Jarrett Quarterly Industry Update Q4 2020 / Volume 16
PR OUD SP ON SOR
NOTE FROM THE PRESIDENT
The winning team of the Salvation Army Food Drive competition raised 573 cans, out of the 2,336 total. (From left to right: Joe Buss, Jessica Renner, Lora Rufener, Jacob Ackerman, Ryan Butcher, Devon Gilkerson)
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rom the very beginning, Diane and I have been firm believers in employing, supporting, and empowering the very best people to succeed personally and professionally. Working from home presented us with many opportunities as well as challenges. We’ve adapted to those changes and maintained the same outstanding level of service for our customers during the eight months our teams were home. However, I was eager to have our teams safely back in the office, and by mid-November we were able to move nearly all of our employees back to their desks to continue strengthening the culture they worked hard to build over the years. Our employees took a brief training course before returning and were provided with all the necessary supplies to remain safe, sanitized, and spacious within their work areas.
Two of our core values at Jarrett are Compassion and Civic Responsibility. We strive to show care and kindness for others by helping those in need, as well as giving back to our communities by donating our time, talents, energy, and resources. In 2018, we decided to partner with charity: water, to donate funds for the installation of a new well to serve the people of Uganda on behalf of Jarrett. The project was completed in November and will bring clean water to 400 people who previously didn’t have access to it. There are 785 million people living without clean water around the world. We are thankful for the opportunity to support the mission of charity: water and play a small part in ending the global water crisis. Our employees love getting involved in helping support their communities. This December, we partnered with the Wayne County Children Services (WCCS) to help make Christmas magical for the children they support. The way we gave looked a little different this year due to the pandemic. Our employees were asked to give monetary or gift card donations, in lieu of buying a specific gift, which the WCCS then took to buy gifts for each child to help bring joy to their holiday season.
Jarrett partnered with charity: water to sponsor the installation of a new well to serve the people in Uganda.
Q4 2020 • Volume 16 • Page 1
This year marked the 11th year we have participated in the Salvation Army Food Drive to help collect non-perishable food items for families in need in our community. Our employees really stepped it up this year and donated over 2,300 cans of food! I am proud to work with so many generous employees and look forward to finding more opportunities to give back to our community throughout the year. This past year presented us with numerous challenges, but our foundation is rock solid, allowing us to weather the storm and forge ahead. Our values influence everything about us, are part of our fabric, and are immovable. No matter what challenges are thrown at us, we will remain strong. With Q4 and 2020 coming to a close, I am looking ahead to 2021 with optimism and hope. We’re excited to see what the new year will bring and wish you growth and prosperity for Q1 and 2021!
W. MICHAEL JARRETT President & CEO
WHAT’S INSIDE
3-4
LESS THAN TRUCKLOAD REPORT
5-6
TRUCKLOAD REPORT
7
FUEL UPDATE
8
PARCEL NEWS
9-10
TRENDING TOPICS
The year concluded with a multitude of company restructures and cyberattacks amid high operating ratios
Driver shortage continues to cause worry while spot rates and demand are up from last year’s figures
Q4 update of diesel fuel price fluctuations and cost per barrel of crude oil
Volume and surcharge increases flood the market during peak season
Air Freight rates rose along with the demand for ocean shipping and technology development announcements
Q4 2020 • Volume 16 • Page 2
LESS THAN TRUCKLOAD REPORT
LESS THAN TRUCKLOAD REPORT
Q4 2020 • Volume 16 • Page 3
LESS THAN TRUCKLOAD REPORT
T
he fourth quarter saw many leadership transitions in the less than truckload world. YRC announced a rebrand, returning the holding company to the Yellow brand name. XPO will be splitting into two independent companies in 2021. Cyber and ransomware attacks were on the rise toward the end of 2020 with several occuring in December. • Contract LTL were up approximately 5.6% for 2021 - a slight increase from 5.1%. (FTR Transportation Insight) • XPO terminal activity levels were up 2% from mid-July to the end of Q3 in comparison to the first part of the quarter. The rest of the industry, including Saia and Old Dominion, saw declines of 1-4%. (FreightWaves) • Old Dominion’s operating ratio set a new company record during Q3 at 74.5%. Greg Gantt, President and CEO, says they will continue to invest in their people, equipment, and service centers to support their ability to win market share over the long term. (FreightWaves) • Saia saw a tonnage increase of more than 7% during November.
Their October LTL shipment figures were up 3.3% when compared to 2019’s numbers. (FreightWaves)
Texas with Green Bay, Wisconsin planned for November. (FreightWaves)
• YRC Worldwide’s Q3 saw a new CFO, EVP of Strategic Initiatives and two new board members along with a return to the Yellow brand and low third-quarter losses. (FreightWaves)
• In October, Averitt Express announced the opening of a new facility in North Carolina. The new terminal is less than 18 miles from downtown Greensboro and has 102 truck doors to handle inbound and outbound freight efficiently. (Logistics Management)
• Central Freight Lines names Jerry Moyes as interim president and CEO while former executive Steve Vondra will return as COO. Moyes will focus on “optimizing current LTL services while expanding product offerings to deliver more for CFL customers.” (FreightWaves) • XPO Logistics is splitting into two independent companies in the second half of 2021. XPORemainCo will serve as a global LTL carrier and transport broker while NewCo will be a contract logistics provider. (Supply Chain Dive) • Saia Inc. opened a cross-dock terminal in Memphis, Tennessee in mid-October. The terminal is 60% larger than the previous facility in Memphis and is not the first location to get an expansion. The transition to larger facilities also took place in Las Vegas, Nevada as well as Sherman and Wichita Falls,
• YRC Worldwide and the Teamsters announced that a $7,500 signing bonus could be paid to new-hires in three installments over 18 months. The memo hopes to combat the driver shortages created by the pandemic. (FreightWaves) • Frozen Food Express will increase linehaul driver pay in January by 25% for solo drivers and 20% for team drivers. (FreightWaves) • In December, Central Freight Lines fell victim to a cyberattack that knocked out its operating systems and call center. It’s unknown how the hackers infiltrated the systems, but no ransomware group had demanded money from the attack. (FreightWaves)
Q4 2020 • Volume 16 • Page 4
TRUCKLOAD REPORT
TRUCKLOAD REPORT Full truckload (FTL) driver pay and bonuses saw a spike at the end of 2020 as carriers attempted to close the gap in the continuing driver shortage caused by COVID19. Spot rates were up nearly 27% with trailer demand up 69% YoY in December.
Driver Incentives • Smaller trucking companies have been raising their pay levels since August trying to stay ahead of larger competitors and prevent driver turnover. Driver shortages are being seen all over the nation and incentives like a base pay increase from $0.95 per mile to $1.05 per mile could help offset the gap in the market. (FreightWaves) • Stevens Transport raised driver pay by as much as 14% in over-the-road (OTR) dedicated, regional, and team divisions. The pay increase also applies to first-year drivers. (FreightWaves) • KLLM Transport Services will now cover all paid miles, both loaded and empty, and push the average pay per compensated mile to more than $1.05 for OTR contractors and more than $1.38 for regional contractors. (FreightWaves)
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• Heartland Express raises driver pay rates for the fifth time in six years. Some rates will increase as much as 12.2%. (FreightWaves) • Roehl Transport added a performance-based incentive for drivers to remain accident free. The plan would pay qualifying drivers $2,000 to $3,000 annually. (FreightWaves)
Other News • Contracted rates had an 11.0% increase with spot rates coming in at 8.5%. (FTR Transportation Intelligence) • According to the latest figures of the DAT load-to-truck ratio, the demand for flatbed and reefers in the spot trucking market was up more than 69% YoY in December. Spot rates were also up nearly 27%, 14% for flatbeds, and 16% for reefers. (TransportDive)
• A shortage of drivers topped the American Transportation Research Institute’s survey for the fourth year in a row. The shortage was linked to some older drivers leaving due to COVID-19, nearly 26,000 drivers failing drug tests, and 25% of driving schools shutting down. (FreightWaves) • According to Eric Fuller, CEO of U.S. Xpress, 2020 could see a drop of up to 200,000 CDLs. (FreightWaves) • David Ross, a transportation analyst at Stifel Investment Banking, is advising logistics managers to analyze TL pricing because of the implications for the LTL and intermodal market. Ross sees rates continuing to increase up in the high single digits in 2021 and a consumer demand market. (Logistics Management) • Hornady Transportation will double the size of its operations by merg-
TRUCKLOAD REPORT
ing with Builder’s Transportation Co. (BTC). Both flatbed carriers are affiliated with the nation’s largest flatbed carrier, Daseke Inc. (FreightWaves) • Terrill Transportation Inc., a California-based trucking and warehousing company, filed for bankruptcy following an abrupt shut down in July 2019. Declining demand in freight volume and warehouse space and an embezzlement lawsuit against a former employee contributed to the decision. (FreightWaves) • Forward Air Corp. was targeted by Hades ransomware group in December. The cyberattack affected both their operation and information technology systems. (FreightWaves) • Landstar System Inc. announced the resignation of CFO Kevin Stout in November. Stout will transition to the role of special adviser to the Pres-
ident and CEO Jim Gattoni. Gattoni will serve as the temporary CFO until the position is filled. (FreightWaves) • DIS Transportation and affiliate company DIS Express filed for Chapter 11 bankruptcy in December. The Michigan-based carrier saw no other option but will try to restructure its business. (FreightWaves) • Kings Cargo Express and Canada Cargo Lines, Canadian-based cross-border trucking companies, were forced into receivership by a court order under the country’s Bankruptcy and Solvency Act. The carriers owed the Toronto-Dominion Bank a collective CA$2.2 million (US$1.7 million). (FreightWaves)
2021 Forecast • Truckload rates could see double-digit gains in 2021 after positive YoY results as fleet utilization remains well above its 10 year average and shippers continue to build inventory. (FTR Transportation Intelligence) • J.B. Hunt predicts the high-demand trucking environment is likely to continue through Q1. They saw an enormous rise in dedicated vehicle demand in 2020 and estimates the same amount of growth in 2021. (FreightWaves)
• J.B. Hunt adds temperature-controlled transportation to their Shipper 360 platform with over 10,000 carriers able to offer the service. (FreightWaves)
Q4 2020 • Volume 16 • Page 6
FUEL UPDATE
gasoline & diesel FUEL UPDATE
AVERAGE DIESEL FUEL PRICES AS OF DECEMBER 28, 2020: •
U.S. National: $2.635
•
Midwest: $2.585
•
East Coast: $2.659
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Gulf Coast: $2.393
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New England: $2.652
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Rocky Mountain: $2.588
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Central Atlantic: $2.850
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West Coast: $3.113
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Lower Atlantic: $2.534
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California: $3.399
COST PER BARREL Brent crude prices are bouncing back from the low $19 per barrel figures in April. December saw prices top at $50 a barrel, much closer to the beginning of 2020 cost of more than $65. The rise in oil prices reflects investor’s anticipation of a global economic resurgence in 2021.
WHAT WE PAY FOR A GALLON
Q4 2020 • Volume 16 • Page 7
ON-HIGHWAY DIESEL FUEL PRICES
PARCEL NEWS
PA R C E L NEWS T
his holiday season may have looked different on the outside than years past, but for the parcel sector it remained a high-demand, high-volume environment. The United States Postal Service (USPS) saw a volume increase of 19% in 2020. FedEx Corp., United Parcel Service (UPS), and DHL all raised surcharges in anticipation of fourth quarter figures. • FedEx and UPS anticipated peak season volume by raising surcharges for big customers. FedEx also added an extra transit day but still shows “on time” to match UPS’s holiday season strategy. (FreightWaves) • DHL has increased parcel prices for customers all across the board with e-commerce driving business and revenue growth. (Supply Chain Dive)
• UPS rolled out the Fastest Ground Ever initiative in November to reduce transit times by one business day on millions of parcels. The improvements vary by origin market, but 63% of ZIP-to-ZIP lanes will see the change and can be traced back to the influence of Amazon.com Inc., UPS’s largest customer. (FreightWaves) • FedEx is partnering with Reliable Robotics to develop the use of unmanned single-engine aircraft for the delivery of cargo. The technology is still years away from replacing the entire fleet. (Supply Chain Dive)
• FedEx uses four high-end technology investments: CoRos, SenseAware ID, FedEx Surround, and automated delivery modes to stay ahead during the peak season. (Supply Chain Dive) • FedEx Corp. acquires ShopRunner, an e-commerce platform that connects over 100 merchants to consumers, as part of its new FedEx Dataworks division. FedEx’s new division is designed to improve integrated digital and physical e-commerce transactions. (FreightWaves)
• DHL Express opened a mobile pop-up store in Texas for customers to drop off international parcels in October. (FreightWaves)
• The USPS package volume increased by 1.2 billion pieces in 2020, a 19% increase. (Supply Chain Dive)
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TRENDING TOPICS
TRENDING TOPICS M
any companies rang in the new year with announcements of increasing research into high-tech developments like fuel cell powered, electric, or automated vehicles. Amazon expanded their Air Freight division into Europe and will add a new hub in Cincinnati in 2021. Regulation updates and reviews brought new changes to finish out the quarter. Air and ocean freight saw increases in rates and demand.
OCEAN & AIR • High demand for ocean shipping is causing major backlogging for overseas transportation. Carriers are encouraging the use of 20-foot containers because 40-foot units are maxed out. (Supply Chain Dive) • An estimate from Drewery saw a 4.5% increase for ocean vessel operating costs in 2020. (Supply Chain Dive) • Air Freight rates from China to the U.S. increased nearly 58% between October and December. (Supply Chain Dive)
Q4 2020 • Volume 16 • Page 9
• Amazon Air opened its first regional air hub in Europe in November. The small hub is located in central Germany with plans to expand further internationally in the coming years. (FreightWaves) • Amazon Air plans to open a $1.5 billion hub in Cincinnati sometime in 2021. Cincinnati’s location was a key decision maker for the implementation. (Supply Chain Dive)
REGULATION UPDATES • Tank truck carriers have been approved to install additional pulsating red or amber brake lights on the backs of their tank trailers with hopes to decrease rear-end crashes. (FreightWaves) • Federal regulators have denied the Small Business in Transportation Coalition’s request to allow drivers traveling with pets to drive up to 13 hours during a shift and to operate within a 16-hour window. The Commercial Vehicle Safety Alliance said this change would put drivers at a greater
risk for fatigue and would increase the danger to themselves and the public. (FreightWaves) • In October, the EPA agreed to a settlement of $417,000 from three trucking companies in violation of the California Air Resources Board’s Truck and Bus Regulation. The companies operated vehicles without proper particulate filters, failed to verify the carriers hired complied with California’s regulations, and other infractions. (FreightWaves) • The Federal Motor Carrier Safety Administration grants Samsara a fiveyear waiver from federal regulations for its AI Dash Cam. The waiver allows the Dash Cam to be placed lower on the windshield to analyze the road and driver behavior in real time. The device can warn drivers of possible collisions, near misses, distracted driving, and high-risk driving behaviors. (FreightWaves) • The “Split Duty Period Pilot Program” is being considered by the Federal
TRENDING TOPICS Motor Carrier Safety Administration (FMCSA) to determine if it would be safe and effective. The program would give drivers the option to pause the 14-hour driving window with a rest period lasting between 30 minutes and three hours. Opposition maintains that the program would allow for a driving window that could be as long as 17 to 19 hours after coming on duty which could put them at risk for fatigue and a decrease in driving performance. Shippers, on the other hand, are pushing for the split-duty program arguing it will allow drivers to get more productivity out of their workday. (FreightWaves) • Hair-sample testing could be the newest addition to drug screenings due to the extended history window of 90 days and currently cheat proof results. (Supply Chain Brain)
TECHNOLOGY DEVELOPMENTS • Toyota Motor Corp & Hino to develop Class 8 fuel-cell truck for North America with road testing starting in the first half of 2021. The truck’s hydrogen power will be sourced from Toyota’s Tri-Gen plant in California. (FreightWaves) • Shell Lubricants to launch the Starship, a Class 8 fuel cell tractor-trailer dubbed Starship 2.0, to complete a second cross-country run in early 2021. The first run was made in 2018, starting in San Diego, CA and ending in Jacksonville, FL. (FreightWaves) • Amazon.com, Inc. plans to expand their Key by Amazon in-garage delivery network to 4,000 cities. The Key app allows drivers to access customers’ homes, car, and business locations to deliver packages and groceries. (FreightWaves) • Walmart partners with Cruise, a self-driving car company, to fulfil
orders in Scottsdale, Arizona starting in early 2021. (Supply Chain Dive) • Amazon orders 100,000 custom electric delivery vans from Rivian to be delivered by 2030 with hopes of 10,000 units being on the road as early as 2022. (Supply Chain Dive) • Walmart will take fully automated, multi-temperature box trucks on a two-mile test drive in Bentonville, Arkansas in early 2021. They also plan to test a longer 20-mile route in Louisiana. (Supply Chain Dive) • Walmart to acquire JoyRun, a peer-topeer delivery app, for its pre-existing last-mile portfolio. (Supply Chain Dive)
OTHER NEWS • September saw the third-highest month of initial orders for new trailers, reaching 52,000 units. The majority of the orders were for dry vans with many refrigerated van requests, and few orders for flatbeds. (FreightWaves) • Reports show the food and beverage (F&B) supply chain will continue to see changes through 2021. Prepackaged goods, single-use plastics, and ready-for-consumption products will still be in high demand. The farming labor shortages, plant closures, and meatpacking capacity decline will still present difficulty for the F&B industry. (FreightWaves) • Key takeaways from a few investors, analysts, and CEOs about what to expect from a Biden presidency: a bigger focus on electric vehicle production, stricter fuel efficiency and greenhouse gas emission regulations, and more requirements for developing autonomous vehicles. (FreightWaves)
regions. Many LTL carriers will have trouble hauling the vaccines due to specific requirements such as maintaining minus 112 degrees Fahrenheit temperatures. (FreightWaves) • Drone use could be the answer to distributing vaccines to hard-to-reach areas such as the Bahamas and other sparsely populated island chains. (Supply Chain Brain) • Conti, a ransomware hacker group, has claimed responsibility for the data breach attack on Daniel B. Hastings, a freight forwarding company specializing in U.S.-Mexico cross-border shipments. Extortion appears to be the main goal behind the breach. (FreightWaves) • A Kansas City, Missouri bridge has its own Twitter and Facebook account to satirically depict the collisions between the low 12-foot clearance bridge and tractor-trailers. The bridge is reportedly hit about twice a month. The city has looked into different options to help prevent accidents and has spent $50,000 in signage and repairs on the bridge in the past few years. (FreightWaves) • Five roads across America that truckers should approach with caution: California Route 138: “Blood Alley”, Interstate 4 in Florida, U.S. Highway 24: “The Killway” running from Toledo to Fort Wayne, Interstate 15 from Las Vegas to Los Angeles, and U.S. Highway 129 nicknamed “Tail of the Dragon” or “The Dragon” beginning in North Carolina and ending in Tennessee. (FreightWaves)
• The Candian government is seeking logistics help to distribute millions of doses of COVID-19 vaccines to Canadians in major cities and remote
Q4 2020 • Volume 16 • Page 10
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