance obligations pass to the next party in the chain.

9. Compromised product re-entering the supply chain happens more than shippers assume.

Stricter serialization has made this rarer in well-regulated markets, but it hasn’t made it rare. Marks estimated that 3% to 4% of pharmaceutical product is expired or destroyed due to temperature mishandling somewhere in the supply chain, and that’s before accounting for diverted product that finds its way back into legitimate-looking inventory. Ramon added that the visibility gap, not just black-market demand, is what lets it happen.

“Many shippers find out about the theft when their customer calls to ask when their shipment should arrive, far past any reasonable chance of recovery,” Ramon said.

10. Condition monitoring isn’t only a pharma-and-food problem.

Categories that don’t seem temperature-sensitive at first glance often are. Humidity affects tobacco. Temperature and shock both affect wine and spirits, given how fragile the packaging is. 

“There is practical applicability of condition monitoring for these industries,” Thompson said, even though security posture there is usually driven by risk tolerance rather than regulation. The stakes are still real, regardless. These categories are heavily taxed, so a loss carries the product’s value plus the tax liability on top of it. 

Chemical shipments carry their own version of the same blind spot. Certain composite materials must stay within tight temperature bands to avoid premature curing or shortened shelf life, without any of the human-safety testing that governs pharma.

Closing the gaps

None of these problems are solved by simply adding another sensor or another alert. What they share is a data problem. Information about a shipment’s location, condition, custody, and security status live in separate systems, held by separate parties, checked at separate times. When something goes wrong, someone has to reconstruct it after the fact.

The starting point doesn’t have to be complicated. Thompson’s advice for food and beverage teams is to pick one shipment that went fine and pull the full custody record on it, start to finish. Who did you have to call, email, or text? How long did you wait for each answer? Did what came back have the detail you needed, and can you verify all of it? The results will identify your gaps, on a day and a shipment with nothing at stake.

On the pharma side, Marks points to a similar shift already underway. Pharma manufacturers, along with their carriers, should be moving away from manual, labor-intensive temperature review toward configurable alarm profiles that match a drug’s own stability data so that minor, expected variation doesn’t consume the same attention as a genuine excursion.

That’s the operating premise behind Overhaul’s platform, in which logistics, quality, and security data for a shipment come together. We’ve covered Overhaul’s name as it pertains to cargo theft coverage, but their team can help your quality and logistics team with a lot more than that.  Learn more at overhaul.com.

Kodiak taps IKEA to launch driverless freight on I-45

Red Kodiak self-driving truck parked outside an IKEA store ahead of the companies' driverless freight launch on I-45

Kodiak AI will haul IKEA freight with no one in the cab later this year, the autonomous trucking company said Tuesday. IKEA Supply is the launch shipper for Kodiak’s driverless long-haul service, which starts on a 219-mile stretch of Interstate 45 in Texas.

The driver-out leg runs primarily between Kodiak’s Houston and Dallas-area facilities. It is part of an established 292-mile delivery route connecting IKEA’s Baytown distribution center with its Frisco store.

Over the past four years, Kodiak has delivered more than 1,300 loads and logged more than 750,000 miles carrying IKEA goods autonomously with a safety observer aboard, founder and CEO Don Burnette wrote in a company post announcing the partnership update.

“Unsupervised driverless operations – no human in the cab – represent a milestone the entire Kodiak team has been tirelessly working toward since Kodiak was founded more than eight years ago,” he wrote.

Kodiak named Dallas-Houston as its long-haul launch lane on Sept. 25. The company began its driverless long-haul launch program in August and said it now consistently completes deliveries between its Lancaster, Texas, hub and Houston without human intervention. On those runs, the safety observer never touched the wheel, including on surface streets, according to Kodiak.

Safety case still open

Before the driver comes out, Kodiak has to finish its highway launch safety case, which the company describes as a structured, evidence-backed argument that the Kodiak Driver can operate without a human aboard in a defined area. Its Autonomy Readiness Measure, the share of claims and evidence in that safety case that are materially complete, stood at 93% for long-haul operations at the end of August, up from 84% in February. Kodiak said it expects to reach 100% and launch driverless operations by year-end.

Kodiak already runs driverless trucks commercially for Atlas Energy Solutions in the Permian Basin, work that began in December 2024. The two companies expect to put that fleet on public roads in early 2027. IKEA’s freight could reach a public highway first.

Last week, Kodiak and PrePass began routing inspection clearances from Kodiak’s driverless trucks into state weigh station systems in Texas and Louisiana. A driverless truck cannot talk to a roadside inspector, so the CVSA Enhanced Inspection clearance travels through PrePass and stays valid for up to 24 hours.

Four years on the IKEA lane

The IKEA service ran seven days a week, “night and day, rain and shine,” Burnette wrote, with what he called “an impressive, nearly perfect on-time delivery record.” The post did not include an on-time percentage.

The runs also taught Kodiak what Burnette called “the little things that really matter”: when and where to launch trucks, exactly when they will arrive in Frisco so unloading can be booked to a specific dock door, and how to turn predictive maintenance data into proactive maintenance plans.

Burnette wrote that the long-haul focus lets the human drivers who remain concentrate on the local jobs “that most prefer.” “They can reduce their time sleeping on the side of the highway and instead be home with family and friends,” he wrote.

He added that Kodiak’s driverless work will continue with IKEA and other customers after the launch.

“Mile by mile, we intend to build trust and gain traction until driver-out service is a routine and everyday part of the long-haul trucking landscape,” he wrote.

Why it matters: IKEA freight is set to be Kodiak’s first driverless long-haul service on a public interstate, ahead of its Permian fleet’s planned move to public roads in early 2027. The launch hinges on Kodiak closing its safety case, which was 93% complete at the end of August.

Arkansas I-40 truck inspections uncover $5.1M in cocaine plus meth and stolen UTV

Arkansas Highway Police announced Sept. 24 that officers uncovered 254 kilograms of cocaine during a commercial vehicle stop along Interstate 40. K9 Mack alerted troopers to the rig during the Arkansas inspection. Officers searched the equipment and also located two kilograms of methamphetamine. Authorities estimated the cocaine’s street value at $5.1 million.

The methamphetamine carried an estimated value of approximately $22,000, according to the agency’s announcement. That discovery represented only one of two significant I-40 enforcement actions. A separate commercial vehicle inspection produced another K-9 alert. This time, K9 Drake led officers toward a different collection of contraband.

Arkansas Highway Police recovered a stolen UTV and additional drugs during a separate commercial vehicle stop along Interstate 40. (Photos: Arkansas Highway Police)

Second truck stop uncovers stolen UTV

Troopers searched that vehicle and recovered 11 pounds of marijuana. Officers also discovered one gram of methamphetamine and 4.2 ounces of mushrooms. Investigators additionally located a stolen UTV during the inspection. Arkansas Highway Police valued the marijuana at approximately $33,000.

Authorities placed the smaller methamphetamine amount near $100 in estimated street value. The agency presented both incidents as separate commercial motor vehicle stops. Each search followed an alert from an Arkansas Highway Police K-9. Both enforcement actions occurred along Interstate 40 in Arkansas.

Key details remain unknown

The announcement focused on the seizures and K-9 alerts from both commercial vehicle stops. Arkansas Highway Police did not provide additional investigative details in the initial post. FreightWaves reached out to the agency for more information before publication. Any response will be added when available.

Why it matters

Commercial vehicle drug seizures show how criminal activity can intersect with legitimate trucking operations. Transportation professionals need visibility into drivers, equipment and shipment activity before freight moves.

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

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Airbus A350 freighter aircraft completes initial test flight

A prototype Airbus A350 freighter takes off on its first test flight with throngs of onlookers watching from the airfield.

Airbus on Tuesday successfully completed the first test flight of its new A350 widebody freighter, marking a major milestone towards the anticipated first commercial delivery of the aircraft in late 2027.

Airbus has tallied 103 orders from 14 customers for the next-generation widebody freighter, which will be the airframer’s first production aircraft effectively able to challenge Boeing’s dominance in the cargo market.

The test flight, which was live streamed by the company, took off from Airbus’ production site in Toulouse, France, reached an altitude of 25,000 feet and lasted four hours and 10 minutes. The aircraft was fitted with special flight test instrumentation and operated by a five-man crew, including three test engineers.

During the inaugural flight, the crew carried out tests focused on verifying the basic airworthiness, fundamental flying qualities, and ensuring basic systems perform as predicted. Flight testing will continue for nine months, after which Airbus will work to secure aircraft type certification for commercial use from the European Union Aviation Safety Agency. Some analysts are skeptical of the Airbus’ timeline and expect the first revenue service to begin in 2028.

A second A350F prototype is at an advanced stage of final assembly and will enter the paint shop in the next few weeks, Airbus said. The manufacturer began designing the plane last decade.

The A350F is based on the highly successful A350-1000 passenger aircraft. Engineers shortened the front section and put the cargo door behind the wing to optimize performance and loading. The main door location will allow airlines to load simultaneously from the main deck and two lower cargo holds without risk of damaging the plane. On the inside, there is a strong metallic floor compared to a metal-composite floor in a passenger plane.

Key features of the freighter include a payload of 111 metric tons, the largest cargo door in the industry at 175 inches wide, a digitally controlled cargo loading system for maneuvering pallets into place on the main deck, and separate air ventilation systems for the crew and cargo hold. Extensive use of composite materials makes the A350 freighter lighter than similar aircraft. Airbus said it will considerably reduce fuel consumption and carbon emissions compared to older freighter aircraft still in use. 

An analysis by trade publication Leeham News shows that the A350F and Boeing’s upcoming 777-8 freighter are within 3% of each other in fuel burn and cash operating costs. Both freighters provide a 20% efficiency improvement over previous-generation cargo jets. The A350 has an advantage because it will reach the market first.

The Airbus A350 freighter takes to the sky for the first time. (Photo: Airbus)

The commonality of the plane with the A350 passenger plane will make it easy for airlines already flying the platform to train pilots on the freighter.

Why It Matters: Airlines and cargo owners are looking for more capacity because the available supply of widebody freighters is dwindling as aging aircraft are retired, new production faces supply chain challenges and international trade continues to grow.

Airbus based many design features on input from cargo airlines.

“We can say it has been built by Airbus, but really it has been designed by the market. The market was sending us a very strong signal. Operators were coming to us to say they wanted choice. They didn’t want just one option in terms of what they could buy for a large freighter,” said Sarah McLaren, head of widebody and freighter marketing, during the live broadcast. 

Another impetus for developing a large freighter came from International Civil Aviation Organization standards requiring manufacturers to end production of legacy aircraft that don’t meet 2028 fuel efficiency and carbon emissions standards. However, the Federal Aviation Administration this month granted Boeing an exemption to sell up to 35 777 cargo jets beyond the Jan. 1, 2028, ICAO deadline.

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

Write to Eric Kulisch at ekulisch@freightwaves.com.

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After Lineage fire, new California laws target cold-storage warehouses

California Gov. Gavin Newsom has signed legislation that will require some cold-storage operators to establish emergency financial resources for affected communities and allow local governments to impose substantially higher penalties for health and safety violations.

The measures, Assembly Bill 817 and Senate Bill 716, follo the June 17 fire at a nearly 500,000-square-foot Lineage cold-storage warehouse in Los Angeles. The blaze burned for eight days, triggering a state emergency declaration and a prolonged cleanup effort amid public-health concerns in surrounding neighborhoods.

AB 817, authored by Assembly member Mark González (D-Los Angeles), makes a contingency fund or insurance coverage for specified community emergency needs a condition of approval for building permits covering certain large cold-storage facilities.

The law is designed to ensure that resources are available for residents when a cold-storage emergency disrupts a neighborhood. Industry opposition groups said the measure could impose new financial obligations on cold-chain companies and ultimately raise costs through the food and pharmaceutical supply chain. The Global Cold Chain Alliance said cities and counties could set required contingency funds from zero to $20 million as a permit condition.

SB 716, sponsored by Sen. Maria Elena Durazo (D-Los Angeles), strengthens local enforcement authority for health and safety violations involving specified nonresidential buildings of at least 20,000 square feet. For qualifying violations that lead to a governor-declared emergency or federal disaster declaration, fines may reach $50,000 per violation.

The enhanced penalties will initially apply in Los Angeles County before expanding to qualifying areas statewide on July 1, 2028. 

Current local penalties can amount to only hundreds or thousands of dollars, Durazo said, an amount she argued was insufficient to reflect the harm stemming from major industrial incidents.

The Los Angeles Fire Department determined the fire originated on the roof at or near a 13,000-panel solar array and involved an electrical event. However, because the precise electrical trigger could not be definitively proven, the official cause remains classified as undetermined.

Lineage said its cleanup and remediation alone would exceed $100 million. That work included removing more than 89 million pounds of spoiled food, demolishing the damaged structure and disinfecting the site.

The bills are California Latino Legislative Caucus priorities and focus on the aftermath of the Lineage warehouse fire in the mostly Hispanic neighborhood, which led to smoke, cleanup challenges and concerns surrounding deteriorating food at the site. Lineage Chief Executive Greg Lehmkuhl said during an earnings call that the company had committed $3.3 million to assist the community after the fire.

“Boyle Heights showed us the lasting impact a major facility emergency can have on a community,” Newsom said in a statement. “These laws strengthen the tools, resources and accountability needed to protect residents and help communities respond when emergencies happen.”

Read more articles by Stuart Chirls here.

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