Small trucking companies see federal loans as bridge to better days

Jimmy NevarezTrucking companies have different takes on seeking Small Business Administration loans. Some would prefer financial help go to those that most need it.

Small trucking companies see federal loans as bridge to better days

Alan Adler FreightWaves 2020 04 02

Jimmy Nevarez

The opportunity to borrow federal money that may convert to a grant is enticing for small trucking companies, but some would rather see it go to those that most need it.

“At the present time, it’s not something we absolutely need to get by,” Jimmy Nevarez, owner of Angus Transportation Inc., told FreightWaves on Wednesday. “That’s why I’ve been on the fence about applying. I’d like to be able to save the money for people who are being impacted more.”

Small to medium-size trucking companies and owner-operators are among businesses eligible to apply for Small Business Administration (SBA) loans created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Loan forgiveness

In some cases, the loans could be forgiven if employers retain their workers during the economic downturn caused by the pandemic.

Details of the SBA program are still being finalized, but it has several provisions that could make it “free money,” according to Randy Hooper, a partner with Katz, Sapper & Miller, a certified public accounting and tax firm.

“It allows companies with less than 500 employees to get a loan from the government that’s based on 2½ months of their payroll,” Hooper told FreightWaves. “Then, in theory, if you go through this analysis on your [full-time equivalent employees] compared to some prior period, then that loan, at least in part if not fully, will be forgiven.”

In addition to covering payroll, borrowing can be used for rent, mortgage, interest and utilities. Hooper has 22 trucking company clients ranging in annual revenue from $25 million to $600 million. Each has called him inquiring about the loan program.

“The ones that are over 500 [employees] have asked what can they do to try to be a part of it, and everyone under 500 across the board has said, ‘Yeah, we want to make sure that we take advantage of it,’” Hooper said.

Independent operators

Owner-operators previously had no access to SBA money. That changed with the CARES Act.

“That is one of the significant changes,” said Prasad Sharma, a partner with the Scopelitis Garvin Light Hanson & Feary transportation law firm. “When you dig into the language, Congress did expand it to cover independent operators.”

Nevarez said that could help two owner-operators he contracts with to haul bottled water and styrofoam food containers from Southern California to Las Vegas. Phelan, California-based Angus also transports PECO Pallets to Bakersfield, California, and Las Vegas.

“No matter what, all small businesses are going to be impacted,” he said.

Stephen Halsted and Sandy Goche, who operate a two-person expedited trucking company based in southern Ohio, applied for a loan because they are refusing loads destined for coronavirus hot spots. Halsted said they have turned down “five or six” loads since last Friday.

“Our safety is the most important thing,” Halsted told FreightWaves.

Bigger firms waiting

The 500-employee limit for loans is standard for SBA loans, Hooper said. As soon as next week, the U.S. Treasury may expand eligibility to companies with more employees.

With 520 employees, Nussbaum Transportation Services Inc. is just over the current application threshold. CEO Brent Nussbaum said the company does not need a loan. If that changes, he would likely tap its banking relationships.

Like Nevarez, Nussbaum would prefer loan money go to financially strapped trucking companies.

“The money ultimately ought to go to those that need it. There is such a huge need. I don’t want to take advantage of federal government money that I don’t need,” Nussbaum said. “It’s debt this country can’t afford in the first place.”

So far, load volumes are holding up from Nussbaum’s largest customers, including Caterpillar and Case New Holland industrial equipment, several major tiremakers, and Pella Windows. All but eight of his 410 drivers are working. Nussbaum said that could change in the next few weeks as the supply chain develops more kinks, but he prefers a different focus.

“What kind of a positive message can we send to the people?” Nussbaum asked. “Can we focus on an upturn? It’s going to come back. We’ll survive and we’ll all come out of it better than we went into it.”

Paper Transport Inc. in De Pere, Wisconsin, hauls that most precious commodity — toilet paper — among its loads. Business is strong for all of the consumer products it hauls.

“As of right now, we’re able to keep everybody,” PTI President Jeff Shefchik told FreightWaves of his 1,100 employees. “We’re not sitting around waiting for the government to do anything. As of right now, we don’t need a bailout.”

Nontrucking needs

Stay Metrics, which conducts driver retention surveys and consults trucking firms, sees the loans as a bridge to the industry’s recovery.

“I lost six customers in three hours last Monday,” said Tim Hindes, Stay Metrics co-founder and CEO. “In a normal economy, we only have 12% customer churn annually.”

An SBA loan will prevent Hindes from laying off any of his two dozen employees.

“What that means for us is I can take a loan out to pay for my labor costs while I’m building up my business to the point it was before,” Hindes said. “Even when the pandemic passes, I should still have cash available. I think that was the design of that program, which was really smart. We see ourselves coming out the other end of this very bright.”

https://www.freightwaves.com/news/small-trucking-companies-see-federal-loans-as-bridge-to-better-days

Everything you need to know about securing an Arkansas oversized permit

Arkansas is home to six national park sites, 2.5 million acres of national forests, seven national scenic byways, three state scenic byways and 50 state parks. But to drive an oversized load through The Natural State, you’ll need to secure an Arkansas oversized permit. At The Permit Company, we help you obtain oversize and overweight…

The post Everything you need to know about securing an Arkansas oversized permit appeared first on The Permit Company.

Everything you need to know about securing an Arkansas oversized permit

M The Permit Company 2020 03 21

Arkansas is home to six national park sites, 2.5 million acres of national forests, seven national scenic byways, three state scenic byways and 50 state parks. But to drive an oversized load through The Natural State, you’ll need to secure an Arkansas oversized permit.

At The Permit Company, we help you obtain oversize and overweight truck permits by working directly with state and local agencies on your behalf. If you have any questions about moving oversized loads through Arkansas or securing a permit, we have the answers.

 

1. How long are oversize permits valid for in Arkansas? 

Oversize permits are valid for three days.

 

What are the legal dimensions for loads in Arkansas? 

The legal limits in Arkansas are as follows:

  • Gross weight: 80,000 lbs.*
  • Width: 8’6” on all roads
  • Height: 13’6” on all roads
  • Length: 45’ for single units and buses on all roads; 53’6” for semi-trailers on all roads, 28’ for twins and doubles on all roads (semi-trailers or trailers 28’6″ in length, that were in lawful use on or before December 1, 1982, are allowed); 65’ for autotransporters on all roads; 75’ for stinger steered on all roads; Rocky Mountain doubles, turnpike doubles and triples not allowed on any roads; and 90’ for saddle mounts (power unit and three saddle mounts) on all roads.

Federal Bridge Formula applies.

 

3. What are the permit limits for loads in Arkansas?

The routine-issue permit limits in Arkansas are as follows:

  • Weight
    • Steering axle: 12,000 lbs.
      • Single: 20,000 lbs.
      • Tandem: 34,000 lbs.
    • Load-carrying axle*:
      • Single: 20,000 lbs.
      • Tandem: 46,000 lbs.
      • Tridem: 60,000 lbs.
      • Quad: 68,000 lbs.

*No additional weight for trunnions.

  • Length: No set maximums
  • Width: 20’, 16’ on interstate system. A maximum overall width of 24′ may be allowed for short moves only in cases of an emergency.
  • Height: 17′. If the overall height exceeds 17′, the move must be accompanied by public utilities personnel.

If load exceeds any of these dimensions or weights, refer to the section on superloads.

 

4. Is continuous travel allowed for oversize permits in Arkansas?

Normally, permits are only valid during daylight hours as established by the U.S. Weather Bureau. Permits may be issued for the movement of overweight vehicles on Arkansas highways on holidays and during the night when all dimensions are legal. Loads not exceeding 90′ long may travel 24 hours a day, 7 days a week. Loads that are only overweight may travel 24 hours a day.

Permits may be issued for movement of loads on Arkansas highways on Saturday and Sunday, unless it’s a holiday weekend. Mobile homes are prohibited from moving on Sundays.

Travel is restricted on the following holidays: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas Day.

 

5. When are escorts needed in Arkansas?

On two-lane highways:

  • 1 front escort is needed for widths 12’-14’
  • 1 front and 1 rear escort (2 total) needed for widths more than 14’
  • 1 escort with height pole is needed for heights of 15’-16’
  • 1 escort with height pole (as stated on permit) and special approval is needed for heights more than 16’
  • 1 public utility escort is needed for heights more than 17’
  • 1 front and 1 rear escort (2 total) with height pole needed for vehicles more than 12’ wide and 13’6” high
  • 1 front escort is needed for lengths 100’-130’
  • 1 front and 1 rear escort (2 total) needed for lengths 130’ or more

On four-lane or interstate highways:

  • 1 rear escort is needed for widths more than 14’
  • 1 front escort with height pole is needed for heights of 15’-16’
  • 1 escort with height pole (as stated on permit) and special approval is needed for heights more than 16’
  • 1 public utility escort is needed for heights more than 17’
  • 1 front and 1 rear escort (2 total) with height pole needed for vehicles more than 12’ wide and 15’ high
  • 1 rear escort is needed for lengths 100’-130’
  • 1 front and 1 rear escort (2 total) needed for lengths 130’ or more

NOTE: The maximum width for highway movement is usually 20’ (based on routes, distance and traffic volume or type).

NOTE: Height poles should be run at 6” above load height on all highways.

Mobile homes

  • 1 escort is needed for widths up to 14’ on certain highways near the Little Rock area and on two-lane highways
  • No escorts are needed for widths up to 14’ on interstate or fully controlled access facilities.
  • 1 or 2 escorts are needed for widths more than 14’ depending on the route

 

6. What is a superload in Arkansas?

Any vehicles more than 16’6” wide, 100′ long, 15’6″ high or weighing more than 180,000 lbs. are considered superloads. Three copies of the applications for extra heavy load permits must be submitted along with a detailed sketch of vehicles including all tire sizes, the distance between axles and the overall length of the vehicle. If a load exceeds 17’ high, it must be escorted by public utilities personnel. This application should be submitted at least two days in advance of the expected move.

An additional $250 fee will be assessed on loads weighing more than 180,000 lbs.

 

If you need help in getting an oversize permit in Arkansas or have a question about permits in any other states, give us a call at (800) 359-9407 or send us an email.  

The post Everything you need to know about securing an Arkansas oversized permit appeared first on The Permit Company.

https://www.permitcompany.com/news/everything-you-need-to-know-about-securing-an-arkansas-oversized-permit/

Colorado trucking company to cease operations after 39 years, employees say

Family-owned H.H. Williams Trucking of Greeley, Colorado, told employees on Thursday it will close its doors by the end of January.

Colorado trucking company to cease operations after 39 years, employees say

Clarissa Hawes FreightWaves 2020 01 16

Family-owned H.H. Williams Trucking of Greeley, Colorado, told employees on Thursday it will close its doors by the end of January.

An employee of H.H. Williams told FreightWaves that one of the company’s owners, Howard Williams, told office personnel on Thursday that he and his wife, Cheryl, both in their 70s, have decided to retire.

“I think we were all surprised and stunned by the news,” the employee, who didn’t want to be named, told FreightWaves. “He gave no other explanation other than he is retiring and the company will start winding down business operations.”

Howard Williams did not respond to FreightWaves’ telephone calls seeking comment.

Rumors started swirling on social media on Wednesday that the company was closing its doors, but it was news to the small fleet’s employees and drivers until mid-morning Thursday, the employee said.

Since early Thursday morning, a dispatcher has been fielding phone calls from concerned brokers about the company’s possible closure. He will stay on until the end of the month to ensure all of the trucks are back in the yard. 

Other employees have not been given a date as to when their employment will end.

The 39-year-old company, known for its green and white Mack trucks, has 23 trucks and drivers, according to the Federal Motor Carrier Safety Administration’s SAFER website.

“The owner told us that we still have trucks and equipment out on the road so it will take us until the end of the month to get everybody in and collect the keys,” the employee said.

The company had a dedicated account with Walmart for over 34 years, hauling drop and hook freight to stores in Colorado, Wyoming, the Dakotas and Montana, according to H.H. Williams’ website.

The website also stated that it had a reefer division with loads going to the West Coast and the Northwest.

This is a developing story.

Read more articles by FreightWaves’ Clarissa Hawes

https://www.freightwaves.com/news/colorado-trucking-company-to-cease-operations-after-39-years-employees-say

What is Total Cost Per Mile for truckload carriers?

Chris Henry runs fleet profitability benchmarking and analytics for FreightWaves and facilitates the TCA’s TPP program. If you are interested in benchmarking your fleet’s performance with the best operators, join TCA’s TPP. The data presented in this article come from analytics of over 230 truckload for-hire fleets, representing more than 70,000 trucks.  A wise trucker …

What is Total Cost Per Mile for truckload carriers?

Chris Henry FreightWaves 2020 01 13

Chris Henry runs fleet profitability benchmarking and analytics for FreightWaves and facilitates the TCA’s TPP program. If you are interested in benchmarking your fleet’s performance with the best operators, join TCA’s TPP.

The data presented in this article come from analytics of over 230 truckload for-hire fleets, representing more than 70,000 trucks. 

A wise trucker once said, “The only way to make money in trucking is to not spend it.” Truer words have never been spoken. This business is a game of razor-thin margins, and an infinite (and growing) number of risks and curveballs. This article is the first of two that will: 1) breakdown the cost components of operating a truck (and a trucking company); and 2) establish a financial framework for improved margins and bottom lines.

It’s very difficult for trucking companies to achieve higher than average rates per mile, per hour and per week. Due to low barriers to market entry, fleets and operators of all sizes are able to add capacity very easily to the market. As a result, shippers benefit from these hyper-competitive effects with rates that don’t typically capture the expense realities of trucking. 

Source: FreightWaves SONAR – NETREV.VCFOO, NETREV.RCFOO, NETREV.FCFOO

Total operating expenses in trucking (excluding very specialized operating models), range from extremes of $1.16 to $3.05 per mile when you simply take the best and worst from each of the categories below. Realistically, no trucking company could achieve an average total operating cost per total mile of $1.16, nor would they survive at $3.05 per mile. However, this article will illustrate the wide variances, and opportunity costs that operators realize on a day-to-day basis.

As the main pricing mechanism for trucking is the mile, it is important that industry participants understand their expenses relative to the miles generated by their trucks in a given week or month. Doing so provides an easier methodology to match  operating expenses with pricing decisions. 

Source: FreightWaves SONAR – MILTR.VCFOO, MILTR.RCFOO, MILTR.FCFOO

Total operating cost per mile summary table

According to the Truckload Carrier Association’s TPP fleet data (available to TPP members and SONAR subscribers), a for-hire truckload carrier will average between 1,700-1,900 miles per truck per week throughout the year, except for December. 

Average operating expenses for a carrier on a per mile basis: 

Expense Category Low Range High Range
Driver Compensation $0.48 per Mile $0.83 per Mile
Fuel  $0.40 per Mile $0.55 per Mile
Equipment Financing $0.00 per Mile $0.40 per Mile
Maintenance  $0.09 per Mile $0.40 per Mile
Insurance  $0.06 per Mile $0.18 per Mile
Variable Driving Expenses $0.01 per Mile $0.09 per Mile
Non-Driver Compensation $0.06 per Mile $0.30 per Mile
Fixed Overhead $0.06 per Mile $0.30 per Mile

Source: Truckload Carriers Association TPP Program for all carriers in the program. Data is available in SONAR. 

Driver compensation ($0.48-$0.83 per mile)

A disclaimer for independent contractors (ICs), driving labor does not equal ‘profit.’ The most successful ICs pay themselves a market wage in addition to projected profit. Whether the amount is actually ‘paid out’ as wages is another issue unique to the personal tax situation, and state/provincial residency of each IC.  Driving labor expense is the single largest expense for trucking companies. Depending on the geographic region, operating mode and length of haul, the combination of driving compensation, benefits and payroll taxes ranges from 28% to 50% of revenue. Industry averages for total driving labor expense per mile range from $0.49 to $0.83 ($0.67 per mile on average). This amount includes base wages, incentive compensation, per diem, accessorial pay, workers comp, health insurance and retirement benefits.

Recruiting and keeping drivers remains a difficult task for carriers, but several experts said that a strong social media approach improves both tasks. ( Photo: Jim Allen/FreightWaves )

Fuel ($0.40-$0.55 per mile)

Fuel represents the second-largest variable operating expense for any company or owner-operator. However, the difference between a top and bottom performer in trucking is directly correlated to the ‘net fuel expense’ calculation. Net fuel expense is simply the sum of gross fuel receipts, including taxes and additives minus fuel surcharge generated for the same time period. Top-performing trucking companies and ICs focus on some of these items and practices to reduce the gross fuel spend:

  1. Reducing speed and idle time, and maintaining proper shifting patterns
  2. Implementing fuel-saving technologies, equipment and practices (e.g. APUs, truck and trailer fairings, etc.)
  3. Reduce empty miles (unless it is more advantageous from a margin/yield perspective)
  4. Maximize ‘in network’ fuel spend. This one occurs when economies of scale really take hold, as fuel discounts are directly related to the volume of fuel purchased – the more fuel purchased, the lower the net fuel per gallon/litre.

Typically, gross fuel expense averages between $0.40-$0.55 per mile. However, when you factor in fuel surcharge and some or all the practices above, the net fuel spend can be dramatically less. Some trucking companies go further than most, utilizing financial instruments to ‘hedge’ their fuel expense from changes in the cost of diesel.

Trucks loading up on diesel. (Photo credit: Jim Allen/FreightWaves)

Equipment financing expense ($0.00-$0.40 per mile)

To be a trucker, you need a truck. Being mechanically inclined provides a distinct advantage for independent contractors and fleets alike. Being able to properly maintain equipment allows ICs and trucking companies to extend the average age of their trucks, and thereby reduce the large expense related to financing both trucks and trailers. In recent years, tax law changes have permitted accelerated capital equipment depreciation rates, meaning if a trucking company still owes money on its trucks and trailers, it is likely able to net more dollars after tax than before these changes. In recent years, fleets have reduced the average age of trucks to 2.3 years (on average). This trend is based on a growing school of thought that younger equipment reduces total tractor lifecycle expense (although this may be debatable based on original equipment manufacturer, specifications and operating conditions). In addition to traditional note financing, fleets and ICs alike have standard lease options available to them, along with Fair Market and Full-Service leases (the former taking care of the majority of maintenance expenses for a premium charge). As a percentage of revenue, due to the wide variety of financing strategies implemented by fleets and ICs, the cost of financing trucks and trailers ranges from 0%-30%.

Maintenance ($0.09-$0.40 per mile)

Based on my observations of over 200 trucking companies throughout North America, maintenance represents the largest margin opportunity for most companies. To be clear, maintenance expenses should capture all labor, parts, tires, supplies, oil, lube and fixed overhead (e.g. tools, shop rent, utilities, etc.). The difference between the top performers on maintenance and the bottom performers range from a low of $0.09 per mile to over $0.40 per mile! You read that right, that’s a $0.29 swing from top to bottom – think of the money going out the door! For many smaller fleets, especially those that do not use traditional accrual accounting, I suggest capturing the total maintenance spend over the past six months and keep rolling that average forward as each month unfolds. This reduces swings in large repairs from month to month and provides a clear picture of your maintenance expense.

Using VMRS codes can help fleets track down problems and reduce maintenance costs. (hoto credit: Shutterstock)

Insurance ($0.06-$0.18 per mile)

Insurance, for the purposes of this article and exercise, is the total cost of liability, physical damage and cargo insurance premiums and deductibles, plus the expense of any other accident-related damages. The latter item is one which sometimes gets ignored or is inappropriately categorized as a maintenance expense. In recent years the cost of insurance has been dramatically affected by the growing trend of nuclear verdicts in multiple jurisdictions and continued general accident repair expenses. This trend has led more companies and single truck operators to shoulder more of the burden of insurance themselves through higher deductibles and captive insurance arrangements. Increasing the deductible per incident (retention) also raises the risk of financial harm in the event of an accident. As such, a prudent operator should invest any insurance expense savings in practices and technologies to reduce the probability of accidents in the future, such as in-cab event recorders, collision mitigation tech and enhanced entry-level driver driving.

(Image credit: Shutterstock)

Variable driving expenses ($0.01-$0.09 per mile)

This category is the most nuanced of the expense categories, and the last of the ‘variable’ operating expenses. This group captures all the permits, tolls, fines, along with motels, lumper fees and driver orientation/screening and recruiting expenses (which can be significant depending on the size of operator/company). As such, it is a bit of a ‘catchall’ for those items that don’t fit cleanly into one of the other large buckets. Top performers keep an eye on the above items to ensure that they aren’t a symptom of inefficient dispatch (layovers), unsafe practices (fines), poor routing decisions (tolls) and bad culture (increased turnover).

Non-driver wages & benefits ($0.06-$0.30 per mile)

This is an area in which independent contractors have an advantage, as they handle all sales, administrative and operating activities themselves. However, they are very susceptible to spot market changes, and the reliance on brokers or load boards for freight. For those that seek to grow their fleet, you need to start hiring people for sales, dispatch, finance and safety roles. Depending on the operating mode (trailer type) and length of haul, a trucking company will have three to six drivers for every one non-driver. For smaller fleets, the expense of non-driving positions represents as much as 15% of revenue. As a company grows, and implements software and standard processes, the cost of non-driving activities can be reduced significantly (by 4-7% of revenue).

Fixed overhead ($0.06-$0.30 per mile)

The last of all operating expense categories is fixed overhead expense. This category will capture all rent, office supplies, software, utilities and communications expenses (among many other possible expenses). Generally speaking, from a percentage of revenue perspective, the cost associated with this category should closely approximate the cost of non-driver wages and benefits.

Truck drivers. (Photo credit: Shutterstock)

Summary

You cannot simply take the sum of the lowest values and highest values for each of the above categories to establish total operating expense per mile range for trucking. This industry has an endless number of modes and operating models, not to mention people and aptitudes. Being a top performer in one category doesn’t necessarily equate to top performance in multiple categories. However, understanding the numbers and their place in your margin equation can be the difference between survival and realizing the American (and Canadian) dream. 

https://www.freightwaves.com/news/understanding-total-operating-cost-per-mile

Morgan Stanley sees lower truck capacity, higher rates in 2020

Morgan Stanley eyeing truck capacity constraints and higher rates in 2020, potentially reaching 2018 levels or higher.

Morgan Stanley sees lower truck capacity, higher rates in 2020

Todd Maiden FreightWaves 2019 12 13

In a report to clients, financial services firm Morgan Stanley (NYSE: MS) examines potential reasons truck supply could be constrained in 2020, causing trucking rates to climb.

The firm’s transportation, retail and machinery analysts contributed to the report.

“We see five Trucking supply-side catalysts potentially constraining truck supply in 2020, similar to what the ELD mandate did in 2018. Memories of 2018 are still fresh which should help mitigate the impact but we still see risk to EPS [earnings per share] across Retail, tailwinds for Trucking (TLs) and Class 8 Trucks,” the report stated.

Capacity-constraining catalysts

The firm highlights five catalysts that could draw down truck capacity.

The first is the final electronic logging device (ELD) rule requiring carriers to convert from automatic on-board recording devices (AOBRDs), an earlier version of ELDs that provided significantly less data and the capability to alter some data, to ELDs by Tuesday, Dec. 17, 2019. The mandate is intended to provide a safer work environment for drivers, make the flow of data easier and faster and ensure the data is not compromised.

The second catalyst highlighted in the report is the precipitous increase in insurance rates. As juries in lawsuits related to catastrophic accidents have begun to award “nuclear verdicts” — those in the tens of millions of dollars — carriers have seen insurance premiums spike by 50% to more than double. Even well-capitalized, larger fleets have noted the pain from the increase in insurance rates.

The Drug & Alcohol Clearinghouse, which aims to speed the reporting of drivers’ positive drug or alcohol tests, was cited as potentially drawing down capacity as well. The clearinghouse is designed to prevent drivers from failing a pre-employment screening with one carrier then finding a job with another carrier before the positive test appears on their record. Reporting of failed tests on the federal database is required starting Jan. 6, 2020.

The International Maritime Organization (IMO) 2020 regulation, which begins Jan. 1, is aimed at significantly reducing sulphur emissions by enacting a 0.5% sulfur restriction in 2020, which is down significantly from the existing 3.5% mandate. This will require the maritime industry to use fuels with lower sulphur content. The expectation is that this will create increased demand for refined products like diesel. The range of forecasts on the impact of diesel demand is wide, with some speculating that as much as 2.5 million barrels of distillate per day would be needed to offset the high-sulfur fuel oil that the maritime industry can no longer use without installing scrubbers.

Morgan Stanley estimates that diesel prices could increase by 5-33%, placing increased financial strain on the smaller carriers, which make up the bulk of the TL industry. The thought is that many smaller operators have inadequate fuel surcharge programs in place to pass through the fuel cost increase to the shipper.

Lastly, the report cited California Assembly Bill 5, or the California AB 5 rule, as a headwind for truck capacity. The rule, which goes into effect Jan 1, 2020, is designed to limit the definition of independent contractors, requiring many of the independent owner-operators with whom carriers contract to haul loads to be reclassified as company employees. While the new bill faces legal challenges, some carriers have already begun to alter their operations in California, with some attempting to unwind their exposure to the state completely.

The Morgan Stanley report stated that the best-case scenario would provide no change to capacity in California if all owner-operators were offered and accepted employee driver positions with a company. However, it labeled this scenario “highly unlikely” and indicated independent contractor rules are a creeping concern as other states will likely begin to pursue some type of similar reform. This is already in the works in New Jersey.

Some of the trucking industry’s largest companies have also highlighted a range of headwinds to truck capacity in recent months.

Potential impact to rates and earnings

The report suggested that 2020 could provide a scenario similar to 2018 with regard to truck capacity and rates. In 2018, the year of the original mandate to ELDs from paper logs to enforce stricter adherence to hours of service rules, some truck capacity exited the industry in lieu of compliance. The firm believes that the 2018 mandate resulted in a high-single-digit to low-double-digit hit to truck capacity, causing TL spot rates to spike 30%, with contract rates moving 15-20% higher.

“2020 could potentially see a repeat of the supply-side constraints that drove truck pricing to all-time-high levels in 2018,” the report stated.

It added that these capacity headwinds could provide potential upside to TL EPS estimates “that could close the 20% gap between post-2018 EPS peaks and current trough earnings” as truck pricing moves higher. The firm estimates that the impact of all five catalysts could be bigger than what occurred in 2018. The “low case” presents a scenario in which contract rates increase 2-3% and spot rates climb 5-10% in 2020. The “medium case” calls for contract rates to increase 5-10% and spot rates to rise 20-25% next year. The “high case” predicts contract rates to rise 15-20%, with spot rates surging 35-40%.

Shanker is currently modeling low-single-digit price increases for the TLs in 2020, closer to the low case scenario that calls for spot rates to improve 5-10% in the first half of 2020 with contract rates flat to slightly negative in the first half, but up 2-3% in the second half. The report noted that this scenario results in EPS estimates that are 7-10% higher than current consensus estimates. Further, if the medium case scenario played out, earnings estimates would move at least 10% higher and more than 20% higher if the high case scenario occurred.

From the report, “we have already seen a clear bottom in the second derivative of spot/contract rates, as well as the absolute rates start to rebound, which we believe sets up the TLs well for further boosts in pricing and operating ratio (OR) if truck rates were to sharply rise next year.”

The report also highlighted a scenario wherein there would be upside to Class 8 production forecasts if capacity were culled out of the market due to these catalysts, but it didn’t offer what the impact to earnings for the original equipment manufacturers would look like. The report noted a high correlation between Class 8 truck orders and TL spot rates and stated that Class 8 orders could increase 50-100% in late 2020 to early 2021 if spot rates increased in the 20-25% range.

Class 8 Truck Orders – SONAR: ORDERS.CL8

Lastly, the report noted that the potential increase in rates to ship goods via truck presents an EPS risk (base case) of 2-3% for the retail space and as much as 4-7% downside to estimates if these capacity constraints materialize greater than expected.

Morgan Stanley conducted a survey of approximately 400 carriers, brokers and shippers to produce its expectations around these events. Of those surveyed, 65-70% expect the first three catalysts (ELDs, rising insurance costs and the Drug & Alcohol Clearinghouse) to have at least a small impact on capacity in 2020. Fifty-one percent of those polled expect an impact to capacity from IMO 2020, and 62% see an impact from the California AB 5 rule.

https://www.freightwaves.com/news/morgan-stanley-sees-lower-truck-capacity-higher-rates-in-2020

Today’s Pickup: KeepTruckin launches developer platform

Keep Trucking development platformPlus: Napa freight company hauls wine in electric truck; Spin E-scooter workers join Teamsters

Today’s Pickup: KeepTruckin launches developer platform

Linda Baker, Staff Writer FreightWaves 2019 12 13

Keep Trucking development platform

Good day,

KeepTruckin, an IoT fleet management technology company, announced the release of its modern developer platform, featuring a developer portal and driver workflow tools.

The platform gives partners, developers and customers access to the company’s APIs so they can build and utilize tailored fleet management solutions.

The developer portal features a self-service model that allows users to register, build and publish integrations. The portal will further grow KeepTruckin’s App Marketplace, featuring integrations that streamline business workflows and enable fleets to build custom management solutions. 

KeepTruckin’s Driver Workflow tool, available within the API documentation, simplifies operations by integrating with any dispatch or transportation management system (TMS).

“We are excited to continue evolving the fleet management industry and help companies of all sizes run more efficiently with our best-in-class technology solutions,” said Ryan Johns, CTO of KeepTruckin, in a statement. 

Did you know?

Carriers delivered about 80 million packages per day during the week of Cyber Monday, but Amazon, FedEx, UPS and the U.S. Postal Service each saw a drop in on-time delivery performance during the week. During the week of Cyber Monday, Amazon’s on-time performance was 93.7%, FedEx’s was 90.4%, UPS’ was 92.7% and USPS’ was 92.3%.

ShipMatrix, via Supply Chain Dive

Quotable

“I was told we were trying to turn things around. We were continuing to hire right up until the very end.”

Celadon recruiter Ernesto Gonzales, via FreightWaves

In other news

Napa freight carrier Biagi Bros. tests all-electric heavy truck to haul bottled wine

The trucking and warehousing company will run a Peterbilt 579 Class 8 truck tractor with a TransPower electric kit. (NorthbayBusinessJournal)

Spins electric scooter workers join Teamsters Local 665 

The scooter company employees are first in San Francisco to organize (PRNewswire)

Four Seattle companies make Glassdoor’s 100 Best Companies to Work for in 2020
Amazon was not on the the list. (SeattlePI)

Cannabis retailer MedMen implements Onfleet logistics software

The software will fulfill MedMen’s delivery management, including driver scheduling, routing, tracking, analytics and customer communications. (Yahoo)

Final thoughts:

The electrification of trucks and buses needs to be accelerated, according to a new report released Dec.11 by the Union of Concerned Scientists (UCS). Titled “Ready for Work: Now Is the Time for Heavy-Duty Electric Vehicles,” the report states that in addition to lowering emissions, the overall ownership costs can be cheaper than diesel. “Fuel and maintenance savings can offset the higher upfront costs of heavy-duty electric vehicles, making them cheaper than a diesel or natural gas vehicle over the life of a vehicle,” the report said.

Hammer down, everyone!

https://www.freightwaves.com/news/today

Today’s Pickup: KeepTruckin launches developer platform

Keep Trucking development platformPlus: Napa freight company hauls wine in electric truck; Spin E-scooter workers join Teamsters

Today’s Pickup: KeepTruckin launches developer platform

Linda Baker, Staff Writer 
FreightWaves 
2019 12 13

Keep Trucking development platform

Good day,

KeepTruckin, an IoT fleet management technology company, announced the release of its modern developer platform, featuring a developer portal and driver workflow tools.

The platform gives partners, developers and customers access to the company’s APIs so they can build and utilize tailored fleet management solutions.

The developer portal features a self-service model that allows users to register, build and publish integrations. The portal will further grow KeepTruckin’s App Marketplace, featuring integrations that streamline business workflows and enable fleets to build custom management solutions. 

KeepTruckin’s Driver Workflow tool, available within the API documentation, simplifies operations by integrating with any dispatch or transportation management system (TMS).

“We are excited to continue evolving the fleet management industry and help companies of all sizes run more efficiently with our best-in-class technology solutions,” said Ryan Johns, CTO of KeepTruckin, in a statement. 

Did you know?

Carriers delivered about 80 million packages per day during the week of Cyber Monday, but Amazon, FedEx, UPS and the U.S. Postal Service each saw a drop in on-time delivery performance during the week. During the week of Cyber Monday, Amazon’s on-time performance was 93.7%, FedEx’s was 90.4%, UPS’ was 92.7% and USPS’ was 92.3%.

ShipMatrix, via Supply Chain Dive

Quotable

“I was told we were trying to turn things around. We were continuing to hire right up until the very end.”

Celadon recruiter Ernesto Gonzales, via FreightWaves

In other news

Napa freight carrier Biagi Bros. tests all-electric heavy truck to haul bottled wine

The trucking and warehousing company will run a Peterbilt 579 Class 8 truck tractor with a TransPower electric kit. (NorthbayBusinessJournal)

Spins electric scooter workers join Teamsters Local 665 

The scooter company employees are first in San Francisco to organize (PRNewswire)

Four Seattle companies make Glassdoor’s 100 Best Companies to Work for in 2020
Amazon was not on the the list. (SeattlePI)

Cannabis retailer MedMen implements Onfleet logistics software

The software will fulfill MedMen’s delivery management, including driver scheduling, routing, tracking, analytics and customer communications. (Yahoo)

Final thoughts:

The electrification of trucks and buses needs to be accelerated, according to a new report released Dec.11 by the Union of Concerned Scientists (UCS). Titled “Ready for Work: Now Is the Time for Heavy-Duty Electric Vehicles,” the report states that in addition to lowering emissions, the overall ownership costs can be cheaper than diesel. “Fuel and maintenance savings can offset the higher upfront costs of heavy-duty electric vehicles, making them cheaper than a diesel or natural gas vehicle over the life of a vehicle,” the report said.

Hammer down, everyone!

https://www.freightwaves.com/news/today

Butter in tow, Plus.ai completes cross-country commercial freight run

The self-driving truck startup hauled tubs of Land O’Lakes butter from Tulare, California, to Quakertown, Pennsylvania.

Butter in tow, Plus.ai completes cross-country commercial freight run

Linda Baker, Staff Writer 
FreightWaves 
2019 12 10

Hauling tubs of Land O’Lakes butter, Plus.ai has completed what the autonomous trucking company claims is the first cross-country Level 4 commercial pilot.

The trip took place the week before Thanksgiving, Shawn Kerrigan, COO and co-founder of Plus.ai, said in an email to FreightWaves.

“There were zero disengagements,” Kerrigan said. “Beyond federally mandated breaks and refueling, our autonomous truck was running consistently on autonomous mode.”

A safety driver was behind the wheel at all times for the 2,800- mile  hub-to-hub stretch, which extended from Tulare, California, to Quakertown, Pennsylvania. The trip lasted less than three days, traversing Interstate 15 and Interstate 70 and passing through varied terrain and weather conditions.

The Land O’Lakes haul demonstrates the “safety, efficiency and maturity of our autonomous trucks,” Kerrigan said in a news release about the trip posted on Dec. 10. Those trucks are already delivering freight for other partners several days a week, he added, and continued advances will make it possible for similar cross-country trips to become the norm in the future.

End-of-year shipments are a busy time for Land O’Lakes, said Yone Dewberry, the company’s chief supply chain officer, in the release. “To be able to address this peak demand with a fuel- and cost-effective freight transport solution will be tremendously valuable to our business.”

The vehicle carrying the Land O’Lakes shipment was equipped with Plus.ai’s advanced autonomous driving system, which utilizes multimodal sensor fusion, deep learning visual algorithms and simultaneous location and mapping (SLAM) technologies.

The truck navigated driving day and night, across the Rockies, road construction, miles-long tunnels, elevations over 11,000 feet, and along rainy and snowy roads.

Founded in 2016 by a group of Stanford classmates, Plus.ai is one of a handful of trucking startups seeking to automate the long-haul. The company has operations in California and China and has been testing vehicles in both countries.

Plus.ai’s cross-country haul comes a few months after the company announced a joint venture with FAW Jiefang, China’s largest truck manufacturer, to develop self-driving big rigs for the world’s most populous country.

The new venture is launching its first product, the FAW J7 Level Two truck, with plans to bring a full Level Four heavy-duty truck to market in three to five years.

In addition to its business relationship with FAW, Plus.ai claims as a partner Softbank- and Google-backed FullTruck Alliance, a Chinese freight-matching platform that controls 80% of the country’s trucking market.

https://www.freightwaves.com/news/plusai-completes-cross-country-run

FreightWaves creates free job board to help impacted Celadon employees (with video)

The sudden closure of Celadon has left thousands of lives impacted. To help those employees find work, FreightWaves has created a free job board where employees can post resumes and recruiters and fleets can post jobs.

FreightWaves creates free job board to help impacted Celadon employees (with video)

FreightWaves Staff FreightWaves 2019 12 10

In light of the Celadon shutdown, we have established a free
job board for companies to post jobs and for employees looking for employment
in the freight industry to post resumes. Celadon office employees are left
without health benefits and accrued PTO, making this holiday season more
stressful. There is no cost for anyone to participate.

Trucking and logistics employers – if you are looking for
employees with tribal knowledge of trucking, the pool of applicants coming from
Celadon is deep. 

The job and career board is focused on logistics talent,
ranging from freight brokerage professionals, customer service, load planners,
dispatchers, sales, recruiters, and drivers. The goal is to have a central spot
for recruiters, companies, and applicants to come together that doesn’t cost
anything to participate. 

“The tragedy of Celadon is impacting so many people across
the industry. FreightWaves is a part of driving transparency and connectedness
in the freight community and we wanted to expand that to connecting the great
talent with prospective employers. Families are being impacted by the sudden
closure of one of the trucking industry’s greatest franchises and the timing
around the holidays is even more unfortunate,” Craig Fuller, CEO of
FreightWaves stated. 

To search for logistics jobs, post new opportunities, or post a resume visit: FreightWaves.Careers.

https://www.freightwaves.com/news/freightwaves-creates-free-job-board-to-help-impacted-celadon-employees

Today’s Pickup: Safe parking available through TruckPark, Dock411 collaboration

Truck parking reservations are now available through popular facility rating app Dock411, plus, more on the Celadon closure, drone safety a focus of working group and Virginia considers a fuel tax hike.

Today’s Pickup: Safe parking available through TruckPark, Dock411 collaboration

Brian Straight 
FreightWaves 
2019 12 10

Good
day,

Truck parking reservation is now available through the Dock411 app thanks to an integration with TruckPark, the digital truck parking platform.

Users of Dock411 are now able to
reserve one of TruckPark’s thousands of available spaces through a link in the
Dock411 app. That link takes the user to TruckPark’s system, allowing drivers
to see and reserve available parking. Shippers will also be able to see the
location of these trucks through the Dock411 web portal, providing insight into
the vehicle’s location.

Spots can also be reserved through
the web portal.

“We have been excited since day one
about this partnership,” Anthony Petitte, CEO for TruckPark, said. “Dock411
helps us bring a full suite of tools to the industry. Shippers now can direct
drivers to safe and available parking and carriers rest easy knowing their
drivers and payloads won’t be compromised.”

Drivers have the option of choosing
locations based on preference and amenities, and security and yard features are
all visible to drivers that use the app, Petitte said.

Dock411 collects, curates and
shares facility profiles and reviews. A complete facility profile in Dock411
includes over 70 attributes, including local directions, restroom availability,
lumper fees, hazards and photos.

“We’ve worked hard to make Dock411
a great tool for the industry by listening to our users,” Eric Weidl,
co-founder of Dock411, said. “Drivers have told us again and again that finding
available parking is a daily challenge. Not only do they want more parking
locations, they want to be able to find those locations. We’re excited about
the opportunity to work with TruckPark to expose their parking locations to a
wider audience.”

Future plans include the ability
for drivers to reserve parking directly through the Dock411 app and to see the
number of available spots in real time, the companies said. Additionally, there
are plans to add more capacity around more shipper locations nationwide.

TruckPark provides technology that allows truck drivers to reserve a space in a lot operated by a partner company. Among those partners is Storemytruck.com, which joined the platform in September. That partnership will open over 10,000 parking spaces to truckers over the next few years.

Did you know?

Investors continue to flock to
supply chain technology businesses, with venture capital investment reaching
$11.7 billion for 371 deals in the first three quarters of 2019, according to
Pitchbook.

Quotable:

“We regret to inform everyone that
Celadon Group Inc. has filed for a Chapter 11 bankruptcy. We will continue to
haul and deliver all the loads that we now have in transit. We will have more
information in the morning as to where equipment needs to be returned to. We
have been assured that everyone who follows instructions will be paid for the
work and miles assigned and completed, and Celadon will not leave anyone
stranded away from home. Finally, we truly appreciate your commitment and
dedication to this company and wish you luck moving forward.”

— Celadon management, in a message Dec. 9 to its drivers on the company’s bankruptcy.

In other news:

Low-tax Virginia seeks hike in fuel tax

Virginia, which has the 12th-lowest state fuel tax in the country, is looking to raise that as it faces an infrastructure funding shortfall. (WTOP

Drone safety at heart of new working group

Police, fire and other stakeholders have joined forces to help study drone safety around major cities and urban centers. (Government Technology)

GM provides loan to new Lordstown owners

GM has confirmed that the new owners of its Lordstown facility were provided a $40 million loan to help facilitate the purchase. (Journal Gazette)

Rhode Island Trucking Association criticizes firm with large toll bill

The Rhode Island Trucking Association said a state trucking company that racked up $75,000 in unpaid tolls in Maine is not reflective of the safety-conscious image the industry considers important. (Go Local Prov)

Lost capacity from Celadon will be absorbed

The trucking industry will absorb the lost capacity from the Celadon closure, experts said. (The Wall Street Journal)

Final Thoughts

The sudden collapse of Celadon over
the weekend had one positive. Despite a perceived overcapacity in the market,
trucking companies up and down the spectrum reached out through social media
with offers of help and jobs. Surely, there was some self-interest involved,
but many companies were simply offering help in ensuring any stranded Celadon
drivers could get home to their families. Trucking may be a competitive
business, but in times of need, it is among the most compassionate.

Hammer down, everyone!

https://www.freightwaves.com/news/todays-pickup-safe-parking-available-through-truckpark-dock411-collaboration