Many states have reported a leveling-off of new Covid-19 cases. Clearly a good sign but we are by no means out of the woods yet. It is unlikely anyone alive today remembers the Spanish flu of 1918, but we may be able to learn some things to expect as we hope to return to some normalcy in the coming months. The administration is already talking about target dates to reopen the country in stages. The fallout from Covid -19 is painfully clear for many people. Let’s try to anticipate what challenges are ahead.

From a logistics and supply chain perspective, while things are still very early, it stands to reason that the impact on all things trade, shipping, and moving freight is already quite significant. There is also, of course, a high level of uncertainty that comes with a pandemic such as this one, in the form of how long it may last for, what should or could businesses be doing to get through this period, and what happens now or next? And what they all have in common is that they are all valid questions that come with a shortage of valid answers, at least so far, for the most part. The impact on supply chains more broadly will be a function of (a) how long businesses remain closed (b) the extent to which there’s an impact on downstream supply chains and (c) the extent to which precautionary measures are taken by corporations including logistics firms. We may be able to glean some information on what to expect during the recovery period by looking at the post Spanish flu recovery.

What Can We Learn From the Spanish Flu Recovery

The immediate effects of the pandemic; postponed weddings, canceled vacations, empty supermarket shelves, sinking housing prices, salary cuts, and layoffs suggest no one will come out of this period without losing something but we are only at the beginning. Predicting how bad things will get economically is difficult. A viral outbreak of this scale has only happened once before in the industrialized world: the 1918 influenza pandemic that hit the world in two seasonal waves, killing 50 million people worldwide and 675,000 in the US. That pandemic occurred during World War I, which makes it hard to compare to now, even setting aside all the other changes in the past century but we may be able to draw some loose parallels.

Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Society as a whole recovered from the 1918 influenza quickly, but individuals who were affected by the influenza had their lives changed forever. Given our highly mobile and connected society, any future influenza pandemic is likely to be more severe in its reach, and perhaps in its virulence.

Two months into this current outbreak, massive layoffs have started, American industries have demanded bailouts, and unemployment rates have surged. Economists at the Federal Reserve Bank of St. Louis are projecting total employment reductions of 47 million — an unemployment rate of 32.1%.

According to Forbes, every sector of the American economy is shrinking: Hotel chain Marriott International is furloughing tens of thousands of workers, Landry’s, the parent company of Del Frisco’s and Bubba Gump Shrimp, laid off 40,000 workers. Air Canada plans to lay off 5,100 members of its cabin crew. Shoe retailer DSW put 80% of its workers on a temporary unpaid leave of absence. This early carnage is understandable. How fast we recover will make all the difference to the U.S. economy.  Is this perhaps a wakeup call for domestic industry revitalization? There is a strong call to bring back the industrial revolution but are we too late?

What’s Ahead is Uncertain

As we look ahead, more information about corona virus will be learned about, to be sure, but things understandably are moving slowly. Freight transportation activity, processes and volumes are likely to be impacted to varying degrees, of course. For now, we assess and move forward as best as possible. Events like this on a global level can make for trying and difficult times, but, as has been the case before, one can expect supply chain networks to adapt and adjust and do what needs to be done to keep economies and freight flows moving forward. Land Link Traffic Systems is available for your supply chain needs.

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In January 2020, the World Health Organization (WHO) declared the outbreak of a new coronavirus disease in Hubei Province, China to be a Public Health Emergency of International Concern. WHO stated there is a high risk of the 2019 coronavirus disease (COVID-19) spreading to other countries around the world. WHO and public health authorities around the world are taking action to contain the COVID-19 outbreak. However, long term success cannot be taken for granted. All sections of our society, including businesses and employers, must play a role if we are to stop the spread of this disease.

How COVID-19 Spreads

When someone who has COVID-19 coughs or exhales, they release droplets of infected fluid. Most of these droplets fall on nearby surfaces and objects - such as desks, tables or telephones. People could catch COVID-19 by touching contaminated surfaces or objects and then touching their eyes, nose or mouth. If they are standing within one meter of a person with COVID-19, they can catch it by breathing in droplets coughed out or exhaled by them. In other words, COVID-19 spreads in a similar way to flu. Most persons infected with COVID-19 experience mild symptoms and recover. However, some go on to experience more serious illness and may require hospital care. Risk of serious illness rises with age. People over 40 seem to be more vulnerable than those under 40. People with weakened immune systems and people with conditions such as diabetes, heart and lung disease are also more vulnerable to serious illness.

Keeping Transportation Professionals Safe at Work

The Transportation Intermediaries Association has created a reference guide for its members to share with their customers to limit and prevent the likelihood of being exposed to this virus. Shippers, receivers, and truck drivers that are in personal contact (as they facilitate the movement of freight) need to be aware of – and take – necessary steps in order to minimize and prevent the spread of COVID-19. As an industry, we are in this together and we all need to look out for one another. If you are a shipper or receiver, consider providing truck drivers with a bottle of hand sanitizer or alcohol wipes to keep them healthy (and keep our nation’s freight moving).

The Centers for Disease & Prevention (CDC) also recommends following 6 key steps to help prevent the spread of COVID-19, which TIA has summarized in a downloadable PDF.

Land Link Traffic Services will continue our 24 hour service throughout this crisis. Please feel free to contact us 732.899.4242 or through this website.

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The debate over whether density-based pricing will succeed in toppling the traditional National Motor Freight Classification’s (NMFC) based pricing in the LTL industry is an ongoing debate. Carriers are pushing for dimensional pricing to combat the profitability of lightweight shipments. This is the basis of the argument. Under the NMFC classification density was taken into consideration as was packaging and commodity but it was largely based upon weight. Back in the day, carriers in a battle over business after deregulation, were offering FAK (Freight All Kinds ) tariffs to get the business. This strategy ultimately led to unprofitable operation ratios, subpar delivery performance and ultimately the bankruptcy of some major carriers. Jevic Transportation of Delanco, NJ is the first one that comes to my mind. Interestingly New Century transport, which was founded by Jevic‘s founder, adopted a similar strategy ending in the exact same fate. Considering this history and the recent high-profile bankruptcies of other major national freight carriers in recent years, one would have to conclude the days of beating up the carrier on rates is over. Unlike in the past, the LTL industry today has a massive volume of smaller shipments. There is also the challenge of completing same-day deliveries or time definite deliveries. Likewise, these shipments are not always of consistent size and density, making it difficult for LTL shippers to sustain profitability.

Today, if you want dependable service, you’re going to have to pay for it. Let’s see if we can help you avoid some of the pitfalls to come.

Dimensional Pricing

There is no secret to dimensional pricing. It’s really a simple equation; L x W x H / 139. It could be argued that the ecommerce boom started all this controversy overweight vs size. Ecommerce shippers have millions of items in inventory and a finite amount of box sizes. I’ve been personally amazed at the box size of some items I’ve received. It didn’t take long for the parcel carriers to figure that their trucks were dimming out before weighing out. This may have been the catalyst for dimensional pricing. It wasn’t long before the LTL carriers arrived at the same conclusion. They were charging by pound through diluted tariffs, not by the room the pallet actually occupied.

FedEx Freight, XPO Logistics, and other LTL carriers have been installing equipment that can scan a palletized shipment and, combined with scales, provide the cubic dimensions and weight needed to check the shipment classification. The consensus among LTL industry executives is that the current classification system is on its way out. The reality is that LTL carriers sell space in a trailer. Using the dimensions of a pallet identifies precisely how much space that shipment will require, thereby providing accurate real estate pricing.

Shippers Prepare

Many shippers believe dimensional pricing amounts to a rate increase, and the number of shipments, they say, are re-billed once they go through a dimensioner, supporting their contention. It can also be argued the shippers are finally being charged an accurate rate. Shippers who are not prepared to invest in equipment to measure their shipments’ dimensional weight will have to adopt strict packaging protocols to package their freight in a uniform method as to avoid a dimensional pricing situation.

The ability to double stack pallets is a prime example. Under dimensional pricing a pallet that cannot be double stacked will be billed at 2 pallet spaces since the pallet will essentially occupy the air above it. To date, much of the use of dimensional pricing has been limited to W & I procedures at truck terminals. However, by capturing more and more dimensional shipment data, LTL carriers are laying the data foundation needed for the expanded use of dimensional pricing.

Our supply chain managers at Land Link Traffic Services can help with packaging strategies, supply chain management techniques to maximize lane and weight balancing strategies and overall shipment planning protocols to maximize your freight spend in this more expensive environment. Finally, the Coronavirus will certainly cause some challenging strain on the supply chain. Don’t wander through this uncharted territory alone. Contact us today for a supply chain consultation.  

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The recent effects of Tariffs on the supply chain may pale in comparison to the potential aftermath of SARS-CoV-2. This virus has the potential to cause an economic shock unlike those that led to recessions in the recent past; the oil spike in 1991 that hit consumer wallets or the credit crunch in 2008 that seized up lending markets. The coronavirus has severely disrupted nearly every link in the global supply chain, from raw materials to components to finished goods, which could lead to curtailed production, product shortages, and financial stress across a range of industries. How manufacturing delays ripple through the economy isn’t so straightforward, however. The multi-level nature of raw material procurement for any large manufacturer creates a potentially large field of collateral damage in the event of supply chain disruption. One missing part for the widget from that line halts production and delays everything behind it for unknown time period. This may be an excellent opportunity to consider contingency planning. 

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The federal government has proposed long-awaited changes to the hours-of-service rules that would increase truck drivers’ flexibility while on duty. FMCSA’s newly proposed HOS rule offers five main revisions to the existing HOS rules, which are based on extensive public comments shared with the agency since last year. The adjustments would happen in five areas:

1. Flexibility for the 30-minute break rule by tying the break requirement to eight hours of driving time without interruption for at least 30 minutes; and allowing the break to be satisfied by a driver using on-duty, not-driving status, rather than off-duty.

2. Modifying the sleeper-berth exception to allow drivers to split their required 10 hours off duty into two periods: one period of at least seven consecutive hours in the sleeper berth and the other period of at least two consecutive hours either off duty or in the sleeper berth. Neither period would count against the driver’s 14‑hour driving window.

3. Allowing one off-duty break of at least 30 minutes but not more than three hours that would pause a truck driver’s 14-hour driving window, provided the driver takes 10 consecutive hours off-duty at the end of the work shift.

4. Modifying the adverse driving conditions exception by extending by two hours the maximum window during which driving is permitted.

5. Changing to the short-haul exception available to certain commercial drivers by lengthening the drivers’ maximum on‑duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles to 150 air miles.

The proposed rule would not increase driving time and would continue to prevent commercial operators from driving for more than eight consecutive hours without at least a 30-minute change in duty status.

Safety Remains The Driving Force For Both Sides

Most in the logistics industry consider trucking deregulated. While this perspective is accurate in a financial sense, the truth is trucking is among the most regulated industries in the country. It is important to understand government regulations add significantly to the cost of operations which, of course, is reflected in the rates. Most carrier executives question the depth and breadth of the regulations and how the federal regulators iron out their final rulemaking is critical to fleets’ efficiency and legal use of time. For example, a truck driver has 660 minutes (11 hours) of legal driving time during his or her 14-hour “on duty” time. How those minutes are divvied up not only matters to safety, but it’s a huge factor in both the driver’s compensation and the carrier’s financial wellbeing.  Among the challenges of drafting regulations for the trucking industry is the myriad of equipment types and services offered. Dry van, refrigerated, bulk carriers and other specialty carriers have present different safety concerns. Add to that mix carriers who transport more dangerous commodities such as hazardous materials like chemicals and munitions, fuel and over-dimensional loads and you end up with multiple regulations to cover all possibilities.

Manufacturers Look To Technology for Help

Technology is constantly evolving, particularly for motor vehicles. Self-automated technologies such as automatic braking systems have already appeared in passenger vehicles and are rapidly becoming available for large semi-trucks as well. Safety systems recommended by AAA researchers include:

• Air disc brakes, which significantly reduce the distance a large truck needs to stop.
• Automatic emergency braking systems, which engage the brakes if the system detects the truck is about to collide with another vehicle or object.
• Lane departure warning systems, which detect when a truck drifts from its intended lane and may hit vehicles in neighboring lanes.
• Onboard video monitoring systems, which monitor the road in front of a truck or the driver’s actions inside the cab to detect when unsafe practices occur.

Some of these systems not only help reduce the risks of truck accidents but may also aid injured victims recover legally afterward. For example, onboard systems can record if the lane departure warnings triggered before the accident, or whether the automatic braking engaged. This can provide evidence that a truck driver was distracted, fatigued, or otherwise impaired behind the wheel. Onboard video monitoring systems are pretty much common these days. They provide a solid picture of what transpired in any incident. They are a welcome e addition to most fleets since they reduce litigation costs and help drivers become more safety conscious. 

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Artificial intelligence and the Internet of Things are making their initial forays into a myriad of warehouse operations. The expected outcome; DCs able to respond dynamically to current supply chain conditions instead of pre-set rules. Look for newfound flexibility and an ability to respond to specific customer demands. The general programming protocol is to minimize human intervention in daily supply chain operations. This should not be news to anyone involved in complicated supply chain systems.

We are at the point where AI and IoT are viable IT applications for the warehouse. Both are powerful new tools that better enable warehouse and distribution center activities to keep pace with rapidly shifting supply chain dynamics. Artificial intelligence systems can learn, over time, the patterns and trends that are most important. It can identify when specific events occur which require human intervention. It can sense security breaches and stop them before they become crises. Simply put, for the IoT to grow to its full potential, it needs the processing power of artificial intelligence.

Integration Into the Supply Chain

AI promises a brave new world of computers that can plan, strategize, evaluate options, calculate probabilities, and make smart decisions. The inter-connectivity and dual reliance of both systems is evident in the automotive applications currently being tested. Repetitive daily environments are best suited for early stage AI learning and IoT experiences at this stage in the application. An example is a typical commercial bus route. The travel route is planned and timed out as are the stops. IoT applications including sensors, video cameras and time keeping technology all gather data throughout the daily route. This data is the basis upon which AI evaluates and electronically digests the information. It is through the digestion process that AI basically learns the particular details of the route like staying on time, the average number of passengers per stop, and, in fact, the unpredictable events like traffic and weather delays. It is through this repetitive experience that AI will eventually be able to maximize the efficiency of the route by anticipating daily events along the route based upon historical data.

The same inference can be applied to a route for a commercial delivery unit whether it be a truck, plane, train or any other conveyance unit. In this example the desired result is the same. To maximize efficiency by learning the route and experiencing every possible condition which may affect it so contingency plans can be implemented in real time to maintain the integrity of the delivery. The benefit of this technology application will become evident once driver less technology is fully implemented.

Early Areas of Implementation

AI can significantly improve business operations by leveraging the tremendous amount of data generated by sensors monitoring the production and movement of products using IoT. The result is referred to as AIIOT, which is the merging of AI and IoT to manage inventory, logistics, and suppliers with a higher level of awareness and precision. The supply chain is one area that can benefit the most from streamlining since it has a direct influence on profitability and customer satisfaction.

There are already several implementations of AI and machine learning where supply chain efficiency is improved:

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Eighty-five percent of supply chain managers expect their outsourcing budget to increase by more than 5% in 2020, according to Gartner, Inc. A sizeable portion of that will be aimed at choosing multiple third-party-logistics (3PL) partners.

The question no longer is whether to outsource; it's what to outsource and how much. Evaluating different outsourcing strategies has become a priority for global managers. To be effective, the supply chain outsourcing strategy needs to be aligned with the overall logistics priorities. Supply chain leaders are realizing that updating their technology systems, increasing speed to customer and improving visibility are their most important goals for next year. We are in the thick of the digital era and new routes to market and technology-enabled products and services are rapidly disrupting industries and business models. To respond to these accelerated and evocative changes, logistics leaders need not only understand the foundational elements of good overall strategy, but also rethink how their logistics outsourcing strategy is assessed and developed.

If your organization is considering a 3PL relationship here are several potential benefits to consider:

Improve global capabilities. 3PLs have on-ground knowledge of local markets, regulations and government agencies, and understanding of capacity constraints.

Reduce costs. 3PLs can help reduce excess carrying costs, return goods cost and lost sales. They can also help manufacturers move more material with fewer assets while still meeting customer requirements. In some cases, manufacturers can realize savings when consolidating warehouses and/or using shared facilities operated by 3PLs.

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Celadon Transport, a division of the Celadon group filed for bankruptcy protection this week just days after two former officials were charged in an accounting fraud scheme. The Chapter 11 bankruptcy filing by the Indianapolis based Celadon Group left more than 3,000 drivers jobless and, in many cases, stranded drivers across the U.S. after their company gas cards were cancelled.  Another 500 administrative jobs are expected to be eliminated through the bankruptcy.

Celadon's former president and chief operating officer, William Meek, 39, and its former chief financial officer, Bobby Lee Peavler, 40, were indicted on conspiracy and other charges. They knew the value of a substantial portion of Celadon's trucks had declined and that many trucks had serious mechanical issues that made them unattractive to drivers, according to the indictment.

Earlier this year, Celadon agreed to pay $42.2 million to settle securities fraud allegations stemming from falsely reporting profits and assets. The company's stock was trading at less than 3 cents a share on Monday, down from a 52-week high of $2.83 last April 11. Celadon said it was the largest provider of international truckload services in North America, and its bankruptcy filing means 3,300 trucks and 10,000 trailers will stop rolling.

Among the big companies that failed in 2019 are New England Motor Freight, which employed more than 1,400 drivers. HVH Transportation, Falcon Transport and LME have all shuttered operations this year, too. Part of the problem, according to Donald Broughton, principal and managing partner of data firm Broughton Capital, is that spot pricing has dropped, which is hurtful to smaller companies that operate in the spot market instead of the contract market. Spot prices refer to shipping prices as they currently exist.

Trade tariffs, as well as slowdowns in a variety of markets, including housing and auto, contributed to the drop, Broughton had told FOX Business. He predicted companies would continue to fail into 2020 because of the weak pricing environment.

Additional pain for the industry could be coming next year in the form of labor laws designed to protect contracted workers from being misclassified. In California, for example, starting in January a law will go into effect that will make it harder for companies to classify workers as contractors, which the California Trucking Association has said could put 70,000 owner-operators in the state out of work. The group has sued to prevent the law from taking effect.

New Jersey is considering similar presumption-of-employment status legislation, which has caused alarm among the state’s trucking industry, as well.

What Shipper Can Do To Protect Shipments

The thousands of trucks stranded Celadon trucks likely have customers shipments onboard which will not be delivered anytime soon.  Getting that freight delivered will likely cost significantly more than the original rate.  The most damaging aspect of getting caught in a bankruptcy like this one is that thousands of customers supply chain has been significantly disrupted.

The best way to protect yourself against insolvent and even under achieving carriers is to vette them annually.  Review financial statements, credit ratings, customer experiences on social media and verifiable on time percentages.  Another option is to employ a 3^rd party Logistics Firm to help with routing decisions.  At Land Link Traffic Systems carrier vetting is a standard procedure.  We take every precaution to route our customers freight with a financially healthy carrier with above average performance.

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