Kyle Bertin

If I were sitting at KKR or Shopify holding the senior debt at Flexport, I’d be benchmarking the asset and asking serious questions. Between NFI partnering with Transfix and UNIS rolling out Item.com as cash flow-positive competitors, both backed by large real estate balance sheets, I’m struggling to understand Flexport’s business case if/when they seek additional capital. Both competitors have developed automation, integrations, and partnerships in a fraction of the time. Most importantly, they have a proven track record of self-funding innovation with sustainable cost structures and the best tech talent I’ve encountered, consistently leaving their VC-funded competitors barely visible in the rearview mirror. My takeaway: When leaders focus on building a superior product rather than merely promoting it, the product always wins! #transloading #ecommerce #warehousing #distribution

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3 Comments

I have long suspected FreightWaves data on truckload tender volumes and accepted loads are strongly weighted towards consumer-centric freight, especially containerized imports. Their most recent market update provides more evidence for my claim. Consider the following: •Accepted tenders have been up ~7% in 2024 from 2023. Do you know what else has been up by a similar amount in 2024 from 2023? Metric tonnage of containerized waterborne imports from Asia, which are up 14.5% year-over-year for 2024 from 2023 on a year-to-date basis. •The article mentions that tender volumes are up 15.8% today than in 2019. As tender rejection rates in 2019 and today are similar, tender volumes and load volumes would result in similar conclusions. I'm very confident that this isn't the case when you look at all of trucking freight (my trucking ton-mile index's most recent readings are within 2% of 2019 levels). However, containerized imports have steadily increased since 2019 and are following the pre-COVID trendline (and are up by roughly the amount FW's is reporting for their trucking volume data). Implication: you need to look closely at different data sources for trucking freight volumes to try and infer what industries receive the most weight. I've long felt Cass is industrial-heavy. FreightWaves appears to be the opposite. My own trucking ton-mile index is heavily slanted towards domestic manufacturing (specifically food, chemicals ex pharma, nonmetallic mineral products, paper, and primary metals) because of the Commodity Flow Survey. Things to keep in mind as you select which indexes to give more weight when undertaking strategic planning (e.g., if you are a carrier with lots of exposure to containerized imports, FreightWaves' data would likely be your preferred metric). #supplychain #supplychainmanagement #shipsandshipping #freight #trucking https://lnkd.in/giQiCCHf

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Adding carriers ≠ carrier diversification Carrier diversification is … -a mindset -a thought process That was my focus in this article. Published 3+ years ago. Retailers are exploring alternative carriers. [that’s good] Some are adding alternative carriers. [that’s better] But how many are making a mindset change? By the looks of parcel market share changes, not many. [or at least not enough] There is no shortage of carrier options. Technology is widely available to enable carriers. But none of it matters. Until a mindset shift occurs. #ecommerce #retailing #logistics

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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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47 Comments

What are we learning from quarterly earnings in transportation? XPO delivered outstanding results this quarter, beating analyst expectations. Yield shot up 7%, and earnings per share exceeded analyst forecasts by over 12%. Meanwhile, Werner Enterprises is winning contractual rate increases. Is the next freight growth cycle finally starting? #supplychain #transportation #turnaround https://lnkd.in/eThCQECa

37

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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Trucking firms tumble after JB Hunt, Knight-Swift signal longer road to recovery; Under-21 driver pilot program a bust with fleets as FMCSA seeks changes ; Prologis warns of slowing industrial real-estate market; Descartes Systems Group’s study reveals 54% of supply chain and logistics operations are prioritizing automation to mitigate workforce shortages; World Trade Organization members hold focused discussions on harnessing digitalization to facilitate trade; How Amazon became the largest private EV charging operator in the US; and the rest of this week's #supplychain and #logistics news -- plus the Red Sox and Song of the Week: “Run Away With Me” by Cold War Kids https://lnkd.in/eHK7Cm2a

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2 Comments

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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New Episode of Kev Talks Podcast: Real World Global Logistics In our latest episode, Weston LaBar shares his insights on logistics, technology, and industry change. Recorded with both Kevins (Kevin Higgins) in the same room in Northwest Arkansas, This setup brought a fresh dynamic to the conversation—clear, straightforward, and loaded with practical takeaways as well as covering timely and essential topics in supply chain and logistics. Key Topics: AI in Logistics: Weston shares how AI can help but stresses the importance of quality data. Data Sharing: Open data can improve logistics efficiency, but collaboration among players is essential. Sustainability: We look at the push for sustainable practices and how it impacts shippers. Policy Advocacy: Weston discusses his work at the Harbor Trucking Association and the need for continuous improvement in logistics policies. Career Advice: Tips for future leaders—embrace mentorship, learn continuously, and network actively. Radical Candor in Leadership: Weston advocates for open communication to tackle industry challenges. If logistics and supply chain innovation are on your radar, this episode has actionable insights to consider. 🎧 Listen now (& Subscribe): Spotify https://lnkd.in/gg7UN5YP Apple Podcasts https://lnkd.in/gGR2uZTZ YouTube https://lnkd.in/gHtGmdqj

14

Another logistics M&A announcement: sennder just acquired C.H. Robinson's European transportation business. What's noteworthy about this deal: * Both sides win * It gives CH Robinson the opportunity to simplify, and exit the European market, to focus on its core North American business * It enables Sennder to double in size, to $1.5B in revenue, to become top-5 in Europe, and to boost its network density (which should strengthen margins) Over the course of 2024-2025, I predict we will see more "asset trades" that generate shared success by enabling both buyers and sellers to double down on their core business. In addition, I believe we will see more M&A in European logistics. Feedback welcome! #logistics #supplychain #acquisition https://lnkd.in/egT5HzV4

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What consumers need to know about tariffs is that FreightWaves seems bent on advancing an incorrect narrative that tariffs won't increase consumer prices (https://lnkd.in/gwQdw4RK). Here are some flaws with this article posted yesterday: •Amiti et al. (2019; Journal of Economic Perspectives https://lnkd.in/gdGZGUE5) report, "In the wake of this increase in trade protection [following the Trump Tariffs], the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods." Complete pass-through = consumers paid higher prices because we didn't see cost of imported goods from China decline. Simple economics here. •As noted in the quote above from Amiti et al. (2019), we will see a reduction in the variety of goods that are imported under tariffs. That is a negative for consumer welfare, as it reduces choice. •There is no evidence that tariffs resulted in an increase in manufacturing employment in industries that received tariff protection (https://lnkd.in/gVUDYjrU), and industries targeted for retaliation shed payrolls. I'm sorry folks, jobs lost to offshoring are gone forever. Let's stop living in the past and wanting to assemble small electronic appliances and apparel in the U.S. again. •Tariffs on imported intermediate inputs used by U.S. manufacturers hurt the largest, most productive, highest wage paying U.S. manufacturers (https://lnkd.in/gjYznBsx; https://lnkd.in/gxr7PiFB) and were found to reduce export growth (https://lnkd.in/gzXUjgGJ). Implication: Craig, I challenge you and anyone and everyone FreightWaves to debate me on the effectiveness of tariffs in spurring manufacturing activity and generating economic welfare for the average American. I'm happy to discuss on this thread or on a live program. I dare anyone who thinks they can ball with me on this topic. #supplychain #supplychainmanagement #shipsandshipping #freight #trucking

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Are you interested in exploring the impact that AI is having on supply chains? A big announcement here about Dave Clark's new venture. And, some additional context about the VC activity in the AI for SCM space. The truth is that there is so much activity in this sector that it's hard to keep track of everything. One of the things I value most about being a limited partner in REFASHIOND Ventures: The Industrial Transformation Fund is that I get a sneak peak at many new technologies and innovations that have the potential to make a huge impact on supply chains. Will be very interesting to see what Dave's $100M becomes, and how soon it shows up in the market. ~Mr. Supply Chain #AlwaysBeLearning #SupplyChain #Startups https://lnkd.in/efK69Mkg

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7 Comments

3PLs/Freight Brokers: Looking for a few guinea pigs – who's game? Here's my ask: Download Third Axiom Solutions new freight analysis – it's free! Then tell us what you think about it. In exchange, we'll schedule a 20 min review session to discuss your findings, including what your data is telling you about: - your operational efficiency - your customer retention - your margin opportunities How It Works: It uses AI and machine learning to analyze your freight volume, missing & flipping customers, and carrier financials – then it spits out an analysis that you can download. All you do is upload a doc, and let it work its magic. Appreciate your help on this, brokers! We look forward to getting your feedback on our freight analysis. Go here to download: https://lnkd.in/gNmCuSu7 Then email Jennifer Prishtina at [email protected] to set up your review session with our team.

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#SupplyChain is hard and complicated. Don't ever let anyone tell you otherwise. This is an internal flow chart that I just built for a training on how carriers, NVOCCs, and shippers relate do each other when building integrations. I've been doing this for 25 years and this took me over an hour to get right. "Carrier Ops" and "Freight Ops" are two Chain.io product features that help integrate these differing parties.

55

7 Comments

The recent market exits of providers like Pitney Bowes mark the end of an era for fulfillment logistics... and it looks like there is still plenty and restructuring to come in the following months. Hoping to see more acquisitions happening as we get closer to 2025.

6

I always enjoy spending time with Kerim Kfuri and Richard Crawford on the #SupplyandDemandShow; here's the latest episode that was created during Home Delivery World USA! Thanks for spending time learning more about our recent launch of Inventory Visibility and the acquisition of Orderbot Software Inc. #teamonerail #logistics #supplychain #delivery #ecommerce #omnichannelretail

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1 Comment

Interesting perspective, Jason Miller 📈 While the Freightwaves metric shows a 9% yoy increase, the reality on the ground for us feels more like the -4%. Since one of our biggest segments is driver recruitment advertising, we feel the ups and downs faster than a Lamborghini. From our vantage point, -4% sure seems more like reality. 📉 The confident business person in me will say that we welcome this challenging period as it's given us the opportunity to build up strengths in other areas.😉 But, for the love of all that is holy, we're actively praying🙏Q3 defies the odds and turns out to be STRONG! #trucking #freightdata #logisticsinsights #transportationnews

2

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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