Adam Humphrey

Where are dry van truckload prices at? With DAT’s most recent data released this week, as well as the BLS’s PPI for general freight trucking, long-distance, truckload [primary services], I wanted to share my thoughts. Two charts below. Thoughts: •Top chart shows DAT’s dry van spot rates (red) and what they call contract rates (black) (including fuel). Both continue to move in parallel. Historically, every major market shift (2014, mid-2017, mid-2020) has corresponded to a sharp uptick in dry van spot rates, inclusive of diesel prices. We just aren’t seeing any signs of such an uptick now, which further solidifies my view that we can write of 2024 as the year the market could turn. It’s time to turn the page to 2025. •Bottom chart shows the producer price index for the commoditized portion of dry van TL freight (which includes fuel). That index continues to move sideways. Historically, as with spot rates (but to a much lesser extent [at least in 2014 and 2017-2018), we will see these rates spike when market cycles change. The BLS’s data likewise is corroborating this hasn’t happened yet. Implication: despite a lot of excitement with the election outcome, the brutal reality is that the dry van truckload sector needs a significant infusion of freight to get out of the current “limbo” conditions where we have seen one cycle end but have yet to see another cycle begin. To continue to echo the prediction I’ve made for several months, the soonest I see the market meaningfully changing towards carriers’ favor would be late Q1 to early Q2 2025. We will need to closely watch demand signals over the coming months, especially data on manufacturing new orders. For the late Q1 to early Q2 market turn to materialize, we will need to see a rapid uptick in new orders over the next few releases from ISM. #supplychain #supplychainmanagement #freight #economics #trucking 

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With the 4th of July holiday fast approaching, I wanted to take a look at where June’s dry van truckload spot market rates stand to get a sense if the market is showing any signs of turning. Two charts below using data from DAT Freight & Analytics. Thoughts: •Top chart shows dry van spot rates as well as dry van broker buy contract rates. Dry Van spot rates, while up $0.06 per mile from the April low, are down $0.03 per mile from June 2023. Given diesel prices are down just $0.08 per gallon from a year ago (https://lnkd.in/g5sUVM8V), fuel isn’t driving this difference. •June 2024’s $0.03 increase over May is quite weak relative to what we have traditionally seen in dry van TL bull markets. In 2014 the increase was $0.11 per mile; in 2017 it was $0.10 per mile; and in 2018 it was $0.17 per mile. For that matter, the increase was $0.10 in 2019 (a down year)! As such, spot prices so far are a sign of a cruel summer—my daughter is obsessed with Taylor Swift—from a pricing standpoint. •Bottom chart shows the dry van spot market cycle indicator (DVSMCI), calculated as the broker buy rate less the spot rate, with the difference divided by the average of the two measures. That ratio is currently 16.6%. While better than last year’s 19.9% reading, we are well away from the 10% threshold where we have tended to see markets flip. Implication: dry van spot market data suggest that folks who made predictions of the dry van truckload market flipping from bear to bull in late Q2 or early Q3 likely made an overly optimistic forecast. I increasingly believe the earliest the market could meaningfully flip is Q2 2025, and this will require many things to go right from carriers’ vantages for this to occur. #supplychain #supplychainmanagement #freight #trucking #truckload

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Q1 has come and gone, and the dry van truckload market did not turn as more optimistic predictions had predicted (https://lnkd.in/gbWQFQB6). Q2 hasn’t looked any better? Why? The answer: demand for truck transportation remains weak. This is in spite of strong year-over-year gains in imports and robust retail trade sales. How can this be the case? Simple: domestic manufacturing still produces the bulk of for-hire trucking demand, and freight-weighted domestic manufacturing remains in a deep slump. One chart below showing this using the seasonally adjusted for-hire trucking ton-mile index that I coauthor. Thoughts: •February’s seasonally adjusted ton-mile reading jumped 1.5% from January’s low reading (which occurred due to the polar vortex) but remains down roughly 2% from this time in 2023 (and remember, we had been in a freight recession for roughly 5 months as of February 2023 [September 2022 saw the first major drop in demand]). •Relative to the seasonally adjusted peak from March 2022, demand for truck transportation has dropped 4%. That may not seem like much, but employment has fallen just 0.3% over this same period (see https://lnkd.in/gdYDGD4j). •For those wondering why demand isn’t stronger given those strong import gains, remember what I’ve been preaching for year(s): imports don’t represent that much freight relative to what we manufacture domestically. Consequently, all the stock analysts focusing on import-centric retail trade are missing the boat (pun intended). Implication: for the dry van truckload market to turn from bear to bull, we either need a much larger loss of capacity (unlikely to happen quickly) or for demand to improve substantially, which will require a sharp rebound in domestic manufacturing activity (also unlikely to happen quickly). As such, I would pencil in “blah” conditions for the immediate future. #supplychain #supplychainmanagement #shipsandshipping #freight #trucking  

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Selecting the right shipping provider is crucial for your import supply chain's success. Here are 5 things to consider: 1. Know your free days before demurrage charges start. 2. Assess how fast and far your product needs to move from the port. 3. Opt for transloading if traveling over 200-250 miles from the port. 4. Decide on the visibility level needed for in-transit freight. 5. Use a single provider for efficiency and prioritized freight handling.  Working with a comprehensive provider like Schneider: - Simplifies your supply chain management - Reduces touchpoints - Prioritizes your success This leads to cost savings and better customer focus.

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The June trucking ton-mile index continues to suggest that for-hire trucking freight demand is moving along the bottom of a trough, with no sign yet of an unseasonal uptick. One chart below. Thoughts: •This chart shows seasonally adjusted trucking ton-miles back to January 2013 (to capture the past several freight market cycles). On a seasonally adjusted basis, June 2024 was down 0.4% from May 2024 and down 0.7% from June 2023. The “good” news” is that this is one of the smallest negative seasonally adjusted year-over-year readings since the start of the current freight recession, providing more evidence that we are indeed at a bottom regarding demand. •Concerning sectors driving the year-over-year weakness, we continue to see negative year-over-year readings for quarrying and oil & gas well drilling, nonmetallic mineral product manufacturing, machinery manufacturing, fabricated metal product manufacturing, primary metal manufacturing, furniture manufacturing & wholesaling, lumber & construction supplies wholesaling, metal wholesaling, and machinery wholesaling. The common theme is these sectors all are interest rate centric regarding demand. •Even if the FOMC cuts interest rates by 50 basis points in September, as was noted in Bloomberg recently (https://lnkd.in/e2cbrjYD), it’s too late to turn around the housing market. Q2 2025 is when effects will meaningfully materialize (not coincidentally the same period I’ve repeatedly noted is the first realistic time frame for the dry van truckload market to turn bullish from a pricing standpoint). Implication: the seasonal tightening of capacity we saw in the truckload sector in June wasn’t due so much to strong overall demand, but rather capacity exit since last year. This said, bull markets don’t begin because too much capacity exits; they begin because of sharp increases in demand. I don’t see such increases occurring in 2024. #supplychain #supplychainmanagement #freight #trucking #markets  

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The August for-hire trucking ton-mile index shows that freight volumes continue to move along the bottom of a trough, with no sign of substantial improvement. One chart below shows seasonally adjusted trucking ton-miles from January 2004 through August 2024. Thoughts: •The current freight recession is in its 29th month if we use the March 2022 peak. Freight volumes are down slightly year-on-year, but there is simply no sign for improvement just yet (we keep skipping along a trough, one month up, one month down, but volumes moving horizontally). •These data incorporated the BEA’s annual benchmarking of the price deflators for wholesale trade. This resulted in a sharper drop in freight volumes starting around September 2022. On a quarterly basis, the annual benchmarking shifted peak freight volumes from Q2 2022 to Q1 2022. •As I’ve suggested before, I believe there is good reason to suspect that annual benchmarking for the industrial production data will ultimately shift the current estimates of freight demand down an additional 1-2%, which means current freight volumes are right in line with where they were in 2019. •It is worth emphasizing again that, while we are in a freight recession, in terms of magnitude of freight decline, this current freight recession is maybe 1/3rd the size of the 2007-2009 freight recession brought about by the Global Financial Crisis. Implication: freight volumes continue to move along the bottom of a trough at roughly the same levels we observed in 2019. As there is strong reason to suspect supply is at the same level we saw in 2019, this suggests we should expect normal seasonal tightening as we move into November and December, with loosening in January. Assuming a few more interest rate cuts, there is the chance for a true increase in freight demand to start materializing in March or April. As such, as shippers prepare for bid season, it is worth having contingency plans for capacity tightening in Q2 and Q3 2025. #supplychain #supplychainmanagement #freight #trucking #shipsandshipping #logistics

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C.H. Robinson automates full freight shipment lifecycle with generative AI #inspiresce.ai #feedly https://buff.ly/4fwk874 In a Trustworthy AI-first O2C process, potential new roles could include AI Process Optimization Manager, Data Quality and Integrity Specialist, Ethics and Compliance Officer, and Customer Experience AI Specialist. SCOR DS processes affected include Plan Order, Plan Fulfill, Order, and Fulfill, scor.ascm.org. Are you ready?

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2 Comments

Now that we are halfway through July, I wanted to look at where the dry van truckload spot market was at. Using data from DAT Freight & Analytics, I’ve calculated the dry van spot market cycle indictor as broker buy contract rates less dry van TL spot rates divided by the average of the two series. One chart below. Thoughts: •Historically, when this ratio falls below 10%, we tend to see a bull market pricing cycle begin, which is picked up well the Bureau of Labor Statistics primary service producer price index for general freight trucking, long-distance, truckload (https://lnkd.in/gUXXNHrd). Conversely, anytime we see the series move above 15%, we enter a bear market pricing cycle. Key dates for bull cycles labeled in black, bear cycles in red. These dates mirror swings in observed contract & spot rates picked up by BLS. •The bad news for carriers is that July’s reading of 15.8% is well away from the 10% threshold. As such, there aren’t signs of the market being ready to turn. •For the market to turn, we need more freight demand. Unfortunately, as I’ve been noting frequently, demand conditions just aren’t great now. For example, Cass Shipments, which tracks the trucking ton-mile index quite closely, fell in June to the lowest level since the recovery from the COVID-19 pandemic (https://lnkd.in/gAZb34hZ).  As I’ll share next week, machinery manufacturing and wholesaling is especially weak. Implication: I continue to see few signs that the dry van truckload sector will enter a bull market pricing cycle in 2024. It increasingly looks like any capacity tightening felt in June was just a return of seasonality. Continued weakness in pricing and freight demand reinforces my emphasis on why domestic manufacturing activity must be front and center in discussions about freight demand, with less attention given to retail sales. #supplychain #supplychainmanagement #freight #trucking #economics #markets

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When you find yourself in a market where every dollar matters, you must make sure your dollars are driving efficiency. More importantly, You MUST be able to articulate that return. That is where workflow AI has helped the most... We have been able to scale up, without the need to increase headcount for a manual process, making the ROI highly measurable.

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Great points and added a few more steps to this guide by Ryan. When evaluating a SaaS investment, make sure you’ve thought through the ROI. Step five: ask yourself, "What is the expected ROI here?" Efficiency gains from revenue addition, cost avoidance, or headcount reduction should yield a minimum return of 3-5x, and most freighttech solutions range closer to 5-10x. For example, if you're paying $300K, you should expect at least $1.5-3M in returns. Step six is crucial: who will champion this product internally and drive full compliance and adoption? If the answer is no one, then don’t proceed. Whether it’s freighttech, Salesforce, or any other solution, you simply won’t see value if your team isn’t held accountable for compliance and adoption. It’s like buying a Ferrari only to park it in the garage or drive in first gear—why own it at all? In today’s competitive landscape, using technology effectively isn’t optional; it’s the price of admission. Fully leverage these tools, or risk getting outpaced by those who do.

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One statement I routinely hear or read is surprise at how dry van truckload capacity has been so resilient given the collapse of commoditized over-the-road dry van TL lanes. Apart from abnormal profits earned in 2021 and 2022 helping keep carriers afloat, I believe another reason for the resilience of capacity is that many other services these carriers offer have not seen nearly as precipitous of a drop. One chart below showing this. Thoughts: •This chart compares the full producer price index (PPI) for general freight trucking, long-distance, truckload (NAICS 484121) (full PPI) versus the primary service PPI (which captures generic dry van services). Prior to COVID-19, these two series moved in unison. However, since late 2022, they have sharply diverged, with the full PPI falling far less (it currently hovers ~35% above pre-COVID levels, compared with 15% for the primary service PPI). Both indexes include fuel surcharges. •I’ve checked with the BLS economist who collects these data, and what we are seeing isn’t the effect of reweighing or other methodological changes. Rather, the only conclusion is that other services (which account for ~1/3rd of revenue for establishments classified as primarily over-the-road TL carriers) have shown much greater resilience. •These services could include dedicated contract carriage, warehousing and storage, specialized TL transportation, or intermodal. When you think about large public TL carriers like JB Hunt, you can see services like intermodal and dedicated operations have shown much greater price stickiness. Implication: the greater resilience of the PPI for all services offered by dry van truckload carriers helps explain why the sharp decline in rates for the commoditized portion of TL services hasn’t caused a larger shakeout of industry capacity (in addition to record profits earned in 2021 and 2022). #supplychain #supplychainmanagement #freight #trucking #truckload

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The Supply Chain Visibility Puzzle: Why the Market is So Confusing 😕 The average Fortune 1000 company has between 15-25 different supply chain systems of record (ERPs, WMSs, TMSs, OMSs, Planning, Replenishment, etc.) Achieving internal visibility across all these systems is hard enough, but extending that visibility across external stakeholders (carriers, suppliers, 3PLs, customers, etc.) can be daunting for most organizations. Oh, it gets worse. In a world where supply chain complexity is growing, the number and types of systems meant to help analyze and provide visibility to those supply chains is also becoming more complex, fragmented, and confusing. Many solution providers provide important but small pieces to the Supply Chain Visibility puzzle. Customers are often left with more systems, more data integration, more complexity, and more confusion. Below please find a quick cheat sheet of the key systems that offer various types of visibility within the supply chain. By understanding the role each system plays—whether it's external collaboration, internal operations, or transportation tracking—you can gain deeper insight into how visibility drives efficiency and decision-making across your entire network. 𝗠𝘂𝗹𝘁𝗶–𝗘𝗻𝘁𝗲𝗿𝗽𝗿𝗶𝘀𝗲 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗡𝗲𝘁𝘄𝗼𝗿𝗸𝘀 (𝗠𝗘𝗦𝗖𝗕𝗡𝘀) ✅𝗪𝗵𝗮𝘁 𝗜𝘁 𝗜𝘀: A platform that connects multiple companies in a supply chain. ✅𝗗𝗮𝘁𝗮 𝗧𝘆𝗽𝗲: Works with external data (suppliers, carriers, shippers). ✅𝗣𝘂𝗿𝗽𝗼𝘀𝗲: Facilitates real-time collaboration and data sharing across procurement, logistics, and manufacturing. 𝗥𝗲𝗮𝗹-𝗧𝗶𝗺𝗲 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁𝗮𝘁𝗶𝗼𝗻 𝗩𝗶𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗣𝗹𝗮𝘁𝗳𝗼𝗿𝗺𝘀 (𝗥𝗧𝗧𝗩𝗣𝘀) ✅𝗪𝗵𝗮𝘁 𝗜𝘁 𝗜𝘀: A system for tracking shipments and logistics in real time. ✅𝗗𝗮𝘁𝗮 𝗧𝘆𝗽𝗲: Works with external transportation data from carriers and logistics partners. ✅𝗣𝘂𝗿𝗽𝗼𝘀𝗲: Provides real-time insights on the location, status, and delivery times of goods in transit. 𝗪𝗮𝗿𝗲𝗵𝗼𝘂𝘀𝗲 𝗔𝗻𝗮𝗹𝘆𝘁𝗶𝗰𝘀 𝗦𝘆𝘀𝘁𝗲𝗺𝘀 (𝗪𝗔𝗦𝘀) ✅𝗪𝗵𝗮𝘁 𝗜𝘁 𝗜𝘀: Analytics for managing and optimizing daily warehouse operations across all systems in the 4 walls (WMS, LMS, WCS, MHE, HR, and Time Tracking). ✅𝗗𝗮𝘁𝗮 𝗧𝘆𝗽𝗲: Works with internal data (inventory, labor, space utilization). ✅𝗣𝘂𝗿𝗽𝗼𝘀𝗲: Provides real-time visibility into warehouse activities for efficient handling, storage, and movement of goods as well as trend reporting and analytics over time. 𝗘𝗻𝗱-𝘁𝗼-𝗘𝗻𝗱 𝗩𝗶𝘀𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗦𝘆𝘀𝘁𝗲𝗺𝘀 ✅𝗪𝗵𝗮𝘁 𝗜𝘁 𝗜𝘀: A central platform that unifies and consolidates supply chain data. ✅𝗗𝗮𝘁𝗮 𝗧𝘆𝗽𝗲: Works with internal data (inventory, orders, shipments, demand). ✅𝗣𝘂𝗿𝗽𝗼𝘀𝗲: Eliminates data silos to provide a cohesive view of the entire supply chain. Any systems I missed? 👇 Comment "Visibility" below and I will send you full PDF cheat sheet that includes "Key Benefits" of each solution #supplychain

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Selecting the right shipping provider is crucial for your import supply chain's success. Here are 5 things to consider: 1. Know your free days before demurrage charges start. 2. Assess how fast and far your product needs to move from the port. 3. Opt for transloading if traveling over 200-250 miles from the port. 4. Decide on the visibility level needed for in-transit freight. 5. Use a single provider for efficiency and prioritized freight handling.  Working with a comprehensive provider like Schneider: - Simplifies your supply chain management - Reduces touchpoints - Prioritizes your success This leads to cost savings and better customer focus.

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LTL should not be viewed merely as a secondary choice but rather as a key component that bridges the voids within your transportation framework. Discover three effective strategies for incorporating LTL into your multimodal strategy to fully leverage its capabilities. I suggest checking out this guide on LTL: http://sndr.pro/5M

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For years, I've been searching for a general theoretical explanation to explain the onset of bull market dry van truckload cycles. The three bull markets requiring explanation started around Q1/Q2 2014, Q2/Q3 2017, and Q3 2020. The story can't be about aggregate demand, as total demand in Q3 2020 was actually down from Q3 2019 because of slow heavy manufacturing production. However, reading this paper by George & Kuhn (2019; https://lnkd.in/gzM_UGxB), I believe I now have an explanation, sketched below (and in the image). •The crux of the argument is that bull market pricing cycles occur when an increasing percentage of dry van TL carriers reach full capacity utilization. As capacity is fixed in the near-term and carriers experiencing convex costs as they approach full capacity utilization, there is a point where they can't service any more demand. Nothing too surprising here. •The question: what can cause an increasing percentage of carriers to reach full utilization? One situation is a general increase in demand across many carriers (what economists would call a positive demand shock). This occurred in 2014 and 2017. •Where the cited article comes into play: we can see more carriers reach maximum capacity utilization even if a demand shock is on average negative (as in Q3 2020 vs Q3 2019) if the standard deviation of those firm-level demand shocks gets much wider. This is exactly what happened with the pandemic, with some firms such as building material retailers seeing huge surges of demand, whereas others like department scores saw sales plunge. •The fact we have many very large demand shocks (as captured by the larger standard deviation) pushes more carriers to their capacity utilization limit. Hence more freight rejected and placed on the spot market. We have just explained Q3 2020. Implication: I'm curious the thoughts y'all have about this explanation. To the best of my knowledge, I'm the first to draw on the concept of how the standard deviation of carrier-level demand shocks showed a huge increase in standard deviation after the COVID-19 pandemic's onset.

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Great conversation with Mary O'Connell from FreightWaves on the opportunities of AI and machine learning in the logistics industry! Always appreciate Mary's insightful perspective and engaging discussions. #AI #MachineLearning #Logistics #FreightWaves

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I do not care what anyone tells you- Your LTL shipment is NOT guaranteed!! Read the fine print when choosing the guaranteed LTL option to ensure you DO get a refund should it not deliver on time. 👉 LTL is consolidated with how many other shippers’ pallets? 👉 It’s a cost-effective way to ship, but if it’s time sensitive - it’s not the way to go. 👉 If you choose the lowest tiered carrier - please know you run the risk of delays even more so!! (If you order a filet mignon from a buffet… likely it’s not even a filet. You get what you pay for) 👉 Roll the dice, miss the deadline & I bet you costed yourself more money trying LTL when dedicated was the right option all along! LTL is a solid option, BUT… again. Consolidated. So with that- 👉 Pick a carrier strongest in that region with ample trucks to ensure you’re more likely to meet the deadline 👉 Please make sure you weigh/measure/categorize the freight properly to avoid any delays/invoice audits 👉 If possible, ship a couple days ahead (especially with holidays & weather rapidly approaching) to meet your deadline! But please please, heed my advice… If the shipment is truly critical/time sensitive… Know that LTL is NOT guaranteed. It’s not a dedicated driver. You can call your broker 5,000 times in one day for an update, but the updates can’t be fast because imagine how many other shippers are also calling dispatchers. Imagine how many other shipments are getting held up because Joe on the dock forgot to get the pallet ready in time, etc etc. #LTL #3PL #NOTGuaranteed #FreightBroker #TimeSensitive

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Package shippers Watch service levels the next 7-10 days. Market package volume will be high. [vs the average] Thanks in part to Amazon. And … Walmart Best Buy Kohl’s Home Depot Macy’s Costco Wayfair And likely hundreds more. It’s a nice peak pressure test. [albeit small] So watch carrier delivery performance. Stay in close contact with carriers. Assess the results. And make last-minute peak adjustments. #ecommerce #retailing #logistics

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