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JOC Guide to Trucking, August 2019

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22 The Journal of Commerce | August 2019 www.joc.com 2019 JOC Guide to Trucking By Eric Johnson MAERSK IS USING an investment in digital freight broker Loadsmart as a path to offer its customers a way to instantly book US truckload service. The move is another sign of how the largest global container line is working to use technology and deepen its landside reach as it works to become an integrator. Maersk in October invested $21.6 million in New York- based Loadsmart as part of a broad set of initiatives aimed at creating a more digital experience for customers. The integrated Loadsmart book - ing tool, available at MaerskTranspor- tation.com, allows users to get instant quotes for dry-van moves within the US. If the quote is accepted, loads are guaranteed to be accepted, a central tenet of Loadsmart's business model. The service was announced via a Maersk LinkedIn post. The instant quoting capability dovetails with Maersk's initiatives in the past year to enable instant ocean freight quoting and booking. Those include tools for shippers to get rate quotes, quotes with confirmed sailings attached, and quotes that require the shipper to guarantee it won't no-show its container and Maersk similarly guarantees it won't roll that container. "We surveyed a number of smaller carriers in late 2018 and we asked them if they had added any capacity and, in fact, they had added significant capacity," Echo CEO Doug Waggoner said. "I don't know if that extends to the larger carriers, but I certainly do think that the industry bought a lot more trucks than we realized." Many of those drivers are now chasing low-priced freight to pay truck loans and insurance bills. High-profile bankruptcies have happened this year, such as New England Motor Freight (NEMF), LME, and Falcon Transport, but NEMF and LME are less-than-truckload carriers and Falcon specializes in flatbed truckload, not dry-van. "It's difficult to see it in the data, because there is a bit of excess capac - ity," Menzel said. "Loads get covered a little more quickly, and so there is capacity out there. It doesn't show itself to us in the data." Landstar vice president Joseph Beacom said its active carrier list is down less than 1 percent this year. But David Parker, CEO of Cove- nant Transport Solutions, said there are signs the market is "rationalizing itself." "We think, if it continues, some- time this fall [supply will be balanced], but that's just a guess for several reasons," he said on a July 25 earnings call, referencing trade uncertainty. Werner Enterprises CEO Derek Leathers agreed and pointed to canceled truck orders and fleet bankruptcies, which he believes will accelerate in the coming months. So peaks Landstar says spot rates rose sequentially in June and were up through the first three weeks of July, while Covenant and Werner said July was weaker than June. Therefore, An integrated offering Maersk leverages Loadsmart for US truckload booking The integration of ocean and truckload freight booking is pushing Maersk closer to the 3PLs with which it aims to compete. it's unclear whether June was a momentary seasonal upswing or the beginning of rising rates. "We just don't know about the next six months because of the tariffs. Some of our customers are very con- cerned how tariffs [from Europe or China] will impact them," said Sarah Ruffcorn, chief operating officer of Trinity Logistics. "One day it's good news, another day it's bad news. So, I think that will determine a lot in the next three months." Landstar CEO Jim Gattoni said slowing manufacturing numbers are hurting volumes, too. "We see a softer request coming in later this summer for our trailers [to use in the fourth quarter," he said. "[For] our other busi- nesses such as heavy haul, automotive, government, expedited, cross-border, I just think it's going to be sluggish through the rest of the year." Like Gattoni, Leathers forecasts the back half of 2019 won't be as strong as last year and the company expects revenue per load to be flat to down 2 percent in the coming quarter. Leathers said he doesn't expect this downturn to persist or be a prolonged freight recession like in late 2015 through 2016. That's a different view than J.B. Hunt Transport Services expressed in a July earnings call, and also varies from Covenant's position. "I'm very confident the industry has hit the bottom," Parker said. "I think we hit it sometime in May, and I think we're seeing it increase to stabilize off a lower base. At least we have a bottom and we're working our way back up. That's how I feel." But asked whether the third quarter will be better sequentially, Covenant and Werner said it could go either way. l email: ari.ashe@ihsmarkit.com twitter: @arijashe "Our industry has shown how volatile and cyclical it can be. The current environment is 180 degrees from a year ago."

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