Welcome to the WHAT THE TRUCK?!? Newsletter. In this issue, a trucker exodus; brokerage layoffs; NFS bends on sick time; robot maids and more.
Trucker poll paints stark picture
35.2% could call it quits — A new FreightWaves Research study says more than one out of every three truckers is considering leaving the business if conditions don’t improve. What’s driving this potential exodus? Joe Antoshak reports, “The median owner-operator in this survey did see revenue grow 7% from 2021-22 — from $224,000 to $240,000 — but expenses far outpaced that success. They paid 22.9% more to operate in ’22.”
Not all bad — Although spot rates continue their year long downward spiral, not all owner-operators are hurting. The most common survey response was, “I have seen profit margins decrease, but my business is still sound.” However, the pain is asymmetric with larger carriers being able to weather the storm better than their less flexible smaller counterparts. In addition, new entrants are far more at risk of washing out.
“Sometime around the middle of 2020, the association experienced a first: It had more own-authority members than lease-on. Drivers wanted to take advantage of the high demand and climbing spot rates while they could.” – FreightWaves Joe Antoshak
Overcapacity — An industry desperate for some new blood, may instead see some bloodletting. But, with outbound tender rejection rates around 3.5%, truckers running their business well have to be looking forward to the drop in capacity a trucker exodus would bring.
Fired – It’s not just drivers who are suffering. Broker profits have taken a tumble since rates hit the toilet last Spring. This has led to over 1,000 layoffs from the likes of C.H. Robinson, Convoy, Coyote, Flexport, Uber Freight and others. But, with incredibly low unemployment, the reality may be that overly aggressive hiring may have just as much to do with these layoffs as does the freight economy.
“As a result, third-party freight companies needed to scale up their hiring, too, according to Wells Fargo senior analyst Allison Poliniak-Cusic. C.H. Robinson, for example, grew its overall headcount by 43% by the end of 2021 compared to the previous year.” – FreightWaves’ Rachel Premack
Crisis hiring – Poliniak-Cusic calls it “crisis hiring” where (also due to low unemployment) firms sucked up and hoarded labor in anticipation of volumes and volatility that’s no longer present in the market.
My advice? Make friends, network on LinkedIn, and keep that resume up to date. The volumes needed to correct where we’re at in the market simply aren’t on the near horizon…and as Premack wrote, “That means layoffs.”
Norfolk Southern bends on sick time after Ohio derailment
Delayed reaction – Weeks after the hazmat disaster in East Palestine, Ohio, politicians and the rail are in search of some good PR. Trump visited on Wednesday with Secretary Pete trailing behind today.
Now CNN reports, “Norfolk Southern has agreed to give one of its unions the paid sick days it demanded for members in negotiations last year, and is in talks to grant sick days to its other unions as well.” Wow, the great sticking point of the rail union contract negotiations fixed with the stroke of a pen…and an ecological disaster.
“Our members are tasked with rebuilding the track of the New Palestine derailment and it is imperative that they have resources available that keep them safe and healthy at a site that many would be apprehensive to work.” – BMWED media representative Clark Ballew
FreightWaves reports that the agreement is with the Brotherhood of Maintenance of Way – Employes Division, which represents roughly 3,000 workers.
Safety ignored, again – The NTSBs initial findings are in and they show that the hot-box detector systems failed to detect a warm bearing on the train’s 23rd car. Shortly before the derailment it had hit 253°F above ambient temperature, which is considered critical.
I’ve heard that one before – As a child of the 80’s, I was raised with the promise of robot assistants and flying cars. Since then I’ve acquired a Roomba or two, but the damn thing still doesn’t know when it’s smearing dog s**t across the floor. Will it be different in the future?
Researchers asked 65 AI experts what they thought the future of household work would look like and they claim 39% of domestic work will be conducted by robots. Curiously enough though, not everyone is buying.
According to the BBC, “Researchers found that male UK experts tended to be more optimistic about domestic automation compared with their female counterparts.”
Logistics of space resupply with NASA — On Friday’s episode of WHAT THE TRUCK?!? I’m talking to NASA about the logistics of resupply missions in space. Kristina Gonzalez from NASA shares the proverbial bill of lading on launching goods into orbit.
Parade is helping 3PLs go digital with their capacity management solution. We’ll learn how that’s working out for their partners and get the full Parade founders story from CEO Anthony Sutardja, CTO Tony Wu and Account Executive Jesse Taylor.
Has inflation spiraled out of control in freight? Traveler’s Elizabeth Simpkins shares what goods are being hit the hardest.
Plus, news, weirdness and more.
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