Freight Waves, Connor Wolf, Monday, February 22, 2021
American Trucking Associations has launched a relief effort aimed at helping those in Texas and Louisiana impacted by the recent deadly snowstorm.
In Texas, residents were left without power and water after a historic snowstorm hit the state earlier this month. With efforts underway to restore utilities and provide relief to those in need, ATA launched an effort to get clean water to residents.
“We are asking our trucking family to not only keep all those affected in your thoughts and prayers, but to help ATA coordinate relief efforts,” ATA President Chris Spear said in a Feb. 19 letter to members. “Our friends in Texas need your help.”
At around the same time, the federation had plans underway to get two truckloads delivered to Shreveport, La., which also felt severe effects from the unusual weather for the region.
For both states, each truckload carried 20 pallets with an estimated 960 cases of water. And more shipments were in the pipeline, ATA said, once trucks and drivers were lined up.
In Texas, the earliest shipments were delivered to recipients with the greatest need, including Houston Memorial Hermann Hospital and Catholic Charities of Central Texas. The Texas Trucking Association and the Southwest Movers Association are helping to coordinate those relief efforts on the ground.
“We have a pipeline of support that we can tap when these things come up,” Texas Trucking Association President John Esparza told Transport Topics on Feb. 22. “We start plugging in what we know and where we know [help is needed], whether it’s moving generators or locating potable water or just resourcing water to be used in boilers. You name it. We’re looking to connect to people within the trucking universe to be able to help and they very much responded.”
Esparza noted that the state has a good level of preparedness to coordinate relief efforts due to experience with past natural disasters like hurricanes. While the snowstorm presents different challenges, knowing whom to contact for emergency management or to move supplies is the same, he said. Esparza noted that uncertainty created by the fast-changing situation with the current relief effort is a challenge, but said drivers who have volunteered are providing constant updates about road conditions and availability of fuel.
“A lot of that stuff has to be triaged by the hour,” Esparza said. “Just anything we can do with boots on the ground to evaluate the situation hour by hour as we are going through this.”
In Louisiana, over-the-road carriers Preferred Materials has been helping coordinate efforts between local trucking companies, the state trucking association and ATA.
“We have been working diligently in aiding both state and local governments in relief efforts, as well as working with our area hospitals to provide them with much-needed water 24 hours a day,” company president David Todd Ruple said in a statement to TT. Ruple said he expected to be providing water to area hospitals at least through the week of Feb. 22, and noted that while southern states simply weren’t prepared for such a severe snowstorm, he was glad to see the industry leading the relief effort.
“I am proud of our trucking community,” Ruple said. “We did and are doing what we always do — pulling together and getting much-needed supplies and goods delivered to those in need. That is the heart of the truck driver — to serve others and their communities regardless of the obstacles and hardships they may face.”
ATA is asking members, affiliates and others to consider donations of cash, supplies or transportation to assist with storm relief efforts.
Freight Waves, Corrie White, Tuesday, September 29, 2020
Historically, hurricane season presents abundant and often lucrative freight-hauling opportunities. For weeks or months after a storm passes, affected cities need rebuilding materials, temporary housing units, nonperishable foods, water and generators. Trucking companies and owner-operators can bid on Federal Emergency Management Agency (FEMA) contracts as early as a week or two before a hurricane makes landfall.
But COVID-19’s supply chain disruptions, like restaurant and meat plant closures, led to a reduction of the fleets, some of which couldn’t pivot quickly enough. With a reduction of capacity and general disruptions caused by COVID-19, Senior Vice President of Global Marketing at PowerFleet Craig Montgomery is concerned about the exacerbated strain on our supply chain during events like hurricane recovery. The SONAR chart below shows the climbing Outbound Tender Reject Index (OTRI), which correlates with tightening capacity in the United States.
“It’s hard enough when communications and cellular networks are knocked down, when roads are blocked and warehouses are destroyed,” Montgomery said. “And when you’re trying to bring loads into a COVID-19-affected world, it’s like a Rubik’s cube with 14 sides. It’s just that much harder on our fleets to deal with COVID issues and a natural disaster.”
Over the past six months, the industry has proved its resilience, arriving at a new normal. The beef and poultry plants have come back online. Most stores’ shelves are stocked with toilet paper. But while the industry has achieved a kind of stability, Montgomery wonders about the impact on a still fragile system in the face of hurricanes.
For instance, last week, Tropical Storm Beta delivered an onslaught of rain to the Gulf Coast, making it the 23rd named storm of 2020. While meteorologists from Colorado State University’s Tropical Meteorology Project predicted 2020 to be an active year for hurricanes, they initially predicted only 16 named storms back in April. Hurricane seasons typically run from June to the end of November, but August and September tend to see the highest concentration of storms.
“No Atlantic season on record has had this many named storms through late September, and they’ve definitely caused transportation troubles,” said Nick Austin, director of weather analytics and senior meteorologist at FreightWaves. “Hurricane Laura, a major Category 4 storm with winds of 150 mph at landfall, forced a shutdown of Interstate 10 from eastern Texas into Louisiana in late August. Hurricane Sally, just a couple of weeks later, shut down I-10 from Alabama into western Florida. The Pensacola Bay Bridge remains closed due to damage from Sally. Worse yet, the hurricane season doesn’t officially end until Nov. 30, so more storms are possible. The Gulf of Mexico and tropical Atlantic waters are still quite warm.”
When Hurricane Laura hit the Gulf Coast, the trucking market’s tight capacity coupled with this region’s lack of logistics activity meant relief efforts had to be sourced from Dallas, Shreveport, Louisiana, and other cities with established logistics networks. The tight market also means that many truckers may choose to serve their contracted or spot market loads as opposed to bidding on FEMA contracts.
“It will take a long time to clean up from this,” said Kathy Fulton, executive director of the American Logistics Aid Network (ALAN), the country’s most notable humanitarian logistics organization.
www.ttnews.com, Eric Miller, August 19th, 2020, 4:15 PM
The Director of National Intelligence has extended the deadline to Sept. 30 for a requirement that motor carriers that do business with the federal government locate and purge telecommunications equipment manufactured by five Chinese companies that may be in use in their operations.
The waiver was granted in response to a request by Ellen Lord, the Department of Defense’s under secretary for acquisition and sustainment, who had argued that a waiver to extend the deadline is in the country’s national security interest.
The companies believed to be potential hackers into U.S. intelligence and defense agencies’ information systems are Huawei, ZTE Corp., Hytera, Hikvision and Dahua Technology. The provision also covers any subsidiary or affiliate of the entities, but experts warn that the technologies targeted could be difficult to locate in complex modern corporate systems.
The requirement, included in the 2019 Defense Authorization Act, requires federal government contractors to rid their companies of prohibited components manufactured by the five companies.
“I am granting a temporary waiver under section 889(d)(2) until 30 September 2020 to allow the Department of Defense to continue its contracting activities that would otherwise be prohibited under section 889(a)(l)(B) and to provide additional information to the Office of the Director of National Intelligence to further assess your waiver request,” John Ratcliffe, director of national intelligence, wrote in an Aug. 12 memo to Lord.
“Section 889 [of the law] seeks to prevent certain Chinese technology companies from accessing sensitive and classified information by tapping into devices they designed,” said Bill Wanamaker, executive director of American Trucking Associations’ Government Freight Conference. “All federal contractors, including all modes of freight carriers, have electronic systems that facilitate business processes and operate their equipment.”
Several trade organizations, including the U.S. Chamber of Commerce and ATA, have for several months been on a letter-writing campaign and engaging congressional staff to extend the compliance date by at least one year.
The law pressures federal contractors of every kind to make a determination on compliance by Sept. 30, or risk noncompliance and possible debarment as a contractor if they cannot ensure the components are not present in their systems, Wanamaker said.
Freight logistics services, including trucking, rely heavily on vast information technology systems, according to an ATA analysis.
“This corporate IT inventory is used to order freight, schedule service, provide in-transit visibility to customers, provide proof of delivery, invoice shippers, support electronic shipping documents and pay by third-party payment systems,” the analysis said. “Motor carriers also use typical office computers, networks, internet service providers, routers, portable computers and scanners, cellphones, security systems, and video monitoring of terminals and warehouses.”
ATA’s analysis also noted that cameras are used for 360-degree video recording around trucks to replace rearview mirrors and that “electronic monitoring of engines, transmissions, braking systems, tire pressure, speed, sudden braking, driver fatigue — all these things are a part of modern commercial motor vehicles.”
The newer the truck, the more IT systems are on the truck for safety, equipment management, tracking and maintenance monitoring, according to the analysis.
www.ttnews, Dan Ronan, August 18, 2020, 1:00 PM
Truck tonnage in July declined a seasonally adjusted 8.3% when compared with year-ago levels, and on a monthly basis was down 5.1% from June, American Trucking Associations reported Aug. 18.
The 8.3% drop is the fourth consecutive year-over-year monthly decline.
In July, the ATA For-Hire Truck Tonnage Index equaled 109.6, compared with June’s 115.5. (In calculating the index, 100 equals the year 2015.)
“After a very strong June, for-hire contract freight tonnage, which dominates ATA’s index, slipped in July for a couple of reasons,” ATA Chief Economist Bob Costello said. “It is likely that tonnage was down because many fleets didn’t have the capacity to take advantage of stronger retail freight volumes. Therefore, much of that overflow freight moved to the spot market, which did increase in July.”
Costello said another factor in the decline in tonnage is that the industry is contracting slightly, and there is less available excess capacity.
“Other ATA data shows that for-hire truckload fleets are operating 3% fewer trucks this summer than a year earlier, so it can be difficult to take on a significant amount of additional freight,” he said. “Also, while retail volumes have snapped back strongly, manufacturing output and international trade freight is lagging well behind.”
Confirming Costello’s statement on spot market rates, the DAT Truckload Volume Index released Aug. 13 showed the surge continues across all equipment types. DAT Freight and Analytics operates the industry’s largest online marketplace for spot truckload freight.
Trucking serves as a barometer of the U.S. economy, representing 72.5% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 11.84 billion tons of freight in 2019. Motor carriers collected $791.7 billion, or 80.4% of the total revenue earned by all transport modes.
ATA said that despite July’s decrease, its index was 3.3% above May’s recent low. June’s index was revised slightly, up 8.9% over May from the 8.7% reported July 21.
Meanwhile, the latest Trucking Conditions Index, released July 31 from FTR Intelligence, which tracked the state of the trucking industry through June 30, reached 11.35. That figure is the highest in a decade, and it comes just two months after a record-low April reading of minus 28.66.
Avery Vise, FTR vice president for trucking, told Transport Topics he is not surprised by the volatility in the industry because of the economic damage caused by the COVID-19 pandemic.
“There have been some significant movements over the past four months or so and likely will be for several months to come,” Vise said. “However, it is unclear how long the positive factors affecting the June reading — a combination of higher utilization and strong growth in freight demand and rates — will remain in place.”
The latest FTR report and one from the Cass Freight Index Report for the same period confirmed the deep hole the U.S. economy slid into during the second quarter.
Gross domestic product shrank a record-setting 32.9% in April, May and June, tracking closely with economists’ expectations of how the COVID-19 outbreak impacted the economy during the early months of the pandemic.
The Cass Index, specifically for shipments, registered 0.971 — down 17.8% year-over-year. However, month-over-month, the index climbed 3.5% when compared with May.
“The Cass Freight Index showed sequential volume improvement again in June, although freight volumes remain well below year-ago levels and also below pre-pandemic levels. We were thinking the June rebound would have been stronger, based on what we’re hearing,” the report said. “In our view, U.S. freight volumes (the amount of ‘stuff’ moving around the country) will not return to 2019 levels until 2021 at the earliest. Given the most recent Cass readings, there is still a wide gap to bridge.”
The DAT Truckload Volume Index, a measure of dry van, refrigerated and flatbed loads moved by truckload carriers, rose 2.1% from June and was 3.7% higher than July 2019.
Van, reefer and flatbed volumes and rates ended up positive month-over-month.
In its latest report, DAT said spot rates have steadily increased since May for van, flatbed and reefer. Van rates are up from $1.60 per mile to $2.19 a mile in August. Flatbed rates increased from $1.90 to $2.27 a mile, and reefer rates climbed from $2.03 to $2.42 a mile.
DAT says capacity is loosening, but rates still were moving upward Aug. 10-16.
“Nationally, capacity loosened last week, as evidenced by the lower load-to-truck ratios on the DAT One load board network last week,” the analysis said. “Spot rates remain elevated, though, with a majority of high-traffic lanes seeing higher prices for truckload freight when compared with the previous week.”
www.ttnews.com, Eric Miller, August 10, 2020, 5:45 PM
The postponed International Roadcheck event has been rescheduled for Sept. 9-11, the Commercial Vehicle Safety Alliance announced Aug. 10.
CVSA officials postponed the event in March due to the COVID-19 pandemic.
“Although the coronavirus pandemic understandably shifted priorities and personnel during the spring, the commercial motor vehicle law enforcement community has reasserted its focus on the roadside inspection program and enforcement duties,” CVSA President Sgt. John Samis with the Delaware State Police said in a statement. “Jurisdictions are nearly back to their pre-pandemic capacity with a strengthened concentration on identifying and removing unfit vehicles and drivers from our roadways using federal safety standards and the out-of-service criteria.”
International Roadcheck is a 72-hour stepped-up visibility inspection and enforcement initiative by CVSA-certified inspectors in Canada, Mexico and the U.S., conducting motor vehicle and driver inspections at weigh or inspection stations, designated fixed locations or as part of roving mobile patrols.
During the three-day time frame, law enforcement personnel inspect commercial motor vehicles for compliance with federal regulations and utilize the North American Standard Out-of-Service Criteria to identify critical inspection item violations.
Each year, International Roadcheck places special emphasis on a category of violations. This year’s focus is on the driver requirements component of a roadside inspection. Of the approximately 3.36 million inspections during 2019, 952,938 driver violations were discovered, of which 199,722 were out-of-service conditions.
For the driver portion of an inspection, the inspector will collect and verify the driver’s documents, identify the motor carrier, examine the driver’s license, check record of duty status and review periodic inspection reports. If applicable, the inspector will check the Medical Examiner’s Certificate, Skill Performance Evaluation Certificate and the driver’s daily vehicle inspection report. Inspectors also will check drivers for seat belt usage, illness, fatigue, and apparent alcohol or drug possession or impairment.
Drivers found to be operating without the proper driver credentials, in possession of or under the influence of drugs or alcohol, operating while ill, fatigued or showing other signs of impairment, or in violation of hours-of-service rules may be placed out of service.
The vehicle portion of an inspection includes checking critical vehicle inspection items such as brake systems, cargo securement, coupling devices, drive-line/drive-shaft components, driver’s seat (missing), exhaust systems, frames, fuel systems, lighting devices, steering mechanisms, suspensions, tires, van and open-top trailer bodies, wheels, rims and hubs, and windshield wipers.
If an inspector identifies critical inspection item violations, the inspector will place the vehicle out of service, which will require it to be restricted from traveling until the violations are corrected.
In the U.S., commercial motor vehicle inspections are conducted to check for vehicle and driver compliance with the Federal Motor Carrier Safety Regulations. In Canada, the standards are based on the National Safety Code and various provincial/territorial regulations, while in Mexico, Normas Oficiales Mexicanas are the commercial motor vehicle regulations and standards.
During International Roadcheck, inspectors primarily conduct the North American Standard Level I Inspection, a 37-step procedure that includes two main inspection categories and an examination of driver operating requirements and vehicle mechanical fitness. A third category, hazardous materials/dangerous goods, may also be part of a Level I Inspection.
International Roadcheck is a CVSA program with participation by the Federal Motor Carrier Safety Administration, the Canadian Council of Motor Transport Administrators, Transport Canada, and the Secretaríade Comunicaciones y Transportes, or Ministry of Communications and Transportation of Mexico.
www.ttnews.com, Eleanor Lamb, June 9th, 2020, 3:45 PM
The Federal Motor Carrier Safety Administration has extended and modified its emergency declaration for motor carriers that are providing direct assistance in support of coronavirus-related relief efforts.
The agency announced June 8 that the modified declaration will take effect June 15 and remain in place through July 14. This modification scales back some of the trucking operations that were covered under the earlier exemption, which previously was extended through June 14. The initial emergency declaration was issued March 13, and then expanded March 18.
Like its previous iterations, the declaration applies to all 50 states and the District of Columbia. It continues the exemption from Parts 390-399 of the Federal Motor Carrier Safety Regulations, which cover hours of service, parts and accessories needed for safe operation, and longer combination vehicles.
The modified emergency declaration allows regulatory relief for drivers providing direct assistance in support of emergency efforts related to the virus and is limited to transportation of:
- Livestock and livestock feed.
- Medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19.
- Supplies and equipment necessary for community safety, sanitation and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap and disinfectants.
Direct assistance refers to transportation and relief services provided by a carrier or its drivers associated with the immediate restoration of essential services, such as medical care, or essential supplies related to COVID-19. According to FMCSA’s notice, direct assistance does not include routine commercial deliveries, including mixed loads “with a nominal quantity of qualifying emergency relief added to obtain the benefits of this emergency declaration.”
The previous versions of the emergency declaration stipulated relief for a wider variety of goods, including fuel, raw materials, paper products and groceries.
“FMCSA has concluded that there is no longer a need for emergency relief with respect to the other categories of supplies, equipment and persons covered by the May 13 extension and expansion of [the] emergency declaration, and those categories are therefore no longer covered,” the emergency declaration document states.
FMCSA emphasized that the emergency declaration does not grant drivers relief from regulations such as speed limits. Drivers are not exempt from requirements relating to commercial driver licenses, drugs and alcohol, hazardous materials, and size and weight requirements.
Motor carriers cannot require or allow a fatigued driver to operate a truck. A driver who informs a carrier that he or she needs immediate rest must be given at least 10 consecutive hours before returning to service.
www.ttnews.com, Eugene Mulero, May 26, 2020, 4:00 PM
Legislation that would compensate essential workers who became ill or died from COVID-19 while performing their services was recently introduced by Senate Democrats.
The Pandemic Heroes Compensation Act would establish a fund for those who qualify, such as certain individuals who were required to provide products or services deemed essential during the pandemic.
A summary detailing the bill’s provisions indicated that funds would be appropriated for five years, as needed, to assist with medical costs, loss of employment or business, and burial costs. Also a website would be set up to facilitate with the application process.
Claimants would need to provide information about the extent of their loss, and eligible individuals would receive compensation no later than 20 days after their approval, according to the bill. Family members at home with such essential workers who then became sick through contact also would be eligible.
The legislation has not been scheduled for debate on the floor of the Senate by Republican leaders. The bill was modeled after a fund for individuals whose health was affected by the response to the Sept. 11 attacks.
“Our essential workers risk their health and their lives daily to keep us safe,” Sen. Kirsten Gillibrand (D-N.Y.) said May 21. She is a bill sponsor. “From the beginning of this crisis, they have been serving on the front lines, getting sick, and some unfortunately are dying. Essential workers stepped up for our country; now Congress needs to step up for them.
“The Pandemic Heroes Compensation Act will provide a critical fund to ensure our nation’s heroes and their families receive the resources they need. I am proud to support this important bill in the Senate, and I will work with my colleagues to ensure it becomes law.”
Sen. Richard Blumenthal (D-Conn.), also a sponsor, said, “These heroes on the front line vary widely in jobs from health care professionals and first responders to grocery store employees, delivery drivers, janitorial staff and transit workers. What they have in common is clearly uncommon courage and dedication.
“Front-line workers continue to put their lives on the line, and they and their families deserve more than platitudes; they’ve earned full, fair compensation for the risks they’ve taken on our behalf.”
Other sponsors in the Senate include Tammy Duckworth (D-Ill.) and Ed Markey (D-Mass.).
A version of the legislation had been introduced in the House. Rep. Carolyn Maloney (D-N.Y.), chairwoman of the Oversight and Reform Committee, a sponsor, noted: “In this fight against the coronavirus, it is the first responders, retail workers, transit workers, grocery store clerks, delivery workers, janitorial staff, sanitation workers, mail carriers, hospitality workers, and federal, state and local employees who are on the front lines, walking into the fire every day as they risk their health to make sure we are safe, fed and healthy.”
Other House sponsors include New York Reps. Jerrold Nadler (D) and Peter King (R).
“America will be forever indebted to the first responders and essential workers who put their lives on the line throughout this pandemic,” King added.
The measure is backed by groups representing firefighters, the National Rural Letter Carriers’ Association, and SMART, the International Association of Sheet Metal, Air, Rail and Transportation Workers.
“Our members are heroes moving heroes, and we walk into harm’s way every day,” said Anthony Simon, general chairman/Alt International vice president at SMART Transportation Division. “We take pride in our jobs and our country. The Pandemic Heroes Compensation Act shows that our [New York] delegation is not only about the words. It is about action.”
www.ttnews.com, Eric Miller, May 14, 2020, 6:00 PM
The employees at the Iowa 80 Truckstop have a motto that serves as reminder of their mission: “Without trucks, America stops. Without truck stops, trucks stop.” As the nation continues to struggle with the COVID-19 pandemic, those words are taking on new relevance.
While drivers are facing challenges amid the crisis, so, too are the businesses that provide them respite along the nation’s highways. As in most sectors of the economy, business is down. But truck stops are working to ensure drivers have the essentials they need.
At Iowa 80, the nation’s largest truck stop, showers and restrooms remain open, diesel fuel flows at the pump, impact wrenches spin in the service center, 900 truck parking spaces are available, take-out food is being delivered, scales are open, and the chiropractor and the dentist are seeing patients. But truck stop employees are adjusting to a new normal as it relates to customers, while the company itself confronts a drop-off in business brought on by a steep decline in traffic.
“We still see trucks, but we don’t see many cars,” Heather DeBaillie, vice president of marketing for I-80 Group, told Transport Topics. “We normally get about 5,000 customers a day.” These days, vehicle traffic is down by more than half, she said.
She also noted that interactions with shoppers have changed. “Everything that we’ve always trained our employees to do, which is take the customers to it, show it to the customer, has changed,” DeBaillie said. Now, she said, staffers are instructed to simply point to the items.
“Patience is probably the biggest thing we’ve learned,” she said.
“Truck stops have been hit very hard,” said Lisa Mullings, president of Natso, a trade association representing truck stop owners and operators, noting that in recent months, many have seen about a 50% decline in business. That’s especially true, she said, as it relates to full-service restaurants that, in most cases, are either shutting down or doing take-out only.
“That was a big hit for our industry, just like the entire restaurant association members have been hit really hard, too,” Mullings said. “Especially when you consider the time of year, because when this all started, we were in the height of spring break traffic. That pretty much stopped.”
Pilot Flying J CEO Jimmy Haslam said gasoline sales at his company’s facilities initially fell about 50% but are now trending down about 30%. Diesel sales are down about 15% to 17%, he added. While sales inside the stores are down about 10%, he noted that some goods — like tobacco — are showing an uptick.
Haslam said he’s pleased with how his staffers have responded amid the crisis.
“I think we’ve learned that we can work virtually,” Haslam told TT. “We’re in 44 states, and we’ve been able to do the basic things like billable, payables, collections, close our financial books once a month. I think there are some positions that can probably work at home just as well, if not better, than they do at the support centers.”
Longer-term, he also sees benefit in giving his customers more ways to access services.
“The more we can offer technology to truck drivers or trucking companies, the better off we’re going to be,” he said. “I think you’ll see a big investment in technology to makes things more efficient.”
He also believes the pandemic response has helped the company prioritize. “Rather than having 12 things going on, let’s pick out four or five big ones and really focus on those,” he said.
Mullings has been impressed with the willingness of members to cooperate on common goals. “We all have learned the importance of sharing information,” she said. “I’ve been impressed by our members sharing information with their competitors on things like where to find suppliers that can provide hand sanitizer, or masks for their employees and sharing resources and information about what to do if you have a positive test for COVID-19 within one of your facilities.”
At Love’s Travel Stops, the company’s operations have been adjusted to account for the virus, spokeswoman Caitlin Campbell said. “We have taken proactive steps to help limit exposure and spreading of the virus by changing our food and beverage options and by practicing social distancing with our customers,” Campbell said, noting that the company has installed Plexiglas at all of its stores, restaurants and truck care registers. And all employees are required to wear a face covering.
“Our travel centers have always remained open for business during COVID-19,” Travel Centers of America-Petro spokeswoman Tina Arundel said. She noted that in addition to carryout options at select locations, the company’s convenience store foods are being packaged in a way that prioritizes customer safety.
While all of these measures are necessary, Iowa 80’s DeBaillie said her staffers are trying to keep customers’ spirits high with humorous messages on digital billboards. “We’re trying to lighten the mood a little bit,” she said. “We know it’s starting to wear on people. After all, the truck stop is the place where drivers socialize.”
American Shipper, Kim Link-Wills, May 13, 2020
Ports around the globe will have to change the way they do business in a post-pandemic world.
Port officials already are changing the way they interact. The World Ports Conference was to have taken place in March in Antwerp, Belgium, but the spread of the coronavirus foiled that plan. So on Wednesday, industry thought leaders conducted the first in a series of webinars, this one titled “Business as Usual: Adapting Port Business Models to Survive and Thrive in the Post-COVID-19 Era.”
Port of Los Angeles Executive Director Gene Seroka said the Western Hemisphere’s largest seaport has suffered “two horrible shocks to the supply chain. One were the ill-advised trade policies out of Washington and second COVID-19. The knock-on effects of both will be felt for the rest of this year and into 2021. We simply don’t have the demand in our economy today to support any notion of recovery in our industry for the United States and its major markets — 70% of the U.S. economy is driven by consumer sales products and consumption. That simply is not happening today.”
Seroka predicts “a very slow reemergence of the American economy at the national, state, county and local levels over time.”
The webinar sponsors — the International Association of Ports and Harbors and IHS Markit — also believe that over time industry leaders will gather in person again and noted that the World Ports Conference has been moved to June 23-25, 2021, in Antwerp.
“In the end, I believe we will lose 15% of our imports because of the trade policies, but what it gives us is the opportunity to reinvent ourselves — how we go to market, the fact that we will overinvest in our export segment of the business to help this reemerging economy whenever it takes place,” he said. “We will help American companies get back to the markets overseas they once enjoyed, and those great partnerships will help them explore new markets. And maybe if we have a better balance of trade coming through the Los Angeles gateway, we may have an opportunity to reduce our cost to serve and be more attractive to people who want to participate in the supply chain through Southern California. So there’s some huge upside here.”
There also are huge obstacles, according to Theo Notteboom, an authority on seaports.
Notteboom, a professor at the Shanghai Maritime University, Ghent University and the University of Antwerp, said there is an “avalanche of things that are hitting the ports.”
“We see a huge drop in the exports from Asia — a 15 to 20% drop to Europe and North America,” Notteboom said. “Of course we’ve seen a lot of blanked sailings, about 20% of the network capacity on average of the container shipping lines is now inactive. We have a lot of idle ships, between 2.5 to 3 million TEU of capacity is now idle.”
Notteboom said although he does not expect any bankruptcies among the major shipping lines, they have gone into “survival mode” as flow patterns have been severely disrupted during the pandemic.
Port operations, however, have not had the kind of disruptions that have plagued other parts of the maritime industry, Notteboom said, referring to the crisis of crew members scheduled to be relieved from duty but prohibited from disembarking ships around the world.
“Only a few ports refer to shortages of dockworkers or shortages of truck drivers. It seems that despite these limits that we have right now in terms of how to perform work, things are close to normal at many ports around the world,” he said.
Jan Hoffmann, chief of the trade logistics branch of the United Nations Conference on Trade and Development, agreed port operators are weathering the crisis and also criticized “the fact that seafarers are stuck on the ships and cannot change and cannot fly home. I’m not sure if all port workers are really in solidarity as they could or should be with their colleagues on the ships.”
Seroka said U.S. West Coast ports had help making sure operations were as close to normal as possible.
“I would like to thank International Longshore President Willie Adams and [Pacific Maritime Association President] Jim McKenna for the work that they did to get coastwide rules on safety for our workers during this unprecedented pandemic. There was meeting after meeting, discussions with leadership on both sides to make sure that we had a plan through all 29 ports up and down the west coast of the Pacific,” he said.
“In particular, early on, before we knew a lot about what was happening, we were called by one of our local officials at the ILWU who told us point-blank that our terminals ‘do not have the proper cleaning solution and materials to get the longshoremen and women feeling safe when they hand off equipment.’
“We immediately jumped into action and with our partner agency here in Los Angeles, the Department of Water and Power, we secured 700 gallons of industrial bleach that were quickly diluted by our hazmat team, poured into 32-ounce bottles that staff and myself went out to our local home improvement stores to buy, and distributed to all terminals at the ports of Long Beach and Los Angeles,” Seroka said. “All of that happened within hours, but it set the tone for what we wanted to do on the safety front with our workforce on the waterfront.”
Hoffmann looked at differences between the COVID-19 pandemic and the financial crisis of 2008-09, saying then there was a problem of less demand. Today the problem is with a lack of supply.
“The factories are closing down. The planes are no longer flying, there’s no space in the belly for cargo,” he said, pointing to U.N. figures that estimate global trade will be down 27% in the second quarter of 2020.
Notteboom also sees differences between 2008 and 2020.
“We see much more optimism on how to get out of this situation. Although this is a very serious disease, I think we have more control of how we can get out and how we pick up where we left off. I think overall also, the 2008-2009 crisis was different in the sense that this was something unexpected, at a time when people thought the sky was the limit. … There was a very good market situation just before the crisis,” Notteboom said.
The 2008-09 financial crisis “hit and it led to a lot of pessimism among people,” he continued. “Now I see a lot of optimism. I see people are very anxious to work hard to make sure we can pick up where we left off.
“We also learned from the previous crisis that we have to be resilient, that we have to prepare for sudden shocks. In 2008-2009, nobody was prepared on how to deal with such shocks. Another thing which is quite different from 2008-2009 is that we now have digital tools to help us,” Notteboom said.
Seroka said, “We have to accelerate technology. We’ve been working on this port community system, the only one in the United States, for four years now and I’ve called on the federal government to adopt a nationwide port community system. We’ve learned so much from our colleagues in Europe, Asia and the Middle East. It’s time to enable that technology here now.
“The one thing that I am convinced of, because we spent the time and the expertise and the study to implement our system here, it allowed us to invent and plug in what I now call the Medical Port Optimizer, which has allowed us to save lives. We have the ability to see product before it gets into a normal pipeline, speed it through our port and our LAX airport, and bring that product directly to the front-line hospitals. It has been a difference maker and we need to have ports in the U.S. adopt this method because if we’re going to reemerge as an economy, data is going to drive us and our companies toward that success,” he said.
Hoffmann agreed now is the time for ports to invest in automation and optimization.
“Ports are challenged to reassess their revenue models and business models. They’re also looking at digital transformation. These are two areas where ports and port authorities in particular can take up a very important role and at the same time can start thinking about how they can add to the existing revenue streams,” Hoffmann said. “Even small ports can have a role to play in digital transformation and in the greening of the supply chains.”
Decarbonization efforts should not be set aside during the coronavirus crisis, he said.
“It’s a good thing to accept realities and not wishful thinking and accept that climate change is a real threat and it’s growing exponentially, it’s getting worse,” Hoffmann said.
Notteboom agreed work must continue to meet International Maritime Organization targets for reducing carbon emissions.
“COVID-19 cannot be an excuse to slow down … on green shipping targets,” he said. “We have to make sure that we continue on the path we set out years ago.”
Seroka believes the path ahead will look very different — greener — in a post-coronavirus world.
“In California there will be an emergence of green machinery at our ports and in our trucks and our automobiles that we drive, and we’re going to have to get skilled people around that industry. That means we need to upskill and reskill our workforce,” Seroka said. “We have 30% of our working population [in California] in the transportation sector today. We’re going to need to make sure that those folks and their successors have a pathway to good work in the future as well. And that’s going to come through our decarbonization plan.
“Like many other ports around the world, we’re going to try and accelerate that technology. That workforce development also will be in big play. And I have marveled every time I’ve visited the Port of Antwerp. … The workforce development and training center is a model for all ports to follow around the world,” Seroka said.
“The new economy is going to look very different,” he continued. “We’re going to have to be as nimble as possible to hit the ground running.”
www.freightwaves.com, John Mannes, March 28, 2020
The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
In the wake of 9/11, 11,000 U.S trucking companies folded. Outside of hurricanes and earthquakes, the attacks on the Twin Towers and the Pentagon were the largest insured losses in history. In an effort to regain control, insurance companies raised premiums across industries with trucking taking a direct hit. The notoriously slim margins of the trucking industry meant that anyone who couldn’t get costs under control went under.
Today, the trucking industry is facing a similar vulnerability as a result of COVID-19. This time, it’s unlikely cost cutting alone will steady the industry. The current pandemic is exacerbating driver shortages and putting a strain on the aging drivers holding up the world’s supply chains. When the trucking industry rebounds, technology stands to play a critical role in its recovery.
The next few weeks are going to be hard — really hard. Most big enterprises are in crisis evaluation mode, working overtime to assure shareholders that everything is under control while taking steps to increase employee safety.
Few CEOs had a pandemic preparedness guide sitting in their top desk drawer. Companies are doing the best they can to respond with the resources on-hand. Optional pilots and POCs are on hold in the most affected industries. Innovation teams in some cases have been repurposed entirely to serve as COVID response teams — searching for thermal scanners instead of RPA tools. Their most immediate need is for solutions that can keep drivers safe and help manage cash flow risks.
In the longer term, COVID-19 is forcing conversations around autonomous trucking and remote work to the forefront of the industry. While glitzy tech companies have been preparing for years with Zoom, Tandem and Dropbox, trucking companies are for the first time grappling with what ‘remote’ means for drivers that already operate in the field.
“When a truck driver makes a delivery, he often gets out of his cab and goes into a room to talk to the individual responsible for that unloading facility,” explains Jeff McCaig, owner of Trimac Transportation, the third largest tanker and dry bulk trucking company in North America. “We’re saying don’t do that, do it through the window, do it through your phone but avoid the contact.”
Remote technologies for industries like trucking need to be able to effectively bridge the physical and digital worlds. This means better communications technologies so trucking companies can do more with fewer field resources. It also means better connecting stakeholders so more planning and coordination can happen back at the office and less has to be done ad-hoc by drivers.
“Truck stops that have formerly been available to a driver as he goes on longer haul, some of them are closing down,” McCaig adds. “How do we make sure our drivers have places to rest, to eat and to use hygienic facilities?”
Autonomous technologies are also moving from nice to have to need to have. Trucking companies need options in the event that sick drivers are unable to work. A successful response to COVID-19 hinges on keeping supply chains functioning. We’re already allowing drivers to exceed federally mandated driving time limits in cases where they’re carrying medical supplies. It’s not infeasible to imagine autonomous trucks running some routes in areas where normal traffic has been prohibited.
“The most tactical and strategic issue for trucking is the availability of truck drivers,” explains Trevor Adey, vice president of Trimac Digital. “Truck driver is the largest employer in Canada and one of the largest in the U.S., but the role is not as appealing as it has been in the past.”
As trucking tech continues to grow hotter with recent rounds for companies like Convoy, Flock, Emerge, CloudTrucks and Ike (among many others), hundreds of new startups working on everything from autonomous trucks to digital carriers need to be thoughtful about how their operations and value propositions will evolve as COVID-19 reshapes the industry.
The next few weeks may appear bleak, with churn and sales cycles moving in the wrong direction. Fortunately, demand for trucking is nearly constant. There’s more than enough demand for food and pharmaceuticals to keep the industry humming. Many of the costs in trucking are variable, so while companies are seizing this opportunity to tighten their belts, it’s likely that trucking will emerge as one of the industries best equipped to ramp-up with technology coming out of this pandemic.
If you’re interested in learning more, check out the first episode of Future Proof which features both Jeff and Trevor from Trimac speaking at length about the themes presented above.
John Mannes is an investor at Basis Set Ventures, an early-stage venture capital fund in San Francisco focused on artificial intelligence and automation.