Jarrett Quarterly Industry Update Q2 2020 / Volume 14
NOTE FROM THE PRESIDENT
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t’s hard to believe that the second quarter of our year has come to a close. It’s no secret that Q2 continued to present challenges for businesses everywhere as a result of COVID-19. Although businesses are reopening and our economy is starting to move again, lots of obstacles are still present. However, we look forward to the positivity and normalcy that lies ahead. This Q2 Industry Update contains the most recent transportation news in our world today. It also includes two featured articles, one on being proactive and the other on civic responsibility, both in response to COVID-19. Proactive decisions are the key to surviving the effects of the coronavirus pandemic, even effects that we have not encountered yet. At the same time, civic responsibility is more important now than ever. This is a time to reset priorities and become a good neighbor to our communities. We began the work from home transition on March 18th. The key to a successful work from home transition was developing and executing a plan with our team to make sure employees could be effective remote workers. At Jarrett, we have great appreciation for our IT team who helped everyone get set up at home in record time. Creative technology has allowed us to continue to serve our clients with exceptional customer care. Our typical JLS Routing Center structure has shifted, which allowed for greater efficiencies and for new leaders to emerge. Even from a work-from-home environment, clients can still expect the same level of service.
Mike Jarrett catches up with Jarrett employees during his virtual "Town Hall" meetings We were proud to play a vital role in helping keep businesses going and crucial supplies available. We have been honored to assist in the delivery of medical supplies, masks, and other necessary goods. In the past, each Friday afternoon, I would enjoy walking around our buildings and catching up with our employees. I have missed that from a remote environment, so we are conducting virtual Town Halls instead. The video conferences are allowing me to catch up with everyone. This is just another way technology has allowed us to continue normalcy as best as possible! A creative initiative we started in quarter two was a webinar series. I had the pleasure of chatting with listeners about the current state of our country. In the webinar, I spoke about COVID-19’s impact on North American business and what business leaders can do to be proactive. In other news, Jarrett was recently named to the 2020 Top Green Providers List by Food Logistics as well as the Cleveland Top Workplaces Award by the Cleveland Plain Dealer. Food Logistics’ annual Top Green Providers recognizes companies enhancing sustainability within the food and beverage industry. Investing in green technology and sustainable initiatives are a priority for us at Jarrett. We see doing our part to con-
Q2 2020 • Volume 14 • Page 1
tribute to a more energy efficient world as a business best practice. Our goal is to reduce waste, whether that be material or energy, throughout supply chains, warehousing, and fleet services. The Cleveland Top Workplaces Award is given to companies with a high score received from employees on their level of satisfaction at the company. The list is based solely on employee feedback gathered through a third-party survey. The anonymous survey uniquely measures 15 drivers of engaged cultures that are critical to the success of any organization, including: alignment, execution, and connection. As we move into Q3, we hope to leave the more difficult part of the year behind us, but look ahead to the second part of the year bringing opportunities to grow and come together. Best of luck to you and your company in quarter three!
W. MICHAEL JARRETT President & CEO
WHAT’S INSIDE 3-4
COVID-19'S IMPACT ON NORTH AMERICAN BUSINESS Proactively navigating through a crisis
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LESS THAN TRUCKLOAD REPORT
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TRUCKLOAD REPORT
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FLEET CARE
FUEL UPDATE
Q2 update of diesel fuel fluctuations and cost per barrel of crude oil
The LTL industry saw a 20% Y/Y decline of volumes in April, while dealing with the slow down from the coronavirus pandemic
The coronavirus pandemic affected earnings for many carriers
Trusting Your Assets with the Right Professionals
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PARCEL NEWS
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THE AMAZON EFFECT
Residential shipping volumes increased dramatically, as both FedEx and UPS added surcharges and increased fees to help offset the shipment volumes
Amazon saw a significant surge in e-commerce demand, while Jeff Bezos resumed oversight of day-to-day operations
11-12 TRENDING TOPICS
Rail freight, air freight, and warehousing all saw dramatic shifts in demand, while truck orders fell
13-14 THE JARRETT DIFFERENCE
Become a Citizen of the World: Civic Responsibility Amidst a Pandemic Q2 2020 • Volume 14 • Page 2
COVID-19 & BUSINESS
By Mike Jarrett
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ithout a doubt, COVID-19 has had an impact on us all. In one way or another, our lives have changed on a personal level. Things have changed for businesses too. The choice of how to respond to challenges is crucial. In a time where change has happened, making new decisions and choices that are right for your business is pivotal. As hurdles arise and new challenges come to the surface, making proactive versus reactive decisions can set your business apart. In this time, we can all look at a vast amount of variables. First and foremost, look at what’s most important: the safety of your people. As the curve continues to flatten, it is important to keep safety a priority. Taking those extra precautions are still important.
Q2 2020 • Volume 14 • Page 3
COVID-19 & BUSINESS As we began to flatten the curve, we also flattened the economy. It is still a frequent discussion amongst officials to try and balance the two. There will always be a tug of war between public health and business, it’s not just something we are currently trying to keep steady. A good example of this is reducing the speed limit to five miles per hour. Surely it would cause less accidents, but it would also impact the economy in a variety of ways. The key is balance.
Back to the Fundamentals As business leaders, we are faced with a lot of decisions. My advice to business leaders everywhere when facing challenges in this current climate is to go back to the basics - the fundamentals. Fundamentals can be put into two categories: controllable and non-controllable. Non-controllable factors are what we saw in the height of the virus: shelter in place, stay at home, the virus itself, etc. As business leaders, you shouldn’t worry about the things you can’t control.
be able to survive tough times. We were thankful for that difficult lesson, even as a young company.
Adapting to Survive One of my favorite books, written by Simon Sinek, is Start With Why. In this book, Sinek says, “You have to have the capacity for existential flexibility.” What he means is that the ability to sustain your existence is really about how you adapt. It’s about accepting the fact that some things will never be the same again. Some companies will understand that because they have the ability and flexibility to make changes. The things that have been handled the same way time and time again, may not be handled the same way anymore. It’s all about reinventing yourself and
is not the first, nor will it be the last, pandemic. So, the ability to adapt and deal with these changes as a business leader will allow you to have an infinite vs. finite mindset.
First Principles Thinking In order to weather this storm, business leaders need to look at moving away from the “we do it this way because we always have” mindset. Leaders should solve problems by looking at the root cause of the problem. Then, pull away the basic parts and identify how to put those components back together in a way that improves the process. This is called first principles thinking. A good metaphor for this approach is football coaches. NFL football coaches are either play thieves or first principle coaches. Play thieves steal plays from other teams and coaches. They may adapt or tweak the play to fit players on the team, but they still stole the play. First principles thinking coaches dig into fundamentals and look at why plays are successful or not. They dig into the root cause of why a play works. Some legendary coaches, such as Vince Lombardi, Chuck Noll, and Larry Kehres, whom I played for at Mount Union, have shown this methodology. They are able to make halftime adjustments because of this way of thinking. These coaches understand the fundamentals of the plays and know what's working and what's not, allowing plays to work more successfully. A coach that steals plays can’t do that. They don’t understand fundamentals, so when plays don’t work, they don’t know why.
"As business leaders, we want to dig into the fundamentals of what is and what is not working in our business, instead of accepting things as they are because that's how they’ve always been done."
On the flip side, you should focus on the things you can control. Business leaders are naturally looking at effects in the financial area. When you go back to the fundamentals of finances, it’s all about financial discipline. Our economy has been on a roll for quite a few years, but it may not be that way again for quite some time. So, in response, business leaders can focus on controllables such as instituting cost control measures, making receivables tighter, and stepping up sales efforts. At Jarrett, we’ve learned from past experience. Being in business for over 20 years, we’ve gone through 9/11 and the recession of 2008. In 2001, our largest customer at the time ran into a lot of financial difficulties because of 9/11 and, as a result, filed for bankruptcy. Unfortunately, when they did this, they owed us a significant amount of money - over $300,000! We received pennies on the dollar, but it taught us a hard lesson about financial discipline. Without it, you are not going to
having the flexibility to change. History in our country has shown that companies that adapt, survive. Those that didn’t learn how to adapt, no longer exist. A good example is Netflix versus Blockbuster. Blockbuster was the king of video rentals; Netflix was simply just a startup. Blockbuster refused to accept the fact that online streaming was going to be a method to watch video, and ignored the movement. Well, we all know how that turned out - Blockbuster struggled mightily and is now down to a single location in Bend, OR, while Netflix has a market value of $194 billion. With COVID-19, we will see companies in a similar situation where only some understand the long-term changes ahead. This
As business leaders, we want to dig into the fundamentals of what is and what is not working in our business, instead of accepting things as they are because that's how they’ve always been done. During difficult times, we must make the appropriate adjustments, just like a football coach makes adjustments during halftime.
Q2 2020 • Volume 14 • Page 4
FUEL UPDATE
GASOLINE & DIESEL fuel update
AVERAGE DIESEL FUEL PRICES AS OF JUNE 29, 2020: •
U.S. National: $2.430
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East Coast: $2.524
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New England: $2.648
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Central Atlantic: $2.704
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Lower Atlantic: $2.377
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Midwest: $2.299
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Gulf Coast: $2.194
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Rocky Mountain: $2.343
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West Coast: $2.948
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California: $3.246
WHAT WE PAY FOR A GALLON
Q2 2020 • Volume 14 • Page 5
COST PER BARREL After oil prices dropped close to their lowest level since 1986, prices began to rise in May. By the end of May, the weekly average of U.S. diesel prices rose for the first time after 19 straight weeks of declines. (Wall Street Journal, WSJ) (Logistics Management) In its monthly oil-market report in May, the International Energy Agency forecast that crude oil demand will rebound in 2021 by a record 5.7 million barrels a day, after demand has dropped 8.1 million barrels a day this year. (WSJ)
ON-HIGHWAY DIESEL FUEL PRICES
LESS THAN TRUCKLOAD REPORT
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he impacts of COVID-19 on the LTL market are wide-ranging. As with other modes of transportation, several segments of the economy surged as the pandemic ramped up, like consumer product goods (CPG), medical supplies and equipment, and government contracts. Unfortunately, shipments in many other segments of the economy dropped off dramatically. Shipments to and from port locations, automotive and aerospace shipments, and most other manufactured goods saw a significant decline. Overall, the LTL industry saw a 20% Y/Y decline in volumes in April, with a small increase in May. The LTL industry moved very quickly to reduce cost, while also maintaining pricing discipline through the second quarter, including leaving previously implemented general rate increases (GRIs) in place, despite reduced demand. As the economy opens up, increased demand will put pressure on pricing and will continue to create service concerns. Continued focus on visibility and being able to deliver to unique places like residential neighborhoods, dock-less sites, and focus on electronic transmissions and e-commerce will put increased pressure on the LTL market as standard LTL shifts back.
YRC Worldwide News • YRC Worldwide’s (YRC) tumultuous 2020 continued as the company’s creditors waived a requirement that YRC maintain $200 million in consol-
LESS THAN TRUCKLOAD FREIGHT idated earnings before interest, taxation, depreciation, and amortization. However, this April 7th filing with the United States Securities and Exchange Commission (SEC) came right before an April 8th filing by one of its investors (Barna Capital) which accused three unnamed directors of not providing “needed guidance” for the company to achieve “decent operating results”. Barna Capital would like these three directors to be removed from the board, and replaced with “individuals who possess extensive experience in running a successful transportation company." (Journal of Commerce, JOC) • In May, YRC announced a slight net profit in Q1, even after a steep drop in demand in late March. YRC decided to still cut capital spending, while also eliminating executive bonuses and laying off and furloughing some workers in order to preserve cash. YRC CEO Darren Hawkins said business has started to improve in May, after hitting a low point in early April. (WSJ) • A spokesperson for YRC stated the company is working with the International Brotherhood of Teamsters union and funds that provide medical and other benefits to its workers to ensure employees “have uninterrupted access to health-care benefits,” after YRC skipped payments in March to those funds. YRC has asked to defer these payments for March, April, and May while asking that the funds continue to
keep providing health care to its workers. At
the end of the quarter, YRC announced it expects to receive a $700 million loan from the United States Department of the Treasury under the CARES Act. The company plans to use the money to make the deferred benefits payments. (WSJ and Freight Waves)
Other News • Roadrunner Transportation Systems sold a dry van segment of its business, Stagecoach Cartage and Distribution, to a logistics company based in New Mexico. (Transport Dive) • A survey conducted by the Commercial Carrier Journal (CCJ) found that while only 13% of trucking companies had to eliminate some drivers by the end of March, that number had jumped to 24% by mid-April. (CCJ) • Arcbest, the parent company of ABF Freight, announced the pandemic contributed to a 61% Q1 loss in revenue Y/Y. (Arkansas Business) • XPO Logistics Inc (XPO)’s CEO Bradley Jacobs said, “E-commerce saved us in April,” after its core transportation segment revenue declined almost 8% in the first quarter. (Reuters) • Freight forwarder Expeditors acquired Fleet Logistics, a fellow freight forwarder, located in Oregon. (The Loadstar)
Q2 2020 • Volume 14 • Page 6
TRUCKLOAD REPORT
TRUCKLOAD TRUCKLOAD RE PORT REP ORT
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hile for-hire trucking added over 8,000 jobs in June, that was only a small percentage of the jobs that were cut in March and April due to the coronavirus pandemic. Even after the increase of forhire trucking in June, the net change from February is still a net loss of 5.7% at over 86,000 payroll jobs lost. While demand decreased capacity in the latter part of the quarter, utilization levels are not expected to return to Q1 levels anytime soon. Many carriers reported that COVID-19 had an effect on their Q1 earnings, while some were forced to close permanently.
COVID-19 Affect on Q1 Earnings • JB Hunt announced that first quarter net income declined 12% compared to the first quarter of 2019, while total operating revenue increased 9%. (Transportation Topics) • Knight-Swift Transportation’s Q1 revenue dropped 6.6% while net income dropped 25.6% Y/Y. (Transport Dive)
income increased 16% Y/Y. (Transport Dive) • Werner’s Q1 revenue was only down 1% Y/Y, but net income dropped 36% Y/Y. (Transport Dive) • U.S. Xpress had an increase of 4.1% in Q1 revenue Y/Y, but lost $7.2 million throughout the quarter. (Chattanooga Times Free Press)
Other News • According to a CCJ survey, nearly 80% of surveyed carriers said that freight volumes had decreased during the pandemic, but over 45% expected to see an increase in freight levels before the end of the quarter. (CCJ) • The Driver Compensation Study from the ATA (American Trucking Associations) found that truck drivers on average earned $58,000 in 2019, up $6,000 from the last study in 2017. (DC Velocity)
• Landstar Systems’ Q1 revenue was down 10.2% Y/Y, while net income dropped 35.4% Y/Y. (Transport Dive)
• PS Logistics, located in Birmingham, AL, purchased the assets of CT Transportation, located in Savannah, GA. (AI. com)
• Schneider National’s truckload revenues in Q1 was down 12% Y/Y, but net
• Throughout the quarter, multiple small to midsize trucking companies were
Q2 2020 • Volume 14 • Page 7
forced to close permanently due to the downturn in demand due to the coronavirus pandemic. Comcar Industries Inc., a Florida-based trucking company of around 700 drivers, filed for bankruptcy protection, with several deals to sell off some of its operations. (WSJ) • Volume was down significantly in the month of April: • The ATA for-hire tonnage index in April was 104.9, which was down 12.2% from March, and was the largest monthly decline in 26 years. (ATA) • The Intermodal Association of North America stated that intermodal volumes fell 15% in April, including a 30.5% drop in trailer volumes. (Logistics Management) • While volume was down in April, it began to increase again in May. According to DAT Solutions, there was a 79.6% increase from April to May in loads posted to the U.S. truckload spot market. (DAT Solutions) • Knight-Swift Transportation said it expects “acute tightness” and higher rates in the truckload markets by the fourth quarter of 2020. (Supply Chain Dive)
FLEET CARE
JARRETT FLEET SERVICES Trusting Your Assets with the Right Professionals
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here’s no doubt that if you own equipment such as trucks, trailers, vans, or other large vehicles, they will experience breakdowns, malfunctions, and general wear-and-tear. There are many fleet maintenance and repair shops, but they don’t all treat equipment, or people, the same way. Here are two ways you can take care of your equipment:
1. Keep Safety a Priority A good repair team always keeps fleet safety top of mind in their fleet maintenance programs. A trusted service will be honest about their findings and actual risk. Some safety warnings may include: • Brakes shoes are getting low or brakes need adjusted
• Tires are low on tread depth and/or tire pressure • Dolly legs are bent • Windshield wipers and bushings are old or dry rotted
2. Avoid Expensive Mistakes Missing a 90-day inspection on equipment can result in drivers missing warning signs that are not visible or audible to an inexperienced eye or ear. When a component on a trailer/truck goes bad, it increases the risk of other components failing because of the malfunction of a smaller issue. Catching the smaller fix is always more cost effective in the long run than having a bigger one down the road. It can result in unplanned maintenance when your unit is down during inconvenient times.
A trusted fleet repair team will keep you on track with regular maintenance and catch those smaller fixes before they turn into larger, more expensive issues.
JARRETT FLEET SERVICES At Jarrett, our technicians have over 100 years of truck and trailer experience. Our experts are actively sharing their knowledge with newer employees so that we create a culture and legacy of the most experienced technicians. World-class fleet repair and maintenance services are a crucial part to a successful supply chain. You need to keep your equipment and vehicles on the road. We would be glad to serve as your partner for any of your fleet management needs. If you have questions or would like more information, reach out to one of our experts on our website, www.gojarrett.com, or call 330-682-6108.
Q2 2020 • Volume 14 • Page 8
PARCEL
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PARCEL NEWS
he coronavirus pandemic considerably affected the parcel industry this quarter, as residential shipping volumes increased dramatically for both FedEx Corp. (FedEx) and United Parcel Service (UPS). Both FedEx and UPS added surcharges and increased fees to help offset the increased shipment volumes. The United States Postal Service (USPS) saw a new postmaster general start while projected losses due to COVID-19 are expected to be billions. • The pilots for UPS, represented by the Independent Pilots Association, voted to approve a two-year extension of their labor contract at the beginning of April. (Atlanta Journal Constitution) • USPS began shipping mail over ocean freight in April while trying to deal with the issue of limited air transportation between the United States and Europe. (Supply Chain Dive) • In early May, CVS and UPS teamed up to begin delivering prescription drugs to Florida’s retirement community, The Villages, via drone. (Tech Crunch) • Q1 revenues and volumes surged for UPS, especially in the home-delivery sector, as home deliveries saw a nearly 70% increase during the quarter, as consumers purchased more through e-commerce as COVID-19 restrictions began to hit businesses. This caused first quarter profit to fall 13% Y/Y, which led UPS to cut its spending by $1 billion to conserve cash. (WSJ) • Louis DeJoy, the former CEO of New Breed Logistics, took over as the postmaster general of the United States and therefore the new CEO of USPS in May. DeJoy takes over while a nonpartisan group, Government Accountability Office, stated “Absent congressional action on critical foundational elements of the USPS business model, USPS’s mission and financial solvency are increasingly in peril.” Shortly after, USPS announced losses in the first quarter fell to $792 million, excluding uncontrollable expenses. Projected losses due to the coronavirus pandemic are expected to be around $22 billion. (WSJ
Q2 2020 • Volume 14 • Page 9
• In mid-May, FedEx began to limit the number of items that stores, including Kohl’s Corp., can ship from certain locations, as it tries to prevent its network from being overwhelmed by any sharp swings in the flow of goods. FedEx compared these limits to its holiday peak-season operations, but if retailers and consumers continue to operate like this even after the pandemic ends, FedEx and others may need to change their networks to match the new fulfillment practices. (WSJ) • Starting May 31st, UPS added surcharges modeled on peak-season rates, effectively considering the surges in operations as the equivalent to the holiday peak season late in the year. UPS is looking to effectively change its fee structure to match the change in demand that has increased operating costs. Residential deliveries are less profitable to deliver than business-to-business shipments, and digital sales at retailers such as Target and Best Buy have more than doubled in the last quarter. (WSJ) • Carol Tomé, the former CFO at Home Depot Inc., started as the CEO of UPS on June 1st. (Bloomberg) • FedEx joined UPS in adding surcharges to some shipments, which went into effect on June 8th. These new surcharges include fees for oversize shipments and surcharges for customers whose shipping volume goes above certain thresholds. (WSJ) • Due to surges in shipping volume in May, on-time delivery performance by both FedEx and UPS fell to their lowest levels of 2020 according to data gathered by third-party data sources, ShipMatrix and Convey. (Supply Chain Dive) • Cross-border postal rates will increase on July 1st, based on the rates agreed upon when a deal was reached by the Universal Postal Union in September of 2019. (Supply Chain Dive)
THE AMAZON EFFECT
the amazon effect
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mazon.com Inc. (Amazon) saw a significant surge in e-commerce demand as the coronavirus pandemic led consumers to increase spending on consumer goods through the website. CEO Jeff Bezos resumed oversight of dayto-day operations of the company, as Amazon worked to keep goods moving through its logistics network. Walmart Inc. (Walmart) began their new delivery service, Express, while also utilizing its stores for e-commerce fulfillment, alleviating some of the stress off of its distribution and fulfillment centers.
Top Amazon News • After putting a stop on the shipment of “non-essential” items, Amazon allowed third-party sellers to resume shipping those items in mid-April. Amazon hired over 100,000 people in full- and part-time jobs in distribution centers and across its delivery network in the United States, as it tries to keep up with the increase in demand. By late May, Amazon began allowing unlimited shipments of "non-essential" goods again. (WSJ) • Employees of Amazon have allegedly used data about independent sellers on its platform to develop competing products, which is a practice that goes against Amazon’s stated policies. One example was an Amazon employee tapping into documents and data about a bestselling car-trunk organizer that was sold by a third-party vendor, and then Amazon’s private-label arm later launched its own car-trunk organizer. Amazon asserts it doesn’t use information from the website’s individual third-party sellers when developing its private-label products. (WSJ) • Amazon began retooling its website in April to get customers to put fewer items in their virtual shopping carts,
as it attempts to keep essential goods moving through its strained distribution networks. Amazon removed its website prompts that push consumers to buy more, and canceled or postponed promotional sales. Some consumer-goods suppliers even began reducing product varieties to speed up production in order to keep up with increased demand. (WSJ) • As the effects of the coronavirus pandemic increased e-commerce demand, Amazon CEO Jeff Bezos reclaimed oversight of most of the company's day-to-day operations. “For now, my own time and thinking continues to be focused on COVID-19 and how Amazon can help while we’re in the middle of it,” said Bezos in a note to shareholders in April. (NY Times) • While Amazon’s sales increased 26% in the first quarter of 2020, profit fell 29% to $2.54 billion. The decrease in profits was due to the 49% increase in shipping costs for the company. Amazon projected $4 billion in costs in the second quarter related to COVID-19. (WSJ) • As other retailers have closed physical stores, many brands that had previously avoided selling on Amazon have begun using Amazon’s marketplace. (Bloomberg) • Amazon added to its air fleet. This past quarter Amazon added 12 767300 freighters under a leasing agreement with Air Transport Services Group, and added at least nine more 737-800 freighters that were converted from passenger planes to freighters. This news came shortly after a report suggested that Amazon Air’s freighter fleet could hit 200 aircraft by 2028. (Air Cargo News & Cargo Facts)
an effort to “help bring their vision of autonomous ride-hailing to reality.” (About Amazon & WSJ)
Keeping up with Amazon • Walmart announced it was starting a grocery delivery service, called Express, that will see orders delivered in two hours or less for an additional $10 fee on top of its usual delivery fee. (Tech Crunch) • Consumers’ stockpiling and increased spending on food and household goods led to Walmart seeing a samestore sales increase of 10% in the first quarter. The company absorbed $900 million in additional expenses related to COVID-19, but e-commerce sales increased 74%. While Walmart had backups at its fulfillment centers under the increase in demand, it was able to use its brick-and-mortar stores to fill online orders, something Walmart believes was an advantage. (WSJ) • Similarly, Target Corp. (Target) saw 10.8% growth in comparable sales in the first quarter, with a 141% increase in digital sales. Target said it handled around 80% of its e-commerce orders from stores rather than warehouses, and added home-delivery and curbside-pickup options for its shoppers. (WSJ) • In June, Walmart announced a partnership with Shopify, an e-commerce shopping platform that allows Shopify’s small business sellers to use Walmart’s marketplace. (Tech Crunch) • Walmart began testing Gatik autonomous vehicles for “middle-mile” transportation between large distribution centers and smaller warehouses. (Bloomberg)
• Amazon acquired autonomous-vehicle technology company, Zoox Inc. in
Q2 2020 • Volume 14 • Page 10
TRENDING TOPICS
trending
TOPICS T
he coronavirus pandemic continued to affect many industries across the world. Rail freight saw a significant decline in demand, while air freight was affected by decreased passenger flights. Truck orders fell, while the FMCSA passed new regulations that are expected to save trucking companies millions annually. Warehousing saw increased demand for space as companies began looking to increase e-commerce order and fulfillment capabilities.
Q2 2020 • Volume 14 • Page 11
TRENDING TOPICS RAIL • Rail freight, like many industries, saw a significant drop-off in April. There was a 21.2% annual decline in United States freight rail carloads, the steepest in Association of American Railroads records, dating back to 1989. (Association of American Railroads) • Many railroads, including CSX Corp. and Union Pacific Corp. took hundreds of locomotives offline in April, and reduced the number of trains in their networks, while sending workers home. BNSF Railway cut hundreds of jobs across its freight network by mid-May. Union Pacific stated that it expects rail volumes to drop 25% in the near term. (WSJ & KGAB AM)
AIR FREIGHT • The Federal Aviation Administration (FAA) issued an exemption in April that would allow cargo to be carried on the seats in the cabin of a passenger airplane if there are no passengers on board. Airlines for America, a trade association representing the airline industry, asked the FAA for the exemption stating that the exemption “will allow U.S. airlines to further augment the cargo capacity normally provided by passenger flights and support emergency efforts." (Supply Chain Dive) • Over 1,200 passenger airplanes were being used as freighters in the air cargo market in mid-May. (JOC) • China imposed new air cargo restrictions that began to increase congestion and leaving freighters to depart without shipments. (The Loadstar) • As demand for personal protective equipment (PPE) began slowing in June, international air freight rates began to decline. (Air Cargo Freight) • Decreased and canceled jetliner orders
caused Boeing to begin cutting thousands of jobs and slashing production, as it tries to cope with the effects of the coronavirus pandemic. By the end of May, it had announced over 13,000 layoffs. (WSJ)
TRUCKING • Tesla announced it was pushing back the delivery of its first semi truck to 2021, which is two years behind the original schedule. (CCJ) • Heavy-duty truck orders fell to the lowest level on record in April, as many trucking companies are putting fleet expansion plans on hold. Freight Transportation Research Associates, Inc. (FTR), which has been tracking truckload orders since 1996, stated the amount of trucks ordered in April was even lower than the pullback during the 2008-2009 financial crisis. (WSJ) • New regulations, passed by the Federal Motor Carrier Safety Administration, will go into effect in September, and are estimated to save trucking companies $274 million annually over the next 10 years. These new regulations include allowing drivers to split their 10 hours of mandated off-duty time into two separate breaks, and exempts some duty time that isn’t spent driving from hours limitations. While it says that it could put fatigued drivers on the road, the Teamsters union supports the new regulations. (WSJ)
WAREHOUSING • Prologis, a logistics real estate company, projects a push for greater inventory stockpiling, which will lead to a warehousing capacity crunch. (The Loadstar) • As e-commerce order and fulfillment surges, companies are deciding whether they need increased warehousing space in order to keep up with online demand. There was a 65%
growth in transactions for warehouses under 25,000 square feet in the 30 day period ending in mid-May, according to CBRE. (WSJ)
TECHNOLOGICAL ADVANCES • Locomation, a company based in Pittsburgh, PA, under an agreement with Wilson Logistics, has begun testing self-driving trucks on highways. (Pittsburgh Post-Gazette) • Daimler Trucks North America is working with Platform Science, a transportation startup company, to embed software into heavy-duty trucks at the factory. This would allow software in the truck to be operated through a touchscreen on the vehicle’s dashboard, rather than multiple devices that have been bolted onto trucks. (WSJ) • CVS Pharmacy, in partnership with Nuro, plans to begin delivering prescriptions using self-driving vehicles as part of a pilot program in Houston, TX. (CNBC)
OTHER NEWS • According to Armstrong & Associates, global Fortune 500 companies spent $371.3 billion on third-party logistics services in 2019, up 21.9% from 2016. (Armstrong & Associates) • The National Oceanic and Atmospheric Administration (NOAA) predicts an above-average hurricane season, which could potentially affect logistics and shipping operations that have already been dealing with the effects of the coronavirus pandemic. (WSJ) • Robert Voltmann is leaving the Transportation Intermediaries Association (TIA) after operating as the association’s President and CEO for 23 years. (DC Velocity)
Q2 2020 • Volume 14 • Page 12
THE JARRETT DIFFERENCE
"At this time of heightened awareness, you have an opportunity to refocus your priorities for the good of your neighbors, your community, your state, and country. "
Q2 2020 • Volume 14 • Page 13
THE JARRETT DIFFERENCE
BECOME A CITIZEN OF THE WORLD Civic Responsibility Amidst a Pandemic By Mike Jarrett As business owners, we endeavor to supply a needed service, create jobs in the community, enable workers to provide for their families, and build lasting value. I propose that another goal should be to set an example to our employees by our words and actions; not only in our relationships with clients and suppliers, but to the community where we live and work. Core values play a crucial role, as they are a compass for professional and personal behavior. Your company’s core values determine how you conduct business, and they establish expectations for your staff. Jarrett’s core values include: Character, Entrepreneurial Spirit, Courage, Compassion, Respect, Fairness, Excellence, and Civic Responsibility. The first seven values are behavioral in nature, and serve as a model for the type of professional and personal attitude we ask of our employees. The last core value, Civic Responsibility, propels those behaviors into action. We define Civic Responsibility as an obligation to engage in activities that benefit the lives of others. We do this by participating in community, religious, government, and voluntary associations, and donating time and effort to advocate for civil, economic, environmental, and quality of life issues. As an essential component of our core values, we define it as giving back to our community by donating our time, talents, energy,
and resources to worthwhile causes within spread of the virus, and some employees are working from home. Some jobs could our communities and society. be performed at home offices efficiently, To that end, it is imperative to seek job can- but many cannot. Hospital, emergency serdidates who embody generosity of spirit, vices, grocery and pharmacy, over-the-road and who exhibit strong character. Employ- and delivery drivers, technicians, etc.— ing civic-minded individuals and working these jobs are considered essential and alongside them in donating time to wor- staff must report to work in order to serve thy causes builds character and provides their communities and keep the economy needed services to the community. Our going. team members have the mindset of giving back to the community; it’s in the very Many companies have stepped up to supfabric of their being. Awareness and action port their communities in any way they is an important part of The Jarrett Differ- can. Automotive factories produced medence, and management sets the example ical equipment and ventilators and industries with the proper components were by demonstrating servant leadership. outputting hand sanitizer. In our industry, We encourage our staff to participate in transportation companies continued to independent and company-organized com- keep supply chains moving. At Jarrett, our munity outreach programs. Our yearly Civic warehousing employees used our PackResponsibility Day allows employees to Ship trucks to help move extra beds and devote time and resources to various proj- medical equipment from Wayne College ects. Last year, our interns spent the day to Aultman Hospital. organizing donations, cleaning, and doing yard maintenance at the Salvation Army. At this time of heightened awareness, Other initiatives include donations to OneE- you have an opportunity to refocus your ighty, a nonprofit integrated health system priorities for the good of your neighbors, in Wooster; Random Acts of Kindness your community, your state, and country. Month; and a monthly jeans day, to raise Become a citizen of the world, and encourmoney for essential community services. age your employees by demonstrating a generous attitude and good works. Your As I write this, our nation and the entire team members will follow your lead and world is in the grips of the COVID-19. Shop- embody the ideas and actions of civic ping centers and restaurants were closed responsibility. for a period of time in order to abate the
Q2 2020 • Volume 14 • Page 14
THE D IF F E R E N CE IS OUR AWARD WINNING CULTURE OUR INNOVATIVE TECHNOLOGY OUR PERSONALIZED APPROACH OUR EMPHASIS ON WELLNESS OUR COMMUNITY IMPACT
OUR P EO P LE
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