Scott Ruffin

CNBC today published the article linked below stating, "America's freight recession is nearing its end...with retail orders and rates headed higher." There are just a few problems: [1]: The article cites data from Motive showing truck visits to distribution centers of the top 5 retailers are up 30% year-over-year as evidence. While Walmart, Target, Costco, Home Depot, and Amazon are indeed large entities (assuming these are the 5 retailers mentioned), they are a small fraction of the overall freight market. And I highly question this figure's accuracy, as Census Bureau data aren't showing sharp increases in retail sales in these sectors to match. [2]: The article ignores that Cass's shipments data for June showed a steep slide to the worst reading in 4 years. Cass shipments is directionally very predictive of freight market dynamics. [3]: The article states, "Data across the retail sector shows year-over-year order increases through June, including at department stores, electronics, and apparel retailers with bricks-and-mortar locations (32.9%), home improvement (24.4%), grocery & superstores (22.1%), and discount retailers & wholesalers (13%)." These numbers can't be accurate nationally, as we aren't seeing increases in real sales or real inventories even close to these totals for these industries based on Census Bureau data. Implication: retail trade is NOT the primary driver of domestic trucking activity. Rather, its domestic manufacturing, and domestic manufacturing output continues to be weak. We are finally seeing signs that seasonally adjusted manufacturing output found a bottom in several industries in late Q1/early Q2 2024, but we still have a way to go before this freight recession ends for trucking firms. #supplychain #supplychainmanagement #shipsandshipping #trucking #freight https://lnkd.in/gAUpaa-Q

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The container shipping industry continues to move upwards on the spiciness scale from a pricing standpoint, with spot rates continuing to rise (and possibly poised to rise further as summarized in the article I'm linking to). My goal with this post is to summarize the key dynamics at work for easier accessibility: •The Red Sea crisis caused a dramatic increase in demand in the form of greater TEU-miles for shipments from South Asia to the USA and especially Europe. •TEU volumes are up strongly year-over-year, representing another increase in demand. •Congestion at ports in Asia (e.g., Singapore) and Europe due to changes in routings brought on by the Red Sea crisis. For example, we are seeing more non-standard transshipment patterns (https://lnkd.in/g35iD2vr). Congestion results in a reduction in supply as vessels wait longer. •Consequently, we have experienced both a positive demand shock and increasingly a negative supply shock. We all know what that means in economics... Implication: Imports in Europe and the USA need to plan for more disruptions and higher prices for container shipping as we move through 2024. The most affected firms will be: (i) lower volume imports in Europe and the USA will be more affected (due to greater exposure to spot rates); (ii) importers of dense cargo that has a lower unit value (think cheap furniture versus consumer electronics); and (iii) importers of cargo that sells for a lower gross margin rate (holding constant density) (think higher margin apparel versus lower margin apparel). #supplychain #shipsandshipping #supplychainmanagement #markets #freight https://lnkd.in/gqxGtVsS

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"What Supply Chain practice or belief would you declare dead?" 🤔 That's the Good Question for August from the folks over at Inbound Logistics. This was my answer: 💠 Data silos. First off, with today’s technology there’s no functional excuse for them anymore. Second, the positive results of collaborating and sharing data across partners and platforms are just too powerful to ignore. Full Article: https://lnkd.in/gThqb4-5 There were a lot of great answers, because unfortunately there's a lot we can move on from. For an industry that runs the world and never sleeps, iterating still moves slowly. There's so much room left for technology, practices, and people to advance. So let's start today. What practices or beliefs do you think we can lay to rest? What would you like to replace them with? #logistics #leadership #processimprovement

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Recall my post just a few days ago about assessing validity claims concerning data? I was struck by a few statements made in this recent FreightWaves' article I just came across this morning that makes be even more strongly question how representative their tender volume data truly is (https://lnkd.in/g5XV3gts). Consider the following quotes: •"Dallas’ outbound tender volumes (OTVI.DAL) have grown approximately 50% over the past five years compared to the national average of 18%." •"Phoenix demand is up approximately 60% since April 2019." My simple question: over-the-road dry van capacity has increased just 4% over this period based on the BLS's payroll data for NAICS 484121: General Freight Trucking, Long-Distance, Truckload. We know from separate Census Bureau data compiled from IRS tax records and highly reliable surveys that nonemployer firms saw just a 1.5 percentage point increase in their share of revenue (from 18.5% in 2019 to 21% in 2022). As such, capacity hasn't grown more than 4.5% across all of trucking. If freight volumes were truly up 18% over this period, wouldn't we be in an incredibly tight market? Curious is anyone else can make sense of these discrepancies. My answer is simple: FreightWaves' tender volume data aren't capturing all trucking freight, and instead are capturing a nonrepresentative slice of the pie. #supplychain #supplychainmanagement #freight #trucking #transportation #logistics

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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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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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I have an opinion piece in Transport Topics this month - it discusses what TL carriers need to know about how shippers look at transportation procurement. Specifically, I address the importance of monitoring the Spot Premium Ratio and the New Rate Differential in the markets. Enjoy the short read! #TL #transportation #procurement #spotpremiumratio #newratedifferential https://lnkd.in/esxiuvdP

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Being able to articulate your current Supply Chain structure is easy when you have a framework to go off of. In this video I walk you through the process we use at Ameriton Freight & Logistics to get the baseline understanding of our clients. With this form we get a detailed understanding of the process to capture inefficiencies and what's working.  #freight #supplychain #supplychainmanagement #supplychainsolutions #logisticscompany #logistics #shippers #everythingfreight #smallbusiness #environmentalsustainability #environmentallyfriendly #sustainability #warehousing #drayage #intermodal #oceanfreight #supplychainmanagement #consulting

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Leveraged Supply Chains As the The White House convenes task forces to forge new strategies, we at Leverage have already observed a pivotal transformation in the supply chain dynamics of mid-market industrial manufacturers. This is not just a change—it's a generational shift, exploiting market imbalances as strategic opportunities. During a recent visit to a client in the heating and cooling sector, it became evident how new legislation and policies promoting clean and efficient energy are rapidly driving demand. This surge necessitates advanced #supplychain automation solutions to cope with the increased scale and complexity. Moreover, the global trade landscape is evolving. This evolution is prompting a crucial diversification of suppliers and stressing the importance of maintaining visibility throughout the entire supply chain—from production to port and port to warehouse. We are committed to ensuring that our clients can track their purchase orders and shipments with unprecedented clarity and efficiency. These are indeed exciting times for the industry. Join us as we navigate these transformative currents. Learn more about the White House's latest initiatives

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U.S. supply chain companies investing in technology, CSCMP report finds #ProvisionAi #supplychainplanning #transportationplanning https://hubs.li/Q02D1PZ70

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The most relevant supply chain book today.

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Many of you know I’ve long argued that FreightWaves Contract Load Acceptance Volume (CLAV.USA) metric is not a good representation of for-hire truckload freight volumes in the USA. The recent article Craig Fuller published (https://lnkd.in/gpa4CexE) lends support for my concerns. I want to draw attention to this quote: “Contracted load accepted volumes, another SONAR index measuring contracted load demand, tell us that the market has grown since January 2023. As of April 15, 2024, year-over-year contracted volumes are up 9%.” Here are two facts that raise serious validity concerns (in my professional academic opinion) that make me believe CLAV isn’t nationally representative: [1]: It doesn’t align with Q1 public truckload carrier financial results. When you look at the chart provided in the article, CLAV has been up throughout 2024 relative to 2023. Yet, you have carriers like JB Hunt hauling fewer loads (-6.8% YoY for dedicated and -5.2% for truckload) in Q1 2024 than Q1 2023. That decline can’t represent JBH turning down that much contractual business due to low rates from contractual customers. [2]: Other indexes such as Cass Shipments and For-Hire Trucking Ton-Miles aren’t showing strong YoY gains; they are showing the opposite in YoY declines of 2-4%. The trucking ton-mile index is nationally representative because it is constructed from the Commodity Flow Survey and various government data sources. Implication: while I really like FreightWaves’ Outbound Tender Rejection Index (OTRI.USA), which I believe is a good indicator of the current balance of supply and demand in the truckload sector, too many other data points result in me concluding that the underlying tender volume data are not representative of truckload freight demand. For anyone who wants to argue differently, ask yourself this: are you or most of the other carriers/brokers you know seeing 9% year-over-year increases in truckload freight volumes? JBH and Knight-Swift certainly aren’t. #supplychain #supplychainmanagement #freight #trucking #truckload #logistics

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Several of you have asked me about what is Bowman PACK so let me give a brief overview. Please reach out to me, Bryan Seitz, DJ McMoran, Ryan Martin if you have any questions. Bowman helps capture all asset data very cost effectively. What is PACK Bowman has developed a GIS based Ports Asset Condition Kit (PACK) as a VALUE added services offering to our existing Ports & Harbor clients. PACK is being designed as an integrated GIS platform for waterfront assets. It seamlessly integrates asset data from above and below waterline data in 2D and 3D, geo-referenced images collected during inspection, asset inspection reports and AS-BUILT drawings. PACK user can view condition inspection reports connected with GIS assets in an interactive dashboard, and also perform capital planning for maintenance and repair actions. PACK will also feature an augmented reality view of site in mobile device showing on-demand point cloud in 3D. Why use PACK Typically, facility owners have capital projects and maintenance related projects. Each facility consists of multitude of infrastructure elements, resulting in multitude of projects. Every capital project has associated drawings, specifications, warranties, contracts and associated pertinent information such as inspection reports, site visit photographs, etc. Majority of the facility owners store these information on a project by project basis in individual file structures. As people in position of the project management/delivery retire or change jobs, facility owners run a risk of losing the information and its relevance for future upkeeping of the infrastructure. PACK attempts to solve this issue by ability to consolidate all relevant information on an asset into a GIS based platform with a highly visual and intuitive user interface. #AAPAEvents #AAPAExpo #innovation #smartports #digitaltransformation #BowmanPorts You can see the demo here:

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In both elections and supply chain decisions, emotions play a surprising role in driving choices. Studies suggest 70% of people vote based on emotion or perception, while only 30% rely on hard data. #SupplyChain #DecisionMaking #Leadership

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With the election settled, I’ve received many inquiries regarding how I anticipate dry van truckload rates will move in 2025. To help answer that, below I’ve charted year-over-year percent change in DAT’s dry van TL spot rate (red) and the BLS’s primary service PPI for general freight trucking, long-distance, truckload (NAICS 484121). Thoughts: •The most profound change that has occurred with these data is that the PPI is now more strongly correlated (albeit with a lag) with spot rates. A decade ago, a 10% year-over-year increase in spot rates would net a ~3% year-over-year increase in the PPI. That relationship appears to have doubled since COVID-19 hit (e.g., a 10% increase in spot rates now gets you a 6% increase in the PPI). •If we assume the shift in the relationship since COVID-19 isn’t due to a unique one-time event but is an underlying product of an environment with much greater information availability, then it would be reasonable to assume this magnitude of relationship will continue. •The question then: how much will spot rates increase? I’ve been on record saying I expect the next bull market cycle to look like 2014 in that I don’t see an increase in trucking ton-miles in 2025 that would be the same pace we saw in late 2017 and early 2018 (not to mention no ELD mandate at work). With that, I’m willing to predict spot rates increase ~15-20% year-over-year by Q3/Q4 2025. That would imply an increase in the BLS PPI by 9-12% year-over-year (but with a lag). That would be the same magnitude of increase in the PPI we saw in 2018. Implication: My best guess basing on looking at underlying demand and supply conditions is dry van spot rates rise 15-20% in 2025 from where they are in 2024 (with those figures being reached in Q3 and Q4 2025). That implies the BLS’s primary service PPI for dry van trucking will rise 9-12% year-over-year, with those gains lagging the spot market changes. #supplychain #supplychainmanagement #freight #trucking #truckload

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Please join us at the Gartner Symposium for our upcoming session where Ron Sweet and myself will be sharing insights on Kimberly-Clark's success in #loadoptimization, #transportationplanning, and #loadbuilding. Don't miss out on this valuable discussion at the Gartner Supply Chain Events! Can't wait to learn from the best in the industry. #supplychain #innovation #logistics #networking

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A new approach to managing uncertainty I keep seeing people who approach uncertainty in #supplychainmanagement by proposing to take problems that exhibit a high level of uncertainty (also called “unpredictable,” “unforecastable,” or “stochastic”) and try to turn them into problems that are that are more predictable (or forecastable, or deterministic). The latest example is Lora Cecere’s thoughtful article   “If Only the Supply Chain was Reconfigured” https://lnkd.in/e54nMaFQ (“tinyurl.com/” with “CecereForecastability2024”)   where she argues for fundamentally reconfiguring the supply chain to manage uncertainty.    Of course, there will never be a single solution to managing uncertainty with an operation as complex as a company running a global supply chain, but there is one point that I keep running into: the desire to perform “forecasts” and assume that the goal is to perfectly predict whatever is being forecasted: monthly demands, lead times, lead time demands, component costs and market prices.   Years ago Lora called for a “new analytics.” I claim that the new analytics starts with using what many (such as Lokad) call “probabilistic forecasting.” This requires a fundamentally different approach to forecasting, especially along three dimensions:   1)   We need a new attitude toward forecasting, which means predicting the distribution of what might happen, rather than guessing what will happen. 2)   We need a new approach to how we evaluate the quality of a forecast, which means evaluating how well it performs in terms of making decisions (including both expected performance and risk) rather than measuring the difference between actual and the point forecast. 3)   We need to rethink what to do with a probabilistic forecast, which means learning how to live in an uncertain world. This is where Lora’s ideas fall, but this has to be approached with (1) and (2) in mind.

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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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