Asset operators: Roll on highway, roll on along
All signals are flashing green for truckload carriers. Growing revenue per driver per week and falling empty-mile percentages pushed operating ratios down, giving carriers more confidence to purchase new and used equipment. In most lanes in the country, carriers hold pricing power and will be able to increase contract
Reshoring on the rise
Global trade as a percentage of global GDP peaked in 2006 for a variety of reasons. Geopolitical tensions are creating more friction in global trade, while automation is smoothing out the labor cost arbitrages that shifted manufacturing from the U.S. to Asia in the 1980s and ’90s. Meanwhile, more
Our look at Nikola’s business model
Even assuming that Nikola's truck can do what Trevor Milton said it can do, the company's business model is exceptionally difficult to execute.
The state of the industrial recovery
The U.S. industrial economy continues to recover following the COVID-related demand and production shocks of March and April, but the recovery has been uneven. In this report, we look at oil and gas, forest products and the automotive industry to gain a sense of where the strengths and weaknesses of
The SPAC boom
For the past six or seven years, an important growth driver of large private equity funds was the fact that private company valuations were higher than public market valuations, so investors and employees of companies had incentives to stay private longer. But in the past two years, technology company
Route optimization in the context of last-mile delivery
The idea of expedited delivery within the trucking industry has its roots in the constantly disrupted last-mile delivery segment. The “Amazon effect,” an e-commerce trend characterized by rapidly evolving delivery expectations of end customers, has overflowed to now envelop the trucking industry. This has led fleets to scurry for
Asset operators: Revenues recover, but what about costs?
The business environment for asset-based trucking carriers continues to improve: Empty mile percentages are lower and revenue per driver per week is up. There are headwinds blowing against asset operators, though: The rack-to-retail diesel fuel spread is no longer doing much work on the carriers’ income statements, and operating expenses
Please Mr. Postman
Two things can be true at the same time: The United States Postal Service is an invaluable public service crucial to the transportation of pharmaceuticals, official documents and much else, and it’s also in an unsustainable position and in need of a turnaround. Many people are aware of the
Reefer markets: Reefer takes a leg up in August
Reefer markets took a leg up in August, supported by fundamentally strong demand, constrained capacity, and a renewed sense of confidence among carriers that now is the time to exercise pricing power. In spot markets, carriers are falling off loads, naming their price, and managing yield. 3PLs are giving
Our North America thesis
The automotive, chemicals, and food industries are fueling North American economic integration.
Multimodal COVID analysis
In our view, COVID-related demand and capacity dislocations have touched off an upcycle in trucking markets supported by fundamentally constrained capacity. This week, a new batch of corporate earnings (UPS, WERN, USX, CHRW) helped us understand how transports experienced that volatility. In 2020, COVID-related volatility hit parcel carriers first
ECHO earnings: looking for spot volumes
Echo Global Logistics’ (NASDAQ: ECHO) second-quarter results and management commentary confirmed our basic view of the trucking market, which is that tighter capacity has made markets more sensitive, and strong volume growth is pushing spot rates up. Positive revenue guidance for Q3 was another strong signal of a fundamentals-driven recovery
Gaming out an Uber Freight deal
First, reports came out that Uber Freight (UF) was being “re-evaluated,” although its demise was not imminent. The more recent news about a potential deal to sell an equity stake in Uber Freight has renewed the industry conversation around Freight’s business model, sustainability and future. In what follows, we
Asset operators: Finding the way home
Bit by bit, trucking carriers are finding their way home out of a disastrous April during which volumes and rates fell precipitously and empty miles increased. Volumes have returned and asset utilization has begun to normalize. Revenue per driver per week has started ticking back up but hasn’t yet established
Reefer markets: Dallas heralds COVID part II
The question on our minds now is whether Dallas is the first stage of another March-like surge in refrigerated volumes driven by the coronavirus. In response to a spike in new infections, Texas officials closed bars and limited restaurants, causing outbound and inbound Dallas reefer volumes to turn upward to
The Future of the TMS
Over the past three decades, TMSes have evolved beyond the management of shipments to encompass many more processes and bring shippers, intermediaries, and carriers closer together. TMSes that began their lives as relatively siloed, on-premise platforms requiring large amounts of manual data entry are now connected via API to shipper
3PL Q2 Preview
April market conditions that were favorable to freight brokerages — loosening truck capacity and declining spot rates — reversed themselves in May, and in June, gross margins progressively narrowed on higher volumes and lower revenues. Contrary to the guidance offered by 3PL management teams on Q1 earnings calls, we
UPS: The e-commerce margin headwind
UPS’s new C-suite led by Carol Tomé has its work cut out for it: Negotiate an increasingly risky relationship with Amazon that has juiced Domestic Package volumes but compressed margins; make real progress on the challenge of B2C delivery density; drive international volume growth; and stabilize earnings. Most of this
Tracking retail and freight
Perhaps it goes without saying that the relationship between consumer spending, retail spending, and freight volumes seems intuitive, but is actually unclear. After all, consumer spending fell 13.6% in April compared to the month prior, and is expected to be negative on a year-over-year basis in May, but truckload volumes
Asset operators: Turbulent seas
The current business environment for operators of asset-based trucking carriers is extremely challenging. Apart from safety and insurance, fuel spreads, and used truck prices – the carrier-specific metrics covered in this report – loose capacity, low spot market volumes and low rates are the most important backdrop for carriers, and
Reefer markets: enjoying a positive setup
Outbound refrigerated freight from California is surging, driving up rates and tender rejections. Reefer capacity tightened in the middle of the country, too, but loosened slightly in Florida. In our discussion of spot rates below, brokers told us that in some important lanes, spot rates are actually higher year-over-year. We