11.01.2021 Views

011521_TT_AllPages

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

Business<br />

January 15-31, 2021 • 17<br />

Freight levels and pricing continue to climb, but hazards exist<br />

Cliff Abbott<br />

cliffa@thetruckermedia.com<br />

November freight levels remained strong<br />

as 2020 entered its final month. The American<br />

Trucking Associations (ATA) reported that its<br />

For-Hire Trucking Index increased 3.7% in<br />

November, earning back some of the 5% loss<br />

in October.<br />

The November index of 112.2 was 3.8%<br />

lower than November 2019, but was strong,<br />

nonetheless.<br />

“The 2020 seesaw pattern continued in<br />

November, as typical seasonality is not holding<br />

this year,” explained Bob Costello, chief<br />

economist for ATA. “It was a nice gain, but the<br />

rebound was not enough to make up for October’s<br />

drop.”<br />

ATA’s numbers are compiled from data<br />

submitted by members of the organization,<br />

which tend to be larger carriers with a high<br />

percentage of contract freight from manufacturing<br />

customers. In an economy where shipments<br />

of retail goods have been higher than<br />

normal while manufactured goods haven’t<br />

fully recovered, carriers with a large percentage<br />

of manufacturing customers can experience<br />

sporadic freight levels.<br />

The Cass Freight Index for shipments,<br />

which tracks shipments in multiple modes<br />

of transportation, declined 2.2% in November<br />

from its October level. Compared to November<br />

2019 however, shipments increased<br />

by 2.7%. The Cass Index includes shipments<br />

by rail, pipeline, ship and barge, trucking and<br />

other modes.<br />

In a statement announcing the decline, Cass<br />

noted that the November decline “followed five<br />

consecutive months of strong recovery averaging<br />

5.0% sequential improvement (seasonally<br />

adjusted), and is likely due to the worsening<br />

pandemic numbers impacting the trajectory of<br />

the recovery in November.”<br />

Rising COVID-19 numbers might impact<br />

some shipping segments more than others.<br />

While people are quarantined at home, they<br />

can still be ordering retail goods online. The<br />

Cass statement noted that shipments in the<br />

less-than-truckload (LTL) sector increased for<br />

three consecutive months, including a 6.0%<br />

increase in November compared to November<br />

of 2019.<br />

Spot freight rates, which are more volatile<br />

than contract rates, tend to react quickly to<br />

market changes. Spot rates have been on the<br />

rise for months and set new records in November.<br />

Van rates rose to an average of $2.46<br />

per mile, while flatbed rates averaged $2.47.<br />

Rates for refrigerated freight dropped a penny<br />

from October’s high, averaging $2.68 per mile.<br />

That’s more likely a seasonal impact, since<br />

refrigerated rates often rise and fall with the<br />

availability of fresh produce.<br />

Overall, spot rates continued strong into<br />

December, and both spot and contract rates are<br />

expected to strengthen into the new year. This<br />

time, however, there are more variables than<br />

usually faced by the industry.<br />

One of the largest variables is the<br />

COVID-19 pandemic.<br />

As November drew to a close, record numbers<br />

of positive COVID-19 tests were being<br />

reported, hospitals reported overcrowding, and<br />

pundits warned of still larger numbers of infections<br />

to come. At the same time, vaccinations<br />

became available in December, with medical<br />

personnel and first responders among the first<br />

to receive shots.<br />

It will undoubtedly take months to distribute<br />

the vaccine to everyone — and many people<br />

have expressed resistance to being vaccinated.<br />

The question of when the country will achieve<br />

“herd immunity” is up for debate, and scientists<br />

disagree on the percentage of the population<br />

that must be vaccinated to stop the virus.<br />

AP Photo/Morry Gash<br />

It will undoubtedly take months to distribute the COVID-19 vaccine to everyone. It may be deemed<br />

necessary to shut the economy down again while the vaccine that would allow reopening is being<br />

distributed, which would certainly affect freight rates and levels. Shown above, boxes containing<br />

the Pfizer-BioNTech COVID-19 vaccine are being prepared to be shipped from the Pfizer Global<br />

Supply Kalamazoo manufacturing plant in mid-December.<br />

In the meantime, positive COVID-19<br />

cases continue growing. President-elect Joe<br />

Biden has indicated that federally mandated<br />

restrictions, including a mask mandate,<br />

could be in store once he takes office Jan. 20.<br />

It may be deemed necessary to shut the<br />

economy down again while the vaccine that<br />

would allow reopening is being distributed.<br />

Another issue affecting freight levels is<br />

inventory. According to a Jan. 4 blog post by<br />

FTR’s Steve Graham, increases in sales have<br />

brought business inventories down, creating<br />

a need for more production. That’s good for<br />

See Hazards on p18 m<br />

Arizona DOT converts to cashless permitting system for commercial trucks<br />

iStock Photo<br />

Beginning Jan. 21, Arizona’s ports of entry will convert to a fully cashless permitting<br />

system.<br />

THE TRUCKER NEWS SERVICES<br />

PHOENIX — Effective Jan. 21, the<br />

Arizona Department of Transportation’s<br />

(ADOT) ports of entry will convert to a<br />

fully cashless system. The change comes after<br />

ADOT successfully implemented a pilot<br />

program, preparing trucking companies that<br />

currently pay with cash to make the move to<br />

a cashless system.<br />

According to a statement issued by<br />

ADOT, when commercial truckers purchase<br />

their permits for driving through Arizona online<br />

ahead of time or use a cashless method<br />

at the port of entry, they spend less time making<br />

payments and get on their way faster.<br />

The move to end the acceptance of cash and<br />

checks at ports of entry also supports recommendations<br />

by the U.S. Centers for Disease<br />

Control and Prevention (CDC) to curb the<br />

spread of COVID-19 through the exchange<br />

of currency.<br />

ADOT’s truck-permitting systems, ePro<br />

and Transport, have cashless features that<br />

are used by nearly 80% of truckers. To help<br />

trucks move through the ports more efficiently,<br />

ADOT’s Enforcement and Compliance<br />

Division used the pilot-program period<br />

to convince the remaining 20% to pay for<br />

permits online using Apple Pay, Android Pay<br />

or a credit card.<br />

“We have been getting a feel from the<br />

trucking industry on how much they would<br />

support this change, and the feedback has<br />

been positive,” said Lt. Jason Sloan, team<br />

lead for implementing the change. “This<br />

improvement will help eliminate waste and<br />

maximize resources available at ports of<br />

See Cashless on p18 m

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!