Connect with us

Hi, what are you looking for?


Loaded and Rolling: Interview with Variant’s Josh Smith; Bank of America transportation outlook

Trucking and technology at scale: A look at Variant with Josh Smith

(Source: FreightWaves)

On Tuesday, Josh Smith, vice president at Variant and over-the-road operations at U.S. Xpress, spoke to FreightWaves about the Variant program and how technology and operations are vital to success in trucking.

During the interview, Smith highlighted the evolution of the Variant brand and how the organizational structure seeks to make life better for drivers on the road. Smith noted the Variant model is designed for growth and scale and outlined his thoughts on the opportunities available as the freight market changes. 

We also got insight into operational challenges, as high inventory levels among retail and consumer-focused customers can often lead to challenges in trailer detention rates. While the pandemic brought about challenges with labor and equipment, the post-pandemic low consumer demand environment has created warehousing space concerns. This has led to some customers using enterprise carriers’ equipment as mobile forms of storage until their warehouse or distribution center inventories rightsize. 

You can view the entire episode here. 

Bank of America transportation outlook

(Source: BofA Global Research)

Last Tuesday, Bank of America Global Research released its transportation outlook for the year ahead. 

Here are a few key takeaways for 2023, according to the report:

  • Truckload demand may inflect positive in the second half of ’23, aided by a low base, while capacity adds will slow as smaller operators face margin pressures on materially higher costs and lower rates.
  • Moderating diesel prices may negatively impact pricing, given carrier surcharge schedules balanced by lower operating costs.
  • Improved chip availability may lead to higher net adds to Class 8 truck capacity levels, potentially leading to rate pressures.
  • Contractual truckload agreements renewing at lower rates after low-double-digit to mid-teen improvements over the 2022 bid process.
  • The proliferation of California’s AB5 law may result in higher labor costs for carriers as owner-operators could require recategorization as full-time employees, incurring additional benefit and insurance costs for carriers.
  • Driver compensation increases will moderate as inflation tempers. Insurance/claims and purchased transportation cost increases, along with fuel upticks, could also present pricing opportunities on sustained expense hikes.
  • Autonomous truck operators [will] continue to demonstrate technological gains, while business plans are revamped [due to the] higher cost of capital backdrop.

From a trucking perspective, another challenge will be trying to predict and quantify the amount of smaller carriers and owner-operators who either leave the market or join a larger carrier. For every carrier bankruptcy reported, there are often multiple smaller carriers that simply cease to pay insurance or do not renew their motor carrier number.

While net revocations of operating authority are one way to attempt to put a number on this movement, challenges remain when attempting to determine an exact moment when the market bottoms or enough capacity leaves to cause meaningful changes in the trucking supply/demand dynamic. 

Market update: December net trailer orders break records

(Source: ACT Research)

According to a recent report from ACT Research, trailer orders in December reached the second-highest monthly intake since record keeping began in 1996. The 57,300 order count was 46% higher than November and 115% higher year over year. 

“Regarding demand, most trailer makers continue to see demand exceeding capacity through the end of 2023,” Jennifer McNealy, ACT’s director of CV market research and publications, noted in the report. “… Some have mentioned an erosion in confidence but are also quick to note that this hasn’t appeared in the form of cancellations.”

FreightWaves market expert Mike Baudendistel was surprised by the report.

“It could be some makeup orders [are filled] to compensate for the supply constraints the past couple years,” Baudendistel said. “I would think the orders were even more heavily weighted toward the large enterprise carriers than they usually are since they are well capitalized and their business holds up better in a weakening market.”

FreightWaves SONAR spotlight: Used truck pricing declines suggest demise of pricing bubble

(Source: FreightWaves SONAR)

Summary: Recent data from ACT Research suggests that used Class 8 truck pricing continues to decline but remains higher than pre-pandemic levels. While new truck orderbooks are opening up and fleets are updating aging equipment, these trends appear to be contributing to a downward impact for used trucks at auction. FreightWaves’ Alan Adler reported that, according to J.D. Power Valuation Services, “prices at auction are about 25% higher than the last pre-pandemic peak. … At the peak of the pricing bubble, used trucks sold for as much as 149% more than they did before COVID hit in March 2020.”

Adler also noted that new truck sales are up 18% year over year in December at 29,172 units, the highest level since J.D. Power began collecting the data in 1998. 

“December’s record new truck delivery rate was partially responsible for strong auction volume and weaker pricing,” Chris Visser, J.D. Power director of specialty vehicles, told FreightWaves. “Trades typically take at least a few weeks to turn around, so new truck deliveries weren’t entirely responsible.”

But questions remain if OEMs can manage their build rate to avoid a used truck oversupply. 

“One way I define ‘oversupply’ is if pricing for late-model trucks dips below long-term trend,” Visser said. “Late-model trucks are currently bringing about 20% more money than the last pre-pandemic peak, and trucks with under 400,000 miles have barely depreciated at all.”

Walmart expands in-house driver hiring, training program (FreightWaves)

Former USA Truck CEO takes COO role at Kodiak Robotics (FreightWaves)

Trucking demand falls faster than inventories in December (FreightWaves)

Carriers seeing light at end of tunnel, but is it too soon? (FreightWaves)

ACT Research: Freight market balance loose with signs of bottoming (ACT Research)

Michigan trucking company auctioning equipment after 50 years (FreightWaves)

Like the content? Subscribe to the newsletter here.