Searchable Goods Movement Timeline

Welcome to the METRANS Goods Movement Timeline. This is a searchable timeline of activities tied to goods movement, logistics and international trade based upon items from the popular press.

Given our location and the importance of this region as an international trade gateway, many of the entries pertain to Southern California. We do however draw from state and national press as well. Some articles' links may have expired, or you may have to pay a fee or register on the Web site where they originally appeared to access the complete article. Our goal however is to provide the researcher with enough information to track significant events over time as they have occurred in key areas like legislation, finance, and security.

This timeline grew out of timelines initially developed for METRANS research projects in the area of goods movement. Earlier entries (before 2005) were therefore not prepared with a searchable database in mind and will be less detailed. We hope, however, that they remain a useful resource.

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May 18, 2018

New Teamsters Strategy

Print Edition

THE TEAMSTERS UNION is backing a bill before the California Legislature that would require beneficial cargo owners (BCOs) to share liability for wages, penalties, and damages to drayage drivers in lawsuits. The California Trucking Association (CTA) opposes the legislation. “Until the major retailers like Amazon, Sony, and Home Depot are held jointly liable for the unconscionable and systematic lawbreaking by their harbor trucking contractors, we will not be able to solve the problem of  having thousands of immigrant drivers being treated as ‘indentured servants by their employers here at the Port of Los Angeles,’ ” said Randy Cammack, president of Teamsters Joint Council 42. The latest bill is a continuation of the efforts by the  Teamsters to dramatically increase the number of employee harbor truck drivers in the largest US port complex so the union can organize them. Under US law, independent contractors such as owner-operators cannot be unionized, but employee  drivers can. “In the past, the backers of this bill tried to outright ban small-business, owner-operator truckers from working at the ports. Their actions were unanimously rejected by the US Supreme Court. Now they’re back with S.B. 1402, which uses
other means to accomplish the samegoal,” said Shawn Yadon, CEO of the trucking association. The Teamsters began this push in the formative stages of the Los Angeles- Long Beach clean-truck plan of 2006. The initial attempt failed because the US  Supreme Court ruled that state and local entities cannot regulate interstate commerce. Since then, the Teamsters shifted their strategy to one of challenging the employment status of owner- operators, charging that drayage companies exert enough controlover drivers’ daily work routine to constitute an employer-employee relationship. Individual drivers in recent years have in fact been awarded millions of dollars in back wages,expenses, and damages, although no case sets an  ndustrywide precedent, so each case must be handled separately. The bill, known as S.B. 1402, would order the California Division of Labor Standards Enforcement to create a list of port trucking companies that have an unsatisfied final
court judgment, an assessment from the department regarding failure to pay wages, imposing unlawful business expenses on employees, or misclassification of drivers as independent contractors. “This list will be available to every shipper who  imports and exports through California’s seaports so that they are unequivocally aware of which companies are violating the law. If in turn the shipper hires a lawbreaking company, then that entity will be held liable for subsequent wage and hour  violation for drivers who haul freight for them,” the Teamsters stated. The CTA noted the nationwide truck capacity and driver shortage and charged that the “flawed process” of the California Division of Labor Standards Enforcement to use the  wage claim process to reclassify drivers as employees will aggravate the shortage. “While S.B. 1402 highlights the $45 million in claims brought by the California labor commissioner against trucking companies, it fails to address the commissioner’s willful  violations of the California Public Records Act and the deprivation of due process during the hearings on those claims,” the CTA stated in a release.

Print Edition

May 18, 2018

ONE carriers merge on firmer footing

Print Edition

NYK Line, MOL, and “K” Line entered the new Ocean Network Express (ONE) joint venture with revenue and volume heading mostly in the right direction, but their total Asia-US container growth lagged the market in the first quarter. The first three months of 2018 was the last quarter of the Japanese carriers’ financial year for the container shipping units of NYK Line, “K” Line, and MOL before they operated as ONE starting April 1 and became the sixth largest global carrier. The three carriers recorded combined year-over-year growth in Asia import volume of 2.1 percent to 610,115 TEU, slower than the 8.9 percent increase in volume for the trade as a whole, according to PIERS, a sister product of The Journal of Commerce within IHS Markit. The 8.9 percent expansion in the first quarter of this year is more than double the increase in the same period of 2017. “K” Line was the only one of the three carriers to record a decline in Asia-US volume in the first quarter, dropping 4.9 percent to 214,392 TEU. Its market share in the Asia-US trade also slipped by 0.8 points to 5.6 percent, with MOL edging down 0.2 points to 5.1 percent, and NYK losing 0.1 points to 5.2 percent share of the market. It was a similar two-up, one-down scenario in the annual results of the three Japanese carriers. This time it was MOL in the negative numbers, as the one-off restructuring costs related to separating its container unit ahead of the ONE launch came in at $672 million. Excluding those costs, the carrier actually made a $141 million profit. The other two carriers turned around losses recorded in the last financial year. NYK Group posted a 2017 profit of $190 million, growing its liner trade revenue by 18 percent to $6.3 billion. “K” Line reported a $95 million net profit, with the container shipping segment growing 15 percent compared to 2016 and generating revenue of $5.4 billion

Print Edition

May 18, 2018

China Waste import ban expands

Print Edition

China is expanding its ban on waste imports, endangering an additional 4.3 percent or 116,663 TEU of the US export trade with the country in 2017, bringing the total to 31.2 percent.

The Ministry of Ecology and Environment ban announced Thursday will take place in stages over the next two years, beginning Dec. 31, 2018 for various plastic wastes, slag steel, waste car pressure parts, and copper, aluminum, and steel-based waste hardware. From Dec. 31, 2019 the ban will include wood chips and wood waste, cork waste, and various metal scraps including stainless steel and titanium.

China’s decision to expand the ban comes after US exports fell 3.5 percent in the first two months of this year as US waste exporters struggle to find new markets for waste China banned at the start of this year.

Of the waste recently banned, the volume of which fell 2.2 percent in 2017, China held 29.9 percent of the market, according to PIERS, a sister product of JOC.com. Taiwan was the No. 2 destination with 20.2 percent, followed by Hong Kong, which held 10.9 percent and is also subject to the bans.

The ban is one of the first actions by the newly minted Ministry of Ecology and Environment, which consolidated several agencies as part of a wide-ranging government crackdown on pollution that has led to factory closures, shipment bans, and trouble for shippers getting hazardous goods into ports such as Qingdao.

At 52,824 TEU, plastic waste scrap is the largest single commodity China is targeting with the new ban. Aluminum scrap is the second-largest at 48,474 TEU, and copper scrap rounds out the Top 3 with 13,857 TEU.

The Port of Los Angeles is the top port for these exports to China, with 20.9 percent of the market in 2017, ahead of the 18.3 percent market share of Long Beach, and 13.7 percent share of New York-New Jersey.

Cosco Shipping is the top carrier of these commodities to China, with a market share of 15.4 percent in 2017, followed by Mediterranean Shipping Co. at 12.1 percent, and Maersk Line at 11.1 percent.

Print Edition

China is expanding its ban on waste imports, endangering an additional 4.3 percent or 116,663 TEU of the US export trade with the country in 2017, bringing the total to 31.2 percent.

Jan 05, 2010

NRDC Files Suit Against Long Beach Port Over ATA Lawsuit Settlement

Online Edition

The National Resources Defense Council and the Sierra Club filed suit last week against the Port of Long Beach, alleging that a federal court-sanctioned agreement that removed the port from ongoing litigation by the American Trucking Associations over the Long Beach and Los Angeles ports' Clean Trucks Program could "reverse efforts to improve air quality in communities surrounding the Port of Long Beach."

The suit, filed Dec. 29, centers around an Oct. 19 agreement reached by port officials and the ATA that effectively ended the Long Beach Port's involvement in litigation brought by the ATA against portions of both ports truck plans in September 2007.

The truck plans, which took effect in October 2008, were designed to reduce ports-generated diesel emissions from ports-servicing trucks that haul containers. The original truck plan, developed and envisioned as a single plan for both ports, eventually morphed into two distinct versions, with each port seeking to approach the truck pollution problem in slightly different ways.

The ATA argued in federal court that a major component of the plan, an access license system that essentially allowed the ports to determine which trucking firms could and could not service port terminals, violated federal law which takes precedence in matters of interstate commerce.

The federal courts agreed and injuncted the concession portion of the truck plan, pending a full court hearing on the matter.

Following this, Long Beach officials determined that their version of the truck plan could move forward without the access license component and still achieve the stated pollution reduction goals, leading to the agreement with the ATA.

The neighboring Port of Los Angeles maintains that the access license component is critical to their version of the truck plan and continue to fight the ATA lawsuit, set to go to court in the next several months.

The Dec. 29 lawsuit by the NRDC follows after an unsuccessful attempt by the group to reverse the Port of Long Beach Harbor Commission agreement at the City Council level, claiming that the agreement violated city law. The Long Beach City Attorney refused to hear the NRDC appeal of the harbor Commission approval of the agreement and stated at the time that the agreement does not violate city law as the NRDC claimed. The NRDC is also alleging in their new suit that the agreement violates Long Beach city law.

Online Edition

The National Resources Defense Council and the Sierra Club filed suit last week against the Port of Long Beach, alleging that a federal court-sanctioned agreement that removed the port from ongoing litigation by the American Trucking Associations over the Long Beach and Los Angeles ports' Clean Trucks Program could "reverse efforts to improve air quality in communities surrounding the Port of Long Beach."

Jan 10, 2010

State Report: $100 Million Wasted By Seattle Port Will Not Be Recovered

Online Edition

A new report from the Washington State Auditor's office has found that performance audits conducted of state agencies and local governments have saved taxpayers $3.6 billion since voters approved the audits in 2005.

However, the report also confirmed that some of the waste found in the audits, such as nearly $100 million lost by the Port of Seattle between 2004 and 2007, would never be recovered.

The state auditor's office released the 350-page audit of the port in December 2007, finding nearly 50 indications of financial and contracting irregularities or fraud at the port. While the state audit did not detail any cases of suspected fraud in 2007, the state found that the port had “no controls in place to prevent a variety of fraud schemes.”

In addition, the state auditors found that the port wasted nearly $100 million in taxpayer money through improper construction contracting.

The audit led to a United States Department of Justice investigation into the accusation of fraud at the port. However, the state auditor’s office was unable to prove fraud due to state regulations putting the collection of substantiating evidence outside the legal mandate of the office.

A port-generated internal review completed in June 2008 gave the port’s financial accounting since the period covered by the state audit a “clean, unqualified” bill of health. In the commissioned report, port-hired accountants “noted no significant deficiencies nor material weaknesses” in the port's internal controls in the period following that analyzed by the state audit.

In passing the new slate of procedures, the port commissioners acknowledged the connection to the state and internal audit.

The state auditor's latest report also confirmed that since December 2007, the port has put into place policies and regulations that should prevent problems such as those uncovered by the original audit.

Online Edition

A new report from the Washington State Auditor's office has found that performance audits conducted of state agencies and local governments have saved taxpayers $3.6 billion since voters approved the audits in 2005.

However, the report also confirmed that some of the waste found in the audits, such as nearly $100 million lost by the Port of Seattle between 2004 and 2007, would never be recovered.

Jan 18, 2010

Puget Sound Ports See Clean Air Programs Working

Online Edition

The Puget Sound ports' collaborative environmental program known as the Northwest Ports Clean Air Strategy has led to sizable reductions in Puget Sound ports-generated diesel emissions, according to a study released by the ports of Seattle, Tacoma and Vancouver BC last week.

The latest NPCAS report from the ports covers 2009 and found that NPCAS programs reduced sulfur emissions generation in the region by more than 68 tons and cargo-handling equipment retrofits reduced particulate matter emissions by 25 percent to 50 percent.

First released as a draft in 2007, the NPCAS seeks to reduce diesel and greenhouse gas emissions in the Puget Sound region by achieving early reductions in advance of, and complementary to, applicable government regulations related to cargo-handling equipment, ocean going vessels, trucks and rail vehicles. In addition, the NPCAS sets targets built the successes on current emissions reduction initiatives, and suggests a range of practical actions the ports and their industry stakeholders may choose from to achieve those targets.

Like many large ports on the West Coast, the ports of Seattle, Tacoma and Vancouver BC are all identified as major generators of diesel emissions in their communities.

Online Edition

The Puget Sound ports' collaborative environmental program known as the Northwest Ports Clean Air Strategy has led to sizable reductions in Puget Sound ports-generated diesel emissions, according to a study released by the ports of Seattle, Tacoma and Vancouver BC last week.

The latest NPCAS report from the ports covers 2009 and found that NPCAS programs reduced sulfur emissions generation in the region by more than 68 tons and cargo-handling equipment retrofits reduced particulate matter emissions by 25 percent to 50 percent.

Jun 01, 2018

SCE gets OK to jump into electrification of trucks, buses and ports, joins 2 other California utilities in race to replace diesel fuel

Online Edition

Three of the state’s largest electric utilities late Thursday breached the monopoly on transportation fuels held for decades by oil companies by investing $738 million in new electric vehicle charging stations, with an emphasis on replacing diesel-powered trucks, buses, forklifts and heavy equipment with vehicles running on cleaner electric power.

The big three: San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison received the green light from the California Public Utilities Commission, signaling a new alliance between the state and utility companies never before seen in California that proponents say is the single largest utility investment in transportation electrification ever.

“A trend is sweeping across California,” said Rachel Boyer, spokesperson for the Sierra Club in an email. “Every day we see more and more examples of our state moving away from investing in outdated fossil fuel technology. And this decision is no different.”

The California Independent Oil Marketers Association, however, called the decision: “California’s largest utility companies’ $500 million money grab from the CPUC.”

The CPUC decision comes on the heels of the California Air Resources Board vote to use the $423 million from the Volkswagen diesel case settlement to put more electric vehicles on the road and shortly after the California Energy Commission in early May voted to require all new homes to have solar power in two years.

Also in May, the South Coast Air Quality Management District board approved a plan to regulate truck diesel emissions from warehouses and railyards.

“As the network of residential, workplace, and public electric vehicle charging stations expands, more communities will be able to enjoy the pleasures of driving plug-in electric vehicles,” said CARB chairwoman Mary Nichols.

Environmental impact

By investing in electric power infrastructure, the regions with the most bad air days, namely Riverside, San Bernardino and Los Angeles counties, will begin to notice less smog, in particular oxides of nitrogen, which take the form of tiny aerosol particles that can lodge deep into the lungs and cause respiratory and heart disease, according to the SCAQMD and numerous air pollution studies.

Cleaner trucks and heavy equipment also reduce carbon dioxide emissions, which contribute to global climate change.

California has a goal of reducing greenhouse gases to 40 percent below 1990 levels by 2030 and 80 percent by 2050. Scientists say in the West, global climate changes have increased temperatures and prolonged droughts and fire seasons.

Transportation is responsible for 83 percent of the oxides of nitrogen and 95 percent of diesel emissions in the state. In Southern California, trucks produce more than 50 percent of the oxides of nitrogen and make up 2 percent of the vehicles on the road.

Targeting this source of air and climate pollution makes sense for the region, said Carlo De La Cruz, with the My Generation campaign for cleaner energy from the Sierra Club in Los Angeles.

“(Thursday’s) decision by the PUC was strategic and a smart one,” he said. “It prioritizes vehicles that have the most impact on our air quality and on our local health.”

Ports to Inland Empire

By helping trucks and cargo-moving equipment change from diesel to battery power, the investment will address air pollution from the twin ports of Los Angeles and Long Beach, where 40 percent of the goods entering the nation come through and moves to and from warehouses in the Inland Empire by truck.

However, even with the boost in incentives and more chargers installed, warehouse owners and trucking companies must be persuaded to buy electric trucks, which are more expensive.

“It is an issue when it comes to business owners, warehouse owners being willing to make that investment,” said De La Cruz.

Specifically, here’s what each utility plans to do:

• SCE will spend $343 million over five years to expand electric charging infrastructure in industrial sites, trucking companies and warehouses. The Rosemead-based investor-owned utility will install charging equipment in 870 sites by 2024.

These will support 8,500 medium- and heavy-duty trucks, buses and forklifts. Of the total budget, 25 percent will go toward vehicles operating at ports and warehouses.

Each recipient is required to buy at least two EVs, or convert two from fossil-fuel to electric.

• PG&E will spend $236 million over five years investing in infrastructure for about 6,500 medium- and heavy-duty electric vehicles at commercial and industrial sites. And $22 million will be used for building 234 fast-charging stations for passenger cars.

• San Diego Gas & Electric will spend $137 million for rebates to up to 60,000 customers who install at-home chargers.

Online Edition

Three of the state’s largest electric utilities late Thursday breached the monopoly on transportation fuels held for decades by oil companies by investing $738 million in new electric vehicle charging stations, with an emphasis on replacing diesel-powered trucks, buses, forklifts and heavy equipment with vehicles running on cleaner electric power.

May 29, 2018

EPA’s agenda gets down and dirty

Online Edition

WASHINGTON — At a time when acts of defiance against the Trump administration are routine in Sacramento, the rebuke that breezed through the California Assembly this month still came as a jolt. Even Trump loyalists in the chamber joined in.

The message to the administration was clear: Forget about your plan to unleash on freeways a class of rebuilt trucks that spew as much as 400 times the choking soot that conventional new big rigs do. Getting caught behind the wheel of one of these mega-polluters in California would carry a punishing $25,000 minimum fine under the measure that lawmakers passed 73 to 0. It had the support of 25 Republicans.

“This was a reaction,” said Chris Shimoda, vice president of government affairs for the California Trucking Assn., which sponsored the legislation. “A lot of people have made the investments to clean up their trucks. They don’t want to see an obvious loophole that allows others to be gross polluters and undercut them.”

Equally strong reactions are rippling across the country in response to the Trump administration’s push to boost a cottage industry eager to sell trucks that run on rebuilt diesel engines. The trucks look new from the outside but are equipped with repurposed motors that, according to the Environmental Protection Agency’s own experts, threaten to produce enough soot each year to cause up to 1,600 premature deaths.

President Trump’s EPA has tried to justify the move by citing a privately funded study that claimed the trucks did not cause more pollution, but even the university that conducted the research has cast doubt on the findings.

Air regulators loathe the proposal to allow thousands more of the trucks on the roads. Most of the trucking industry feels the same. Even the White House budget office and several conservative allies of the administration are balking.

“We urge you to consider the adverse impact on the economy,” said a letter that the EPA recently disclosed from the Republican senators of Indiana, West Virginia and North Carolina. They warned EPA chief Scott Pruitt that the plan was ill-advised and disruptive to industry. Ten House Republicans agreed in their own letter, which warned the proposal was a potential job killer. “We respectfully ask that you carefully consider the negative impacts,” the GOP lawmakers wrote.

Yet the EPA is undeterred. Its crusade to lift an Obama-era ban on these heavily polluting vehicles known as “gliders” perseveres, largely at the behest of a small group of activists on the right and one generous political donor, Tennessee businessman Tommy Fitzgerald. Fitzgerald, who has met privately with Pruitt and who held a campaign event in 2016 for Trump at one of his facilities, says restricting the sale of the trucks and the kits to build them threatens 22,000 jobs.

Pruitt says the restrictions on the trucks were a misuse of Clean Air Act regulations.

In announcing the rollback, Pruitt’s agency ignored its own findings about how much environmental damage the vehicles cause. Instead, it cited a new study from Tennessee Tech University that concluded, astonishingly, that the glider trucks were no more harmful to air quality than trucks with new engines. That study was bankrolled by Fitzgerald’s business.

The results of the study came as a shock to experts at the EPA, and also to the engineering faculty at Tennessee Tech.

“Tennessee Tech has skills in some areas, but air pollution is an area we have never worked in,” said David Huddleston, an engineering professor at the university. “I thought, who on campus knows enough to actually even offer an opinion on that? We have one guy who has some expertise in emissions, but he wasn’t even involved in this.”

The faculty would soon learn that the study was run by a university vice president who lacked any graduate-level engineering training, and that it was conducted at a Fitzgerald-owned facility. Tennessee Tech’s president and Rep. Diane Black (R-Tenn.) — who has accepted more than $200,000 in political donations from Fitzgerald, his companies and top employees — had lobbied Pruitt to embrace the research.

The Tennessee study quickly came under suspicion. Notes from discussions between EPA scientists and its authors revealed major flaws. The EPA scientists then updated their own tests of glider vehicles, which confirmed the trucks are substantially dirtier than newly manufactured trucks.

The head of Tennessee Tech’s engineering department dismissed the study’s key conclusion as a “far-fetched, scientifically implausible claim” by a research team that included “no qualified, credentialed engineer.” The faculty senate passed a resolution demanding the university revoke its support for the study and begin an investigation.

By late February, the university asked the EPA to stop using or referring to the study, pending its investigation. That investigation continues.

“The university takes the allegations of research misconduct seriously,” the school said in a statement to The Times. “Tennessee Tech is still in the process of following its internal procedures related to such matters.”

Despite Pruitt’s earlier acknowledgment that the study factored into his decision to revisit the glider vehicle restrictions, an EPA spokesperson said in an email last week that “it played no role” in the action the EPA is now taking.

Two former EPA chiefs are skeptical. Christine Todd Whitman, who led the agency under George W. Bush, and Carol Browner, who led it under Bill Clinton, pointed out in a March letter to Pruitt that the industry’s petition that prompted the EPA to act on glider trucks relied heavily on the now-disavowed study. They urged him to withdraw the proposal.

Fitzgerald’s company is refusing to publicly release the full study, which it owns under its arrangement with the school. But it has cast itself as the victim.

“We did not expect to receive work product that some have characterized as ‘flawed and shoddy’ or ‘far-fetched and scientifically implausible,’ and we certainly did not expect to be defamed by faculty members and administrators from the very institution that conducted the research,” a company lawyer wrote to university officials this year.

The company later demanded that four faculty members who have spoken out against the research and the company’s involvement in it turn over any emails they wrote about the matter.

“It’s a mess,” Huddleston said. “All these professors are trying to do is the right thing. And now they have had to go out and hire lawyers to protect themselves. It’s sad.”

Rep. Black recently told Nashville Public Radio that she had no regrets about using the study to try to help the glider business. She said glider manufacturers were in a noble “David and Goliath” battle with much larger trucking interests seeking to crush them.

But even some at the White House are chafing. Its budget office directed the EPA to undertake an extensive economic review that will hold things up for weeks and could reveal more legal vulnerabilities. The free-market think tank FreedomWorks has, in turn, started a campaign to pressure the White House to approve the EPA’s plan promptly, without requiring the economic analysis.

It remains to be seen whether Pruitt will prevail. But if he succeeds, glider truck drivers could find themselves entering California at their own risk. Backers of the $25,000 penalties that the Assembly approved said they would expect to see them enforced, regardless of how the EPA proceeds. The bill appears likely to pass the state Senate and be signed into law.

Asked how it would confront that challenge, the agency demurred. “EPA has not yet taken a final action,” said the email from its press office, “and will not comment on hypothetical outcomes before the process is complete.”

Online Edition

WASHINGTON — At a time when acts of defiance against the Trump administration are routine in Sacramento, the rebuke that breezed through the California Assembly this month still came as a jolt. Even Trump loyalists in the chamber joined in.

May 14, 2018

Surging US flatbed demand delays service

Online Edition

Whether you are fracking in the Permian Basin or a construction company in the Midwest, overwhelming flatbed demand is forcing trucking companies to warn shippers about delays and slower service. There are a host of reasons behind the imbalance between freight levels and available trucks.

West Texas Intermediate Crude (WTIC) has been trading near $70 per barrel — oil traded up 30 cents to $71.00 per barrel Monday morning — much higher than in February 2016 when WTIC cost $30 per barrel. With those bullish prices, oil companies are fracking to capitalize on the stronger market, which has substantially increased their margins — requiring materials to be transported on trucks. Further, Florida and southeastern Texas are also rebuilding from devastating hurricanes in August and September 2017. Also, in the Midwest, winter weather eliminated more than a month off the usual construction calendar and compressed shipping schedules. Trucking companies are urging shippers to be patient and flexible on delivery requirements as a result.

"Flatbed capacity is exceedingly tight and will likely tighten further as milder weather finally arrives in northern regions. There seems to be very large imbalances regionally; creating ‘panic’ freight buying,” one anonymous shipper said in the biweekly Morgan Stanley Truckload Index.

Flatbed spot market rates moved in concert with contract rates between January and April, rising from $2.00 to $2.20 per mile, excluding fuel surcharges, based on data from Morgan Stanley and DAT Solutions. Since then, the spot market has continued to rise above $2.30 per mile while contract rates have settled down. Fleet executives told JOC.com that contract prices are about 5 percent higher than last year.

Spot market rates, including fuel surcharges, rose 7 cents to $2.72 per mile for the week ending May 5 — a record — and is higher than contract rates for the first time in a decade, according to Morgan Stanley. Flatbed spot rates rose 29.4 percent overall last month, according to DAT.

Rates per mile were up 10 percent for flatbed carrier Daseke Inc., according to its first-quarter earnings report. Universal Logistics Holdings reported revenue per mile, excluding fuel surcharges, rose 12.7 percent year-over-year.

“We have not seen a rate environment like this for a long, long time, if ever,” said Robert Ragan, chief financial officer with Melton Truck Lines.

CEO: shippers waiting 10 to 14 days for an available truck

“I’ve never seen anything like this in more than 30 years in business,” added Joyce Brenny, CEO of Brenny Transportation. “Volume was at least manageable a year ago. We were doing well and rates were good. But now it’s out of control, and we can’t keep up.”

She said new shippers are waiting 10 to 14 days to get an available truck. Last year, the wait was about three days, and during leaner times it was as little as 24 hours.

Owens Corning Chief Financial Officer Michael McMurray said that flatbed shipping costs “have driven a 15 percent increase in outbound shipping costs and are expected to persist for the balance of the year,” speaking on an earnings call.

Anixter International, a distributor of communication and security products, said rate increases “in the mid-teens” translated into a 20-basis-point increase in operating expenses in the first quarter.

Economic data shows the industries shipping freight on flatbed will continue to grow.

The Institute for Supply Chain Management’s manufacturing index was 57.3 in April and hovered around 60 between December 2017 and March 2018. A number greater than 50 indicates economic expansion and economists generally agree 60 is a marker of robust conditions.

The US Census Bureau reported building permits jumped 7.5 percent and construction spending rose 3.6 percent year-over-year in March.

“These numbers give us an early indication of what’s to come because once the permits are approved, there is usually a 90- to 180-day period before construction actually starts,” said Dan Taylor, senior vice president of sales of Melton Truck Lines. “We see permit activity as fairly strong and consistent, so we believe it’s going to be a strong summer. That correlates with what our major shippers of construction products are telling us.”

IHS Markit data shows auto production is expected to decline from 17.8 million to 17.3 million vehicles this year, but industry analysts believe the sector remains strong and figures will rebound in 2019.

“The second, third, and fourth quarters this year should be very, very strong for the open deck carriers,” said Jay Folladori, president of Bennett Motor Express. “There is a heck of a lot more freight available than there are trucks in many, many markets.”

Fracking taking flatbed capacity from other industries

Exploration in the Permian Basin is siphoning trucks from other industries. With crude oil prices now double the price from two years ago, expect more investments in the future.

Trip Rodgers, a financial analyst with energy investment firm BP Capital Fund Advisors, wrote in a recent report that an average well site requires at least 10,000 tons of frac sand, equating to about 400 truckloads.

“Assuming 10 to 15 days for the completion stage of an average well, this implies 27 to 40 sand truckloads per day to each individual well,” Rodgers wrote. “We estimate this amounts to over 2,000 trucking round trips per day in the region, a figure that is expected to grow substantially in upcoming years.”

Much of that material is moved on a tank truck, but energy producer Encana Corp. recently said it’s using more sandbox systems to place frac sand onto flatbeds. These well sites also require bits, piping, casings, tubing, blowout preventers, motors, drilling equipment, and steel coils and bars.

DAT industry analyst Mark Montague said the top two flatbed lanes in April were intra-Houston and Houston to Midland, Texas. Rates between Houston and Midland were up 30 percent last month.

“A few years ago, four pipelines were built in just one year and the latest I have heard is they are out of capacity already,” Montague said. “What we’ve done is double down in that sector. And all the tax cuts have done is accelerate the investment in these sites in the basin.”

According to a S&P Global Platts analysis, “Permian production growth could soon be the victim of its own success.”

Even flatbed carriers that are not involved in the energy sector benefit when crude oil prices are higher, and conversely, shippers in unrelated industries take a financial blow.

“When there is more freight activity in the oil markets, capacity tightens in our primary markets and drives up rates,” Ragan said.

Flatbed trucks also serving hurricane rebuilding

Much of the Houston flatbed activity is tied to the energy sector, but Montague acknowledges rebuilding efforts from Hurricane Harvey are also driving business. Home Depot leased a 300,000-square-foot warehouse in Jersey Village, Texas, and Lowe’s Companies leased on a 244,000-square foot warehouse near Bush International Airport. Both companies opened the new facilities to handle the new demand to buy building supplies in 2018.

DAT’s top 10 flatbed lanes in April also included Dallas to Houston. Montague explained that Dallas is used as a staging ground to aggregate and distribute building materials and supplies elsewhere in the region.

Freight lanes in Florida also appeared on the list, even though the Sunshine State is not usually a hotbed of flatbed activity, according to Montague. Jacksonville to Miami ended the month at No. 15, and Lakeland to Jacksonville was No. 17. Hurricane Irma caused $155 million in damages in Jacksonville and brought record-breaking flooding, according to the Federal Emergency Management Agency and the National Weather Service.

Melton’s Taylor said he is monitoring rebuilding efforts because it could exacerbate the existing supply imbalance. Flatbed drivers relocating into Florida and Texas will reduce truck supply in other states.

“If there are any major rebuilding projects in either state, it probably should be starting right about now,” Taylor said.

Dry van and refrigerated spot rates rose exponentially in Florida and Texas last autumn and nervous shippers began to pay more on contractual freight to ensure guaranteed capacity.

Winter mess in Midwest straps flatbed carriers

The snowstorms and frigid temperatures in the Midwest wreaked havoc on railroad shippers this winter, but now there is a spillover into the flatbed market.

“We had a lingering winter in places like northern Ohio and Illinois. And so we did not cancel spring, it was just being postponed for several weeks,” Montague said.

The No. 9 busiest flatbed lane last month was Cleveland to Detroit and No. 16 was Cleveland to Chicago.

In Minnesota, frost was still on the ground as of the early May. Brenny, whose company is based in St. Cloud, Minnesota, said that building season typically begins on April, requiring flatbeds to move materials to construction sites. Everything is compressed into a tighter window this year, however, because of the season beginning four to six weeks later owing to weather.

“The brick, the steel, the lumber, the building products are just starting to move because of delayed spring. We were busy in January just hauling our normal, everyday loads, now add this extra demand on top and my goodness,” Brenny told JOC.com. “We lost at least one month on construction season so people are rushing to begin their projects, but there might be some delays because we can only haul so much.”

For shippers, patience will be key to navigating this flatbed market. Although if you have been playing the spot market in recent years because the per-mile rates were cheaper than under a contract, there may not be any good answers.

“If you worked with us in the lean times and listened to our early warnings about capacity, we will work with you. The shippers who played the market and kicked trucking to the back burner, it’s a little too late. The only thing they can do now is pay the rates. Moving forward, what you should do is be a shipper of choice because the current market is going to last for a while,” Brenny said.

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Whether you are fracking in the Permian Basin or a construction company in the Midwest, overwhelming flatbed demand is forcing trucking companies to warn shippers about delays and slower service. There are a host of reasons behind the imbalance between freight levels and available trucks.

May 24, 2018

As union asks Long Beach leaders for action on truckers’ compensation, some drivers demand a choice

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Contractors? Or employees?

The Long Beach City Council Harbor and Tidelands Committee began to tackle the issue of how the massive twin ports’ big-rig drivers should be classified at the first of two hearings Thursday afternoon.

It’s not clear what role the city can play in the debate, but officials are staging the hearings to investigate the issue.

Both Long Beach and Los Angeles ports have worked to find policy solutions to address allegations that some companies improperly employ port truck drivers as independent contractors, denying them overtime and benefits, when critics and union leaders say they should considered hourly employees. In February, leaders agreed to hold hearings on the matter.

For years, some drivers and their unions have complained about not receiving the benefits of employment. Some say they end up owing their companies money for equipment fees despite long work weeks.

The California Labor Commissioner has received hundreds of complaints regarding the issue and has awarded more than $35 million in back wages and penalties.

But as some port truck drivers told council members about extremely low or even negative paychecks, some independent owner-operator drivers said such conversations made them wary. They want such an arrangement to be a choice, they contend.

These independent drivers have it good, they said — they make a good salary, run their own businesses and take care of their own insurance, retirement and trucks. And they’re worried that the push to make companies classify all drivers as employees will actually hurt them.

“Becoming an employee has to be a choice,” George Javarra, an owner-operator, said. “I’m trying to build a business here.”

Javarra held his paycheck in the air. While he did not say exactly how much it was, he indicated it was not a small check. His thoughts were echoed by other speakers who are owner-operators — one of whom said he takes home about $160,000 annually. Drivers who are not getting paid well should simply go to a better company, he said.

But on the other side of the room sat a group of drivers from the Teamsters union clad in neon-colored vests. They said they wanted drivers to have a choice of being their own bosses or being an employee. When it isn’t a choice, it equates to theft, they said.

“Not all companies are good,” said Randall Williams, who said he was not an owner-operator.

Councilwoman Jeanine Pearce said that the issue isn’t if drivers want the choice or not, it’s that California law states that “if it looks like a duck and quacks like a duck, it’s a duck” when it comes to driver-company relations.

In other words, if a company is treating a driver like an employee, they should be given appropriate employee benefits.

The next hearing on the subject will be Thursday, May 31 at 3 p.m. at the Port of Long Beach Maintenance Building Meeting Room, 725 Harbor Plaza.

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Contractors? Or employees?

The Long Beach City Council Harbor and Tidelands Committee began to tackle the issue of how the massive twin ports’ big-rig drivers should be classified at the first of two hearings Thursday afternoon.

It’s not clear what role the city can play in the debate, but officials are staging the hearings to investigate the issue.