Signs of Cooling???

Are signs of a cooling freight market already apparent?

Over the past 15 months headlines have revolved around the growth of the economy and how it has impacted our supply chains. Consumer spending has been the greatest factor as generous government assistance has left Americans with extra cash. Even as airline travel, lodging, and entertainment have opened back up, retail sales remain strong. This is especially true as we approach the holiday season. The big question on most logistics professionals’ minds, however, is how long will this 15+ month peak season last? A handful of indexes such as Personal Consumption Expenditures, Savings Rates, the CPI, and TEU bookings may already be trending in a cooling direction.

For example, while Service Expenditures have remained above Durable and Nondurable Goods combined throughout the entire pandemic, since Q2 this year PCE Services have really started to pick up steam as COVID fears eased and vaccination counts began to increase. At the same time, Durable Goods seem to have peaked and are in a downward trend. Durable Goods represent items purchased by consumers that last more than 3 years such as electronics, appliances, and furniture. As we’ve discussed in past episodes, the influx in demand of these goods during the pandemic has kept an enormous amount of pressure on our supply chains.

Spending on consumer goods has remained elevated even as consumers began spending money on entertainment, lodging, and travel as the US Personal Savings Rate spent an entire year at or near record levels. However, as of September, the rate has returned to pre-pandemic levels. This is another indicator that without continued Government assistance going out to US households regularly, pandemic-like spending cannot sustain.

 

Another factor that may impact consumer spending in the near future is inflation. The Consumer Price Index (a measure of the average change over time in prices paid by consumers) raised 6.2 percent from Oct 2020 to Oct 2021. That’s the largest 12-month increase since the period ending in November of 1990. While some may argue that the consumer can afford to spend a little more right now, a more relevant argument may be “but for how long at our current pace?”

 

As far as the effect on freight volumes domestically, SONARs Inbound Ocean TEU Volume Index shows us the pace at which inbound TEU bookings have grown over the past three years on average. The YoY jump from 19’ to 20’ and 20’ to 21’ has been remarkable to say the least, and as import volumes remain strong so does the overall demand on all transportation modes.

A different view of the same chart shows bookings trending in a downward progression since their April peak of this year. And while remaining significantly above pre-pandemic levels, the overall bookings trend and some of the other consumer data we discussed, may be a couple of trends to keep an eye on as 2021 ends and next year’s forecasts become relevant.

 

80,000 drivers needed-An overreaction or a call to action?

Today we’re going to talk about the current driver shortage debate and whether or not adding 10’s of thousands of drivers into the current truckload market would alleviate some of the supply chain bottlenecks we’ve all been experiencing over the past year or not.

Now as we’ve talked about in past the problems, we’ve been facing over the past 16 months have not only been supply-related, but demand-related as well. This is one of the fundamental differences between the 2018 capacity shortage and our current environment.

You can see the difference in the data depicted as rejections spiked in 18’ while imports remained relatively flat. Ultimately, caused an overcorrection towards the end of the year, lasting until the start of the pandemic when both imports and rejections skyrocketed.

Now unfortunately before the increase in steady demand a huge round of layoffs and resignations began as the fear of the unknown plagued employment back at the end of March last year. This however for the truck transportation sector was short-lived as consumer demand quickly rebounded, although in between that time many found employment outside of the trucking realm which helped kick start the shift from a shipper’s market to a carrier’s market.

Since summer truck transportation employment overall has returned to pre-covid levels and is within 2% of its record high set back in July 2019. Which at that time, the outbound tender rejection index was below 4%, and the outbound tender volume index was 34% below current figures.

The average van rate per mile, according to the International Trucking Services, was hovering around $2/mile back then. That’s a significant decrease from today’s more than $3.40/mile average. As you can see even as employment has begun to return to pre-covid heights, rates have persisted at record levels as unprecedented demand has remained.

So much so that if we bring back our truck transportation employment compared to volumes, on the Left, and put it next to rejections, on the right, you can see that both rejections and volumes grossly outpace pre-pandemic levels.

Now it’s important to keep in mind, That the overcorrection in capacity from 2018 to 2019 contributed to a record number of trucking bankruptcies as there was a quick and drastic shift from a carrier’s market to a shipper’s market. These figures speak volumes when considering how to avoid the extreme-scale tips and volatility we’ve experienced over the past several years.

I believe the mainstream headline “80k drivers needed” is a bit aggressive as that much capacity entering our current environment would only swell our most congested areas and eventually when restocking and consumer spending did subside lead to a blood bath of carrier bankruptcies like in 2019 when over 1000 trucking companies went belly up.

While I don’t believe any one solution will resolve the problems, we are currently going through. I do believe that drivers, warehouse employees, and dock workers already have unique solutions to the complications we know about and even more important to the ones we don’t know about.

Off The Rails!

Let’s talk about what’s going on in the intermodal realm currently and what’s changed over the past year.


This chart represents a year-over-year percent change in outbound rail container volume in some of the most popular domestic lanes. As you can see volumes are down in all but 2 of some of the most popular lanes which are ATL to Dallas and Dallas to ATL, which together represent a small fraction of the overall market share represented here.

One would think that with volumes down year over year that the amount of containerized freight in the market has decreased in relation but according to monthly totals of TEUs imported into the US, that hypothesis couldn’t be further from the truth.


This treemap depicts imported TEU volumes on a year-over-year basis for the largest ports in the country. As you can see, all are experiencing explosive year-over-year growth. Mostly due to a prolonged increase in consumer spending & shift in buying habits over the past year.


This is another good data set to look at as it shows not only domestic rail container volumes but also International and overall US customs data year over year. As you can see shipments that have cleared customs (in green) are up 19% while outbound international rail volumes (in blue) are down 14%, and Domestic rail container volumes (in orange) are down 3% year over year. Typically, international rail volumes and shipments that have cleared customs to move in conjunction however since July there has been a significant trend in opposition. Which begs the question, how are rail providers not showing an increase in throughput with imports as strong as they are currently?


If you look at these same trends since the end of July when imports and international rail volumes started to significantly diverge you can see an increase in domestic container rail volumes (in orange) and long-haul truckload volumes (in purple). Based on expert feedback from individuals who are much smarter than me on this topic, there are several things causing this to happen.

First, it’s no secret that import volumes have been breaking record after record for the past 15 months. With extended record-breaking activity has come a massive amount of port congestion not just domestically but overseas as well. For example, the anchorages in Shanghai and Ningbo alone make the figures in San Pedro Bay currently look like rookie numbers. With demand remaining strong for imports, empty containers remain a critical factor in the supply chain process.

This has all led to an increase in international containers being transloaded to domestic modes of transportation as rail providers are trying to restrict the number of international containers moving inland. Longer train sizes have also led to slower origin and destination departure times which in turn has increased transit times in some of the most popular rail lanes, even with train speeds increasing.
Sequentially this has continued to make truckload a more desirable mode for shippers looking to replenish inventories, ease backlogs, and meet overall peak demand timelier.

Finally, factor in a chassis pool shortage, warehouse understaffing and congestion, a lack of gate reservations, draymen, shoreman, and a decreased competitive cost advantage in Intermodal versus truckload, and the rail container mystery really starts to unravel.

Cincinnati’s Best Place To Work Finalist

For the ninth time since 2011, Bridge Logistics has been named a finalist for Best Places to Work in Cincinnati!

This year the Cincinnati Business courier recognized 66 finalists to be Cincinnati’s best places to work. These finalists were picked based on an anonymous survey conducted by a third party, Quantum Workplace, to gauge how employees feel about their workplaces. Questions range from “Do you think your company will succeed in the future” to “is your company welcoming of everyone.” The final companies are then scored in the categories such as senior leadership, team effectiveness, work recognition, and benefits along with other companies of similar sizes.

Bridge Logistics has won the Best Places to Work Award three times.

We truly believe in the work we do here at Bridge and the people who help make that possible. Our goal has always been to create an environment that allows people to achieve their goals, believe in themselves, and invest in one another along the way. This recognition is truly a testament to the culture we have worked so hard to create. Our motto has always been, “people first, success delivered,” You see this in the way we treat our customers and carriers with respect and the way we treat our co-workers with servantry.

 

Read the full article here: Best Places to Work – Cincinnati Business Courier (subscription required)

 

Bridge Logistics: Now Powered By McLeod

It has been a busy couple of months for us at Bridge Logistics. Our team has been hard at work switching our system over to Mcleod, a transportation management and trucking software built to provide solutions to the trucking industry.
We are excited about this change for a multitude of reasons. Vice President, Paul Lanham, says Mcleod allows us to keep moving forward, “I believe this new software will allow us new capabilities that will benefit our customers, carriers, and team members like never before. I’m extremely excited to see the efficiencies created from McLeod that will allow us to continue our expansive growth and take us to the next level.”
Change is never easy, but our team has been taking it with stride. Our brokers have been tirelessly practicing our new system before our “go live” date on October 10. To date, we have entered over 900 practice loads and counting. Our trainers at Mcleod commended us saying, Bridge is the most prepared company they have taught. Katie Kaczmarek, an ELITE team member, says, “the beautiful thing about McLeod is that it’s a system where you can achieve the same results using different options to better suit your personal needs.”
Mcleod has opened a whole new level of business Intelligence that Bridge has never had before. We are looking forward to leveraging these new data collections and reporting tools to better inform our customers, carriers, dispatchers, and sales team.
At Bridge, we are committed to learning and growing as the industry does. Ryan Ziemba, our technology lead has been at the forefront of making this change, “McLeod will provide our customers and carriers with superior service through greater efficiency, communication, and automation. I’m mostly excited to see how we will leverage this powerful system that I believe will make Bridge Logistics the most Dynamic brokerage in Cincinnati!”

Flatbeds, Refers, Vans…Oh My!

A few months ago, we talked about three factors that may cause flatbed rates to increase throughout 2021, let’s look at how rates have progressed since then and why.

Since February, national flatbed rejection rates have increased 44% while van and refer rates are still incredibly elevated at 21% and 38%. Their swings seem relatively insignificant when compared to the massive surge in flatbed rejections over the past 8 months.

Previously, typically when rejections increase so do spot rates, and eventually contracted rates follow suit. As you can see here, a tremendous seasonal push in flatbed demand as the weather broke in March sparked a huge spike in rejections until they peaked north of 30% in June.

At the same time, rejections were peaking, June was the last month we saw spot rates rise above contracted rates in a five-month margin narrowing battle.

The magnitude of stickiness surrounding the offset in supply and demand becomes even more apparent when you look at both rejections and spot vs contracted rates at the same time. Also, the increase in compliance after June’s peak can be seen in the approval of higher contracted rates being submitted by carriers.

That is what has transpired since we made our predictions in February but let’s talk about why.

Starting with Total Residential Construction Spending, the most recent release, according to the US Census Bureau, came in at 795 million for August. That’s up 14% from the pre-pandemic high set back in 2006 before the housing bubble burst and 7% or 57 million from the last time we visited this data back in February.

As for Single-Family Housing Starts and Building Permits, both have experienced drop-offs since February however, not due to demand as both data sets are reporting numbers above pre-pandemic levels and have both labor and building material shortages to combat.

Have questions? Feel free to reach out via LinkedIn or visit https://www.bridgelogisticsinc.com/

Why 2021 Is Not The Year To Put Off Your Christmas Shopping

Let’s talk about why this is NOT the year to procrastinate your Christmas shopping, besides not wanting to fight over toys with parents on Christmas Eve, it goes a little further than that.

Let’s talk about the earth-shattering import volumes we’ve been experiencing for over a year now. To help explain those volumes we can look at the Inbound Ocean TEU Index for the US (IOTI).

IOTI is a good forecasting tool, it allows us to see how much demand is expected to reach a given US port 30+ days in advance. This is even more relevant when discussing seasonal goods as continuous above-average import volumes, as we’ve seen over the past year, have led to increased anchorages and above-average dwell times. So much so that many ports are starting to look more like parking lots instead of somewhere to load and unload cargo.

For example, the ever-popular picture of San Pedro Bay, which holds vessels looking to dock at the ports of Los Angeles and Long Beach, currently has 70+ ships anchored waiting to get unloaded. According to The port of LA’s SIGNAL data, the average anchorage time is up to 8.7 days. The port of Long Beach has also been experiencing explosive volumes, shattering monthly cargo records 13 of the last 14 months.

Combined, these ports make up 35% of the domestic import volumes into the US.

This historic volume surge has importers looking for ways to diversify their network and with the Panama Spread or the container rate difference from China to the North American West Coast minus China to the North American East Coast only about $1700 currently. For many importers it makes sense to explore East coast import options and one of those popular alternative solutions for several importers has become The Port of Savannah.

According to the Georgia Ports Authority, Savannah moved a record-breaking 450k containers in July–That’s a 25% increase from last year.

While the numbers for August have yet to be reported, with over 25 ships currently at anchor and future bookings strong, volumes do not seem to be subsiding anytime soon.

Other east coast ports experiencing explosive Year Over Year bookings currently are New York and New Jersey with 173% growth, Baltimore at 76%, Norfolk at 134%, Newark at 257%, and Jacksonville at 420% growth YoY.

The persistent amount of elevated import volumes for over a year now and bookings yet to arrive have and will continue to put pressure on an already maxed out domestic transportation environment. This requires an abundance of capacity operating efficiently to fill store shelves and fulfillment centers in time for Christmas.

When talking about the overall health of the domestic transportation environment SONARs OTRI paints a pretty good picture of the state of the overall TL market. The higher rejections rise the more it signals that supply and demand are out of whack. With rejections remaining above 20% since July of last year, it’s safe to say that demand has been overwhelming supply or capacity for some time now.

Now in “ordinary” market conditions rail would serve as a relief valve however, the pandemic has catapulted e-commerce demand years into the future and has proven to have some stickiness around the Amazon effect or the expectation of getting goods delivered much faster than ever before. Utilizing TL over rail however has proven to be beneficial for many retailers right now, whose biggest fear is not getting enough product on the shelves in time for the approaching holiday season.

We can see why many retailers share this fear as the most recent downstream average for transportation capacity within the Logistics Manager’s Index came in at a very compressed 28.8%.

For those who are not familiar with the, it is a change index not a measure of absolute growth with anything over 50% representing expansion and below 50% representing contraction.

According to the August release published on Sept 7th

“The Transportation Capacity Index remains historically low, indicating continued downward pressure on transportation capacity. Further, our data indicates that the downward pressure on transportation capacity remains extremely strong for downstream firms in supply chain, indicating that companies are facing significant challenges in ramping up shipments for the approaching holiday season.”

All this to say importers are experiencing an extreme amount of bottlenecking across all modes of transportation which directly impacts the speed at which goods are and will continue to be available to consumers.

So, if you want to avoid this…

Don’t wait until the last minute this holiday season or little Jamie may not get his long-awaited Turbo Man after all.

Celebrating America’s Unsung Hero’s

We often don’t think about how our milk got on the shelves or how the computer you ordered got to your doorstep. Some of the unsung heroes in our nation are the truck drivers that deliver and pick up our goods—they are how supply and demand stays alive. Join Bridge Logistics in celebrating National Truck Driver Appreciation Week September 12-18.

2020 was one of the toughest times for truckers across the nation. When the whole world shut down, truck drivers were deemed essential workers causing a greater need for as many drivers as ever. Remember when toilet paper started to disappear? You can thank overtime truck drivers for refilling those shelves quicker than ever. Director of Sales, Chris Seeds, says, “At the end of the day almost everything we consume, purchase, or use reaches its destination via truck. It’s easy to take for granted what hardships take place behind getting something from point A to point B. Truck drivers keep what we rely and count on every day available and accessible. Thank you for keeping our supply chain moving.”

As the country tries to rebound from a disastrous year, truck drivers have stayed consistent in delivering goods. These men and women hardly ever get the recognition they deserve, even on the front lines. Jim Campbell and Paul Lanham, the President’s of Bridge Logistics, say, “We owe a high level of respect and gratitude to America’s truck drivers. They keep our economy moving, food on our table, and clothes on our backs. They ARE the Backbone of America. Thank you to all drivers for their dedication, commitment, & service.”

This week is a way to show appreciation to those who keep America running. Join Bridge Logistics in #ThankATrucker and show gratitude to a trucker this week!

 

National truck driver appreciation

 

 

Building Trust with Your Broker – withSONAR

Building trust with your broker — withSONAR (with video)

Chris Seeds joins withSONAR to talk data-driven broker and customer trust 

Fresh off an appearance on WHAT THE TRUCK?!? Chris Seeds of Bridge Logistics joined Luke Falasca and Kyle Taylor to talk all about the benefits of SONAR technology.

One word came up over and over again: trust.

As sales manager at Bridge Logistics, Seeds says trust is at the core of what makes his business successful and data is the ultimate key to truthful sales deals.

Using the FreightWaves SONAR platform, Seeds has created his own series, What Not to Miss with Chris, aimed at explaining the data metrics supplied by SONAR technology.

His main goal is the “why behind the what” of logistics brokering.

Seeds believes his clients are so thirsty for information that he goes deeper than just what is happening with the freight markets.

He says that the customer needs to be crystal clear on what the seller is saying and vice versa. Companies should “have that childlike curiosity to ask those hard-hitting questions,” and brokers should “make sure that you’re listening instead of reacting,” said Seeds.

Using SONAR data has allowed Bridge to connect with customers on a deeper level, but it also lends some credibility when things go wrong.

Seeds says that dropping the ball as a broker can completely break the trust between a 3PL and a shipper, but using data can back up what happened so “when things go wrong, you have something to validate” it.

Bottom line: You can’t control everything in the freight market, but you can control the data you’re using to explain your decision-making process.

You can find more withSONAR recaps and recaps for all our shows here.

Building trust with your broker — withSONAR (with video)

 

 

Why LinkedIn is your Best Resume

By Kejal Shah, Talent Acquisition Manager

I want to start this conversation by noting 94% of recruiters out there use LinkedIn as their main vetting platform. I must also admit that I fall into that category. Clearly, no bias here..

For the past several years I have seen many candidates reach out to me with copies of their resumes, letters of recommendation, and endless formal references but none of them effectively show all facets of a personal value proposition and what skills they could actually bring to the table through the interviewing process. Now, I will say, having a great resume is important but is not the end-all-means to being hired into a company. Especially with COVID-19 running rampant throughout our workplaces and communities many companies have scaled back their onboarding and maybe don’t look at resumes as much at this time.

If you wish to find a new opportunity that best matches your skills to a company that will appreciate your tremendous value during a time of uncertainty and strong career options; I would suggest considering the research I have done for both career seekers and talent managers across all markets regarding effective usage of LinkedIn…

If we look at the market overall, Kinsta.com quotes a couple of interesting statistics:

  • “[…] A study found that 122 Million people received an interview through LinkedIn, with 35.5 Million having been hired by a person they connected with on the site.”
  • “One good LinkedIn stat for recruiters is that employees sourced through the site are 40% less likely to leave the company within the first 6 months.”

Let’s check out another great resource called expandeddramblings.com:

  • 20,000 US companies use LinkedIn to recruit
  • Keeping your positions up-to-date in your LinkedIn profile makes you 18 times more likely to be found in searches by members and recruiters
  • 100 Million average number of job applications submitted on LinkedIn monthly.”

LinkedIn also does effectively communicate why they are the best means to find a new career on their network platform:

  • “70% of the global workforce is made up of passive talent who aren’t actively job searching, and the remaining 30% are active job seekers.
  • 87% of active and passive candidates are open to new job opportunities.”

While spending time social networking or submitting your resumes through a standard application process might help; LinkedIn truly is the largest reaching market for connection top-talent to fresh, dynamic opportunity and fellow professionals. For my talent managers and recruiters out there; I would submit to you that each industry is different and may require that your resume is the forefront of your hiring process. I would urge to think about how times have changed. The way people connect with our talent management and executive team is entirely different than even just five years ago. Candidates want to reach out through LinkedIn and have a real conversation with leadership teams and if we become too formal and restrictive in our approach, we might miss out on some great people. Do not allow this to happen.. losing great candidates will stunt your corporate growth potential. People wish to know what the culture is like not even just through the recruiters but also the management team training and developing new talent. Also, career opportunities for candidates (before and soon after COVID-19 has passed) will continually become more available in new spaces in the workplace. Candidates will return to the workplaces and we will need to understand their personality on all platforms and not just on paper.

Ultimately that single piece of paper with experience does not carry the same weight it once did. I think we all would agree with this. Not to say, that it isn’t important but that a resume is only a small step of the interviewing process. I have found through personal and professional experience that owning your personal brand on LinkedIn and through the content that we create can make a tremendous impact on the perception people see in us within the LinkedIn and social networking community. Usually, I would submit to you that perception is reality. But this does not mean that every hire from LinkedIn will be a perfect fit or that we should stop using paper resumes all together. I predict within the next 5-8 years paper resumes will, in fact, disappear or moved to fully customizable downloads off LinkedIn. A “One-Stop-Shop”, per say, for employers to hire even more efficiently during and after uncertain times.

So, to all my talent managers and recruiters out there, I invite you to be ready for this shift and start preparing to connect candidates on a much larger scale. As a talent manager, I am a gatekeeper. I hold the key to unlock the future success of the company.

References:

https://kinsta.com/blog/linkedin-statistics/
https://expandedramblings.com/index.php/linkedin-job-statistics/
https://business.linkedin.com/content/dam/business/talent-solutions/global/en_us/c/pdfs/Ultimate-List-of-Hiring-Stats-v02.04.pdf