Blockchain Technology Could Impact the Transportation Industry

Although blockchain technology was initially built for the cryptocurrency Bitcoin, it could make its way into the transportation industry for good. Some people feel that it may actually bridge the gap for companies using different operating systems.

Roger Gilroy of Transport Topics writes:

Freight contracts, document transfers, food safety, driver security, parts management and asset tracking are among the many elements of the trucking business that could become easier and more secure through new applications built around the shared digital ledger called blockchain.

The blockchain concept originally was developed to support the digital currency Bitcoin, but technology experts are exploring a whole universe of possibilities to apply it to other industries, including transportation.

Trucking fleets, transportation software companies and other industry players are studying blockchain, testing it and anticipating it could reach a tipping point within two years.

“If you are looking for some kind of immutable, secure, trackable, incorruptible data, then that is what you need blockchain for,” said Ken Craig, vice president of special projects at McLeod Software. “It is going to have a lot of uses in the trucking industry where those types of applications and functions are needed.”

Simply put, Craig said, blockchain provides another aspect of interoperability and visibility within the supply chain, much like electronic data interchange, application programming interfaces or web services.

However, blockchain without its own truly interoperable standards will develop into nothing more than a new process that mimics the difficulties surrounding the use of EDI, he said.

“We have programmers today [at McLeod] that work on nothing but developing new and very proprietary ‘standard’ EDI transaction sets dictated by various shippers,” Craig said.

The push for standards comes as some companies already have forged ahead with their own blockchain applications.

“Two years ago, I was a centralized database kind of guy, looking at big-data warehouses, and I didn’t see the value of blockchain, at first,” said Tim Leonard, chief technology officer at TMW Systems.

Fast forward to now. TMW has 54 separate blockchain applications, he said. Among those are ones covering truckload, less-than-truckload and dedicated activities.

Leonard described blockchain as “the big visibility,” with the contract information, lanes and proof of delivery all contained within the digital contract itself. “And it is a living, breathing ledger, which means it is constantly going back to the transportation management systems, for updates to itself,” he said.

In August, a consortium was launched to develop blockchain standards for freight movements.

By November, it had changed its name to the Blockchain in Transport Alliance after starting out as the Blockchain in Trucking Alliance.

The change was requested by key members, said Craig Fuller, CEO of TransRisk and BiTA’s co-founder.

“Companies like UPS Inc., FedEx Corp., YRC, BNSF and C.H. Robinson do more in transport than trucking. It felt like the organization was well-positioned for cross-­industry collaboration, regardless of mode,” Fuller said.

He added: “We love that TMW [also a member of BiTA] is starting to develop appli­cations inside their ecosystem, but the world of transportation is massive and collaboration with competitive platforms is necessary for the technology to proliferate.”

BiTA said it has 160 member companies and saw applications for membership surge to more than 900 as of January.

North America’s largest truck manufacturer, Daimler Trucks North America, is considering applying for membership.

“Joining BiTA is a talking point, right now, for the company,” Lori Heino-Royer, DTNA’s director of business innovation, told Transport Topics.

DTNA plans a pilot test of blockchain internally in the first quarter, she said, “before we start moving into how do we work with outside suppliers and vendors or our carriers. But I would definitely say that we will make a progression on those fronts.”

There are elements of blockchain she likes and parts she questions.

On the positive side, blockchain could become an agnostic means of linking companies currently using different operating systems. This would reduce the widespread inefficiency in the trucking industry, she said.

“Whenever there is a physical movement and a financial transaction that occurs with that physical movement, it is right for blockchain,” Heino-Royer said.

However, blockchain’s latency, or the time it takes to get all of the verifications out there and understood, needs to improve, she said. “It’s not instantaneous.”

Also, blockchain’s immutability concerns her since entering information correctly 100% of the time is not what happens in the real world, she said.

Lastly, there is a private and a public key to every blockchain transaction to control access to the information.

“If the private key that your organization has gets damaged, that blockchain is then null. It is no longer verifiable. So what happens then? I haven’t seen a good solution that solves that,” Heino-Royer said.

In August, IBM announced a globally focused blockchain to collaborate on food safety with Dole, Driscoll’s, Golden State Foods, Kroger, McCormick & Co., McLane Co., Nestlé, Tyson Foods, Unilever and Walmart.

Steve Rogers, IBM’s vice president of supply chain for blockchain, said the emergence of blockchain will be supported by cloud computing, the use of remote servers hosted on the internet to store and process data in lieu of on-premises computer systems.

“The good thing about this new technology is that it is coming after the cloud revolution so people don’t have to worry about fitting up that huge data center with equipment that they then are going to buy lots of software and storage for and have huge IT departments to run that,” Rogers said. “Most blockchain-related services are going to be cloud-based so people can get into blockchain-related solutions much, much easier.”

Transflo, a unit of Pegasus TransTech, is actively studying how it wants to position itself with this technology, Chief Technology Officer Salem ­Elnahwy said.

Transflo provides document scanning and delivery services at truck stops and via its mobile app.

The company handles millions of documents and performs automatic recognition and identification of data on these documents, Elnahwy said, “so we are in a very good position to start with automating some of that data gathering and using blockchain to create a better digitized standard protocol communication across the whole supply chain.”

Another area with big potential for blockchain is improving yet simplifying security challenges with driver identification, particularly given the broader use of mobile apps and electronic logging devices across the industry.

“There is more to be thought through there, at least from the transport side,” Elnahwy said.

Penske Logistics sees blockchain potentially benefiting its customers that operate in the manufacturing, food and beverage sectors, the company said in a statement.

Penske pointed to the benefits of further digitizing and securing supply chain and logistics processes, improving order ac­curacy, tracking physical assets such as vehicles, trailers, trucks and containers, and securing freight bill pay and audit transactions across its freight brokerage and ded­icated carriage operations.

Polaris Transportation Group is one fleet that believes blockchain could provide a competitive advantage.

“In terms of operational precision, blockchain pivots the traditional ‘waiting for an order’ to a more proactive relationship where a customer request is anticipated as early as when the raw materials are sourced in another part of the world,” company President Dave Cox said in a statement.

The Toronto-based fleet said it is the largest privately held Canadian cross-border LTL carrier serving every U.S. ZIP code and Canadian postal code on a daily basis.

“When you think about the ­value of knowing what orders you’ll have to execute tomorrow today, for an LTL operator, it ­allows the system to flow in a ­totally different and better way,” Cox said.

Meanwhile, blockchain and its distributed ledger technology will be here much sooner than later, predicted Jack Legler, technical director of American Trucking Associations’ Technology & Maintenance Council.

“I think we will see distributed ledger technology find its way into the mainstream of contract transactions in our industry,” he said. “As a consequence, warranty and truck parts supply chain transactions will adopt blockchain-based systems once the cost-savings potential becomes more identifiable and distributed ledger technology is proven in reliability,” he said.

When that happens, it will be “like Carfax on steroids,” said Mauricio Paredes, vice president of business technology at transportation firm PS Logistics, a BiTA charter member.

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Trade Deficit Grew Wider Than in 2008

The trend of the widening deficit may continue into this year, as the number of imports outweighed the number of exports in December 2017.

The U.S. trade deficit widened to the biggest monthly and annual levels since the last recession, underscoring the inherent friction in President Donald Trump’s goal of narrowing the gap while enjoying faster economic growth.

The deficit increased 5.3% in December to a larger-than- expected $53.1 billion, the widest since October 2008, as imports outpaced exports, Commerce Department data showed Feb. 6. For all of 2017, the goods-and-services gap grew 12% to $566 billion, the biggest since 2008.

The trend may extend into this year: Solid consumer spending and business investment — assuming they hold up amid the recent stock-market rout — will fuel demand for foreign-made merchandise. While improving overseas growth and a weaker dollar bode well for exports, Trump’s efforts to seek more favorable terms with U.S. trading partners remain a work in progress, and his tax-cut legislation may cause the deficit to widen further.

One of the central themes of Trump’s presidential campaign was a pledge to level the playing field for American workers. In his first State of the Union address last week, Trump promised to “fix bad trade deals and negotiate new ones.” The president recently placed tariffs on imported solar panels and washing machines, sparking concern the U.S. may prompt trade wars.

With two of Trump’s main targets, China and Mexico, the imbalances worsened in 2017. America’s merchandise-trade gap with China, the world’s second-biggest economy, widened 8.1% in 2017 to a record $375.2 billion.

NAFTA Talks

The goods-trade deficit with southern neighbor Mexico increased 10% last year to $71.1 billion, the highest since 2007. The administration is currently renegotiating the North American Free Trade Agreement with Mexico and Canada, and Trump has repeatedly threatened to withdraw from the pact.

U.S. merchandise exports to China and Mexico in 2017 were the highest on record — and so were imports.

For the full year, total U.S. exports rose 5.5% to $2.33 trillion, while imports climbed 6.7% to a record $2.9 trillion. Both showed the biggest gains since 2011.

What Bloomberg Economists Say

The international trade balance deteriorated further in December as import growth continued to exceed that of exports. In December, a strong increase in imports possibly resulted from some suppliers rushing goods into the country at year end, fearing import tariffs in 2018. A larger widening of the trade deficit in the fourth quarter than the previous data were indicating suggests net trade could be a larger drag on economic growth than the previously estimated 113 basis points.

— Yelena Shulyatyeva and Carl Riccadonna, Bloomberg Economics

The December goods-and-services gap was wider than the median estimate of economists surveyed by Bloomberg for $52.1 billion.

Exports rose 1.8% to $203.4 billion in December from the previous month, led by record shipments of capital goods and gains in industrial supplies and materials. Imports advanced 2.5% to $256.5 billion, boosted by record U.S. purchases of consumer goods, capital goods and food products.

The monthly figures add to details for the fourth quarter, when trade was a substantial drag on the economy, and show how a widening deficit may mitigate any gains in the pace of expansion in 2018. Net exports subtracted 1.13%age points from gross domestic product growth, which registered an annualized rate of 2.6% in the October-December period.

Other Details

• After eliminating the influence of prices, which renders the numbers used to calculate GDP, the December goods-trade deficit widened to $68.4 billion from $66.5 billion in the prior month.

• For all of 2017, the real petroleum gap of $95.9 billion was the narrowest in records going back to 2003, as real petroleum exports rose to a record high; the non-petroleum goods deficit of $740.7 billion was the widest on record.

• Exports and imports of goods account for about three-fourths of America’s total trade; the U.S. typically runs a deficit in merchandise trade and a surplus in services.

With assistance by Chris Middleton, and Vince Golle

 

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Autonomous Vehicle Sales Likely to Increase

It’s no secret that technology is at the forefront of most industries today, including trucking. With many successful pilot projects already completed, autonomous vehicle sales will likely increase. Many believe that the question is not if, but when.

Jack Roberts of Heavy Duty Trucking (HDT)/Truckinginfo writes:

These days, no one seems to question the inevitability of autonomous technology moving into the mainstream, although there’s little consensus on when exactly it will become widespread. At this point, the main question seems to be which transportation sector will it affect first – passenger cars or commercial vehicles.

A little boost to those who predict commercial vehicles will take the lead in adopting autonomous technology appeared last week via a report by Tractia, a global market research firm that focuses on human interactions with technology, which found that worldwide revenue from sales of autonomous trucks and buses reached $84 million in 2017.

Looking ahead, Tractia’s researchers found that the market will continue to develop at a strong pace over the next few years with more competition within the industry, providing significant opportunities to various industry participants, and reaching global revenue of $35 billion by the end of 2022. During that period, Tractia forecasts that annual unit sales will increase from approximately 343 vehicles in 2017 to 188,000 units in 2022.

“The potential for autonomous trucks and buses is huge and market growth is accelerating, with news of successful pilot projects coming at an increasing pace,” noted Tractia research analyst Manoj Sahi. “Considering the next two to three years as a make-or-break time, several prominent companies are prioritizing investment for large-scale development.”

According to Tractia, the report also looks at key drivers and issues affecting the adoption rate of autonomous technology today, including:

  • What is the current state of technology and market development for autonomous trucks and buses?
  • How will the market evolve over the next 6 years?
  • What are the key drivers of market growth, and the key challenges faced by the industry?
  • What are the bottlenecks in technology development?
  • Who are the important players in the market, and what are their products and services?
  • What are the future pricing trends for different vehicle types?

An executive summary of the report can be downloaded by visiting Tractia’s website.

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Why the Trucking Industry is Worried About NAFTA

One of President Trump’s top priorities is to rework trade deals so that they are fair to the U.S. But, what if leaders cannot reach an agreement and NAFTA ends altogether?

Published by Transport Topics, Connor D. Wolf | InsideSources.com (Washington, D.C.) writes:

 President Donald Trump has pledged to rework trade deals so they benefit domestic workers, but current efforts have sparked concern among industry groups, including trucking.

The North American Free Trade Agreement became a critical component in the national economy when it was implemented in 1994. The trade deal is now facing major changes as partner countries rework its many provisions – a process that has been marred by contentious negotiations and a possible pullout by the United States.

President Trump entering office became the catalyst for the renewed trade talks. He has been highly critical of current trade agreements like NAFTA which he sees as undercutting domestic workers. Industry groups generally agree that the deal should be updated, but have become increasingly worried about the direction talks are going.

“Compared to when we started I have to say I’m a bit more pessimistic,” American Trucking Associations chief economist Bob Costello told InsideSources. “I thought it was a great idea to update NAFTA. I think everyone was under the impression that it would be a lot easier than it’s been, and therefore I think reality has set in and we’re probably a little bit more pessimistic. But by the same token, I don’t think it’s all done either.”

The fifth round of negotiations in Mexico City, Mexico, ended with lingering tensions when they closed Nov. 21. The next round of negotiations is scheduled to begin Jan. 23 in Montreal, Canada.

NAFTA has been a major point of contention since it was first implemented over two decades ago. Critics have argued the trade deal has benefited large corporations or foreign workers at the expense of domestic workers. But to industry groups, the trade deal has been vastly more beneficial than not.

“From our perspective, NAFTA has been a win-win,” David French, senior vice president for government relations at the National Retail Federation, told InsideSources. “It has been very successful agreement by most measures. The flaws in the agreement can be fixed by negotiating. You’re not going to get the best agreement by threatening to pull out.”

NAFTA was negotiated as a free trade agreement between the United States, Canada, and Mexico. The agreement reduced or eliminated tariffs and other trade restrictions to open up more access among the partner countries. It was able to increase trade dramatically in the region.

“The vast majority of products that go over the southern border and the northern border involve trucks,” Costello said. “That’s generated $6.5 billion in revenue annually for our industry, and that means we’re employing over 46,000 people who’s jobs sorely depend on NAFTA, including over 31,000 U.S. truck drivers.”

President Trump hopes to use trade and other reforms to encourage domestic production – which could result in more jobs. But some domestic production faces barriers that other countries don’t have. Restricting foreign trade in certain circumstances could hurt both domestic companies and consumers by limiting the flow of goods they might rely on.

Mexico, for instance, is the only place in the world that can grow avocados year round. The country, as a result, supplies 45% of the global avocado market. Texas A&M University found in 2015 that avocado imports have helped to create roughly 19,000 domestic jobs along with $600 million in tax revenue.

“We really want no changes, no changes to trade,” Ramón Paz, strategic advisor at The Avocado Producers and Exporting Packers Association of Mexico, told InsideSources. “If we go back before NAFTA, we had a tariff of about six cents per pound. If they reapply that tariff it would have a cost throughout the supply chain. There would be changes for the growers and the shippers and everyone. But in the end, the most affected party would be the consumers.”

Industry groups and companies elsewhere have also been vocal in expressing their concerns and hopes throughout the renegotiation process. About a hundred companies urged federal officials in a letter Nov. 14 not to make major changes to trucking provisions. Food and agriculture groups also sent a letter Oct. 25 warning that withdrawing would cause significant problems for their industries.

Industry groups have been particularly concerned about the rhetoric coming out of the administration. The president has also proposed several contentions proposals which partner countries are unlikely to agree with. U.S. Chamber of Commerce President Tom Donohue called some ideas “poison pill proposals” which threaten to undermine talks.

“We’re hopeful but some of the rhetoric out of the administration hasn’t been helpful,” French said. “We’re hopeful the administration is just playing a game to achieve maximum leverage in the agreement but is ultimately interested in constructing a solution rather than tearing the agreement apart.”

U.S. Trade Ambassador Robert Lighthizer detailed during a congressional hearing June 22 that the administration plans to renegotiate trade deals to be fairer and more efficient, enforce trade deals more aggressively, and increase domestic exports. Those goals have been consistent talking points as the administration has discussed trade.

The disagreements and heated rhetoric have fueled concern throughout the economy. Many businesses rely on the massive trade deal which makes them vulnerable depending on how the negotiations end – while creating uncertainty in the process. Alliance of Automobile Manufacturers federal affairs vice president Jennifer Thomas notes that there are two bad outcomes that could potentially come from these talks.

“It’s hard to see how we end up in a good place at this point,” Thomas said. “At this point, we’ve been envisioning two scenarios. One where we’re looking at an unworkable NAFTA because we have an erroneous rule of origin that we’re having to meet, or that there is no NAFTA.”

Trump has said he is trying to make a better trade deal but is willing to pull out if not possible. Investment bank Goldman Sachs announced late last year that it expects the administration to ultimately withdraw from the trade deal. Industry groups warn that there would be immediate economic harm if the administration does decide to step away.

“We’re growing more concerned by the prospects of the administration using the treat of a withdrawn as leverage in the negotiations,” Thomas said. “And I think that if the president were to trigger a withdraw, there would be immediate ramifications. It’s hard to see how we could pick of the pieces at that point.”

Thomas adds withdrawing could undermine other achievements like tax reform which helps the business community. She also notes that withdrawing could create a lot of uncertainty across many industries. Costello warns that it would be disastrous for the trucking industry – which plays a critical role in trade.

“The NAFTA renegotiations are critical for our industry,” Costello said. “If it were to go south and we pullout, it would be disastrous for us. We obviously have a big stake in it and as a result, I’ve been following it closely.”

The American Action Forum, a center-right nonprofit, released a report Dec. 11 claiming that withdrawing from the trade deal could jeopardize 14 million jobs. The report also found that withdrawing could expose businesses to $15.5 billion in new tariffs and increase consumer costs by at least $7 billion.

The NAFTA negotiations are still ongoing so there is still hope for the business community. Reuters found in a survey Jan. 19 that the majority of economists expect the U.S. to stay in the deal – but there is still the issue of what the finalized reworked deal will look like. Industry groups are generally open to updating the trade deal – but are concerned over what the outcome will be.

“I think that we’re concerned about the direction that administration seems to be taking the talks,” French said. “I think that everyone agrees with the goal of modernizing the agreement. But too many times in the last several months the White House has suggested that maybe the outcome will be to pullout of the agreement, and that’s not a constructive approach.”

The national economy has changed in dramatic ways since the trade deal was first implemented. Technology, like new forms of communication, have shifted markets and opened up new avenues for international trade. The internet, for instance, has provided a whole new way to shop and conduct business.

“We went into this process thinking it was just going to be a modernization of NAFTA,” Thomas said. “We realized that this was going to be more than that and then we saw the contentious proposals that were tabled in the fourth round. Our industry [automobile manufacturers] really feels like we’re in the crosshairs at this point.”

Costello points to a cross-border trucking program that could be in jeopardy as the talks progress. The federal program allows Mexican truck drivers to make long-haul deliveries in the United States. The program is intended to reduce contentious interactions at the border – but it has also faced opposition.

“We’ve been supportive of the Mexican truck program,” Costello said. “It’s now an open door policy for all Mexican truck drivers to come across the border. But it is good and has the potential to be better. It’s a relief valve to clear congestion at the border.”

Trump was also able to upend another major trade deal before it was fully implemented by withdrawing from the Trans-Pacific Partnership (TPP). The agreement would have been the largest regional trade deal in history at roughly 39% of global GDP.

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What We Know About the ELD Mandate So Far

It’s no secret that adjusting to the new ELD mandate has been difficult for many drivers and companies. This article shares and analyzes a few takeaways you should be aware of going forward. However, hopefully, as time goes on, companies will learn to smooth out the process for all parties involved.

Heavy Duty Trucking (HDT)/Truckinginfo.com writes:

Since enforcement of the electronic logging device mandate started in mid-December, J.J. Keller reports that it is seeing problems with confusion whether a device is an ELD or a grandfathered automatic onboard recording device, as well as complaints about vendor support, and more drivers running out of hours due to delays.

 J.J. Keller Senior Editor Mark Schedler reports that its compliance experts are seeing four recurring themes:
  1. Drivers are not sure if they have an AOBRD or ELD in the truck, and enforcement isn’t certain either, due to the variety of devices now in operation.
  2. ELD-related citations are being issued in several states for AOBRDs, even though drivers were compliant with Section 395.15, which is the AOBRD regulation.
  3. Carriers who chose vendors with insufficient levels of customer support are feeling the pain in the form of frustrated drivers and a potential loss of equipment productivity.
  4. Drivers are running out of hours due to delays at customers, traffic, and major accidents, and/or are not getting credited with a full break because of starting on-duty time just minutes too soon.

Schedler offers a closer look at each of these:

1. Know the requirements of the device in the truck

This may sound basic, but drivers must be certain of which device they are using (AOBRD or ELD), and understand the requirements for the respective device. If you or the vendor didn’t provide adequate instruction on the actual device in the vehicle, this can — and is — resulting in miscommunication with enforcement.  

2. Incorrect citations and data transfer failures

There are reports of drivers with AOBRDs being cited (but not fined) for ELD-related violations. The violations have been primarily for “failure to transfer data,” when, in fact, AOBRDs are not required to transfer data – they only must display or print the required hours-of-service information. If your driver was incorrectly cited, the citation should be contested via the DataQs process, even though there is no CSA point impact until April 1, 2018. A pattern of ELD-related violations will be looked upon unfavorably in court and by insurance companies, regardless of CSA point values.

There are also several reports of data transfer failures with purported “ELDs.” However, drivers were not cited and were permitted to use the device as an AOBRD if the display was compliant. The root causes of the data transfer problems were likely ELD-related versus FMCSA system-related. Different enforcement districts may choose to correctly cite for the failure of a purported ELD to transfer data.

Data transfer issues and any other ELD malfunctions must be repaired within eight days. You can file for an extension with the state FMCSA office within five days of the malfunction. If the vendor is unable to provide a compliant device, other actions to consider are reporting the vendor to the FMCSA and/or switching vendors.

3. Vendor support may be insufficient

Along with having a compliant device, customer support is one of the most important aspects of the vendor decision. Carriers are now experiencing the reality of their vendor’s customer support. There are 175 vendors and 278 models on the FMCSA ELD registry to choose from, and many do not have a strong track record in the AOBRD/ELD business. Blogs are filling up with unhappy stories of broken vendor promises and long waits for customer service responses.

Driver frustration with ELDs and AOBRDs can be reduced by a vendor with 24/7 support. If adequate time wasn’t devoted to training on data transfer procedures, edits, unassigned drive time, and other areas, a solid vendor can assist with this task. If things are bad enough, you might have to think about switching vendors.

4. Avoid and address potential hours issues

The hours-of-service regulations have not changed, yet there has been an increase in the reporting of drivers running out of hours before reaching a safe place to park. The burden is on the back office to consider drivers’ available hours and the expected hours for a trip, including potential delays at customers. Dispatching procedures must provide guidance on how to handle situations when there isn’t enough capacity to handle “priority” loads. Drivers cannot make the problem disappear.

Create, if you don’t already have, a safety procedure that addresses situations where a driver could be forced to leave a customer without enough hours to make it to a parking location. Personal conveyance or “off-duty driving” cannot currently be used as the back-up plan. If drivers run out of hours and must leave a location after failing to gain approval to park there, the electronic log must reflect the actual “on-duty driving” that occurred.

Instruct drivers to enter detailed annotations with the reason for any exceptions used or hours-of-service violations. Trends of violations are an audit concern, but an occasional well-documented instance of being over hours shows that you aren’t allowing continual unsafe practices.

The start date for full enforcement is fast approaching. Effective April 1, drivers will be placed out of service and Compliance, Safety, Accountability (CSA) points will be assessed for ELD-related violations.

Truck orders close out 2017 at 290K units

We all know the equipment needs for the trucking industry are growing.

Commercial Carrier Journal (CCJ) writes:

Class 8 truck orders closed out 2017 on a tear according to ACT Research, reaching 37,200 units and topping 30,000 orders the third consecutive month.

December order activity jumped 15 percent over November totals and were 77 percent higher versus a year ago, hitting their highest level since the 40,000-plus orders seen at the close of 2014.

“ELD implementation is now in full swing and will continue through the initial enforcement phase of April 1 of this year,” adds Jonathan Starks, ACT chief operating officer. “This is contributing to the tight capacity environment and is combining with strong freight activity to move freight rates higher. Our forecast continues to call for an increase in production for 2018, but market expectations are varied for 2019.”

The North American equipment market continues to show strength entering 2018, with Class 8 orders for the past 12 months totaling 290,000 units.

 

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Freight Flows Adapt to Industrial Migration

It’s no surprise that an increase in population affects freight flow. But, did you know that migration to the south, southwest and mountain states is expected to rise? According to a recent article by FleetOwner®, these states have adopted more business-friendly taxes and practices. Aside from migrating retirees and millennials, this is one of the major reasons for the influx of population in these areas.

A study done by Area Development just last year shows that the top five states to do business in—from most to least desirable—are: Georgia, South Carolina, Texas, Tennessee, and Louisiana. The survey was conducted based on various criteria, including cooperative and responsive state government, workforce development programs, competitive labor environment, regulatory environment, and a statewide approach to economic development.

Another analysis conducted by United Van Lines found that not only has there been an inflow in western and southern states, but that northeast states continue to experience a moving deficit, meaning that more people are leaving than entering. More specifically, the research stated that the moving trends for top destinations in the west—from highest to lowest influx—are: Oregon, Idaho, Washington, Nevada, and Arizona. Southern states saw approximately 53 percent inbound growth, while places like California, New Mexico and Delaware remained balanced.

States that continue to increase taxes and regulations are either losing people, or growing significantly slower than states that are more conducive to businesses. For example, a recent article by the Northwest Herald confirmed that Chicago has experienced the biggest dip in population for various reasons, two of the major ones being historical mismanagement of funds and lack of business-friendly laws. So, how does this dip in population in Chicago and other cities affect freight flow?

Noted by FleetOwner Magazine, John Larkin, Managing Director and Head of Transportation Capital Markets Research at Stifel Financial Corp., said that migration of consumption and production will continue to reshape transportation and distribution patterns, which are likely to lead to shifts in freight lane balance and equipment availability. Carriers that are not watching and adapting to these changes could experience loss in profitability.

Migration patterns must be considered for 2017 freight strategies. Although many companies likely have efficient fleet management in place, what happens when the landscape changes or business demands shift? Distribution patterns will be altered in order to keep up with these changing demands.

However, according to an article from I.D. Systems, some carriers are not adapting quickly enough to these changes because they are not able to handle the adjustments that need to be made when it comes to equipment utilization, lane balancing and pricing. In addition, manufacturers hauling certain goods out of specific areas need to be aware of these trends in order to maintain the elements that drive profitability for both the company and the drivers.

Difficult as it may be to adopt new practices in the midst of changing migration patterns, there are steps that business owners can take to be proactive and adjust to the trends accordingly. For example, companies should use tools that help to provide real-time visibility such as transportation management software (TMS) and tracking devices. It’s no easy feat, but changes have to be made in order to compete and thrive in the trucking industry.

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Transport Pro Offers Scanning Feature with the Transflo Mobile+ App

NASHVILLE, TN—Transport Pro announced that they have launched a new scanning feature in conjunction with the Transflo® Mobile+ app. This integration saves office personnel time by allowing drivers to scan and index required documentation to a specific load in Transport Pro.

Drivers first need to download the Transflo Mobile+ app on their iPhone or Android. Once the app is downloaded, drivers will be prompted to enter their carrier code and some personal information. When the app registration is complete, drivers can begin scanning and indexing documents to the correct load in Transport Pro.

Once registered and logged into the app, drivers will be prompted to take a photo of any required documentation they have using their phone’s camera. Once that photo gets uploaded in the app, they will be directed to crop and edit the document if necessary to ensure it is legible. Once satisfied with the image, the driver will be required to label the document. When the driver reaches this point in the process, the app will provide a list of document types from which the driver makes a selection. The driver can upload and label as many documents as necessary.

Once the driver has uploaded and labeled all of the necessary documents, the driver will then be prompted to enter the applicable load number, which corresponds to the load ID in Transport Pro. The indexed documents will then show attached to the load in Transport Pro.

Only Transport Pro subscribers who utilize the Transflo Mobile+ App will be able to take advantage of this integration.

America’s Crumbling Infrastructure, Traffic Congestion Yield Economic Obstacles

Imagine what $3.6 trillion looks like. That’s what our country needs to come up with by 2020 in order to simply maintain our infrastructure, let alone build and integrate creative architectural structures and technological innovations. Every few years, the American Society of Civil Engineers (ASCE) puts out a report card that grades America’s infrastructure. In 2013, we scored a D+! This study stemmed from analysis of dilapidated roadways, insufficient waterways, and a loud, desperate cry to enter the 21st century. The harsh reality is that we are lagging behind many other developed countries, such as Saudi Arabia, Spain, and South Korea to name a few. In a recent article by Business Insider, The United States ranked 15th for railroad infrastructure and 14th for quality of roads. Yikes!

While this issue is a nuisance for everyone, the crumbling infrastructure and road congestion is costing the trucking industry over 141 million hours in wasted time, according to trucks.com. The  Department of Transportation’s (DOT) National Freight Strategic Plan stated that road congestion cost the trucking industry about $27 billion in 2015 due to lost time and excess fuel consumption. Additionally, according to the DOT, the nation’s state of good repair and preventative maintenance backlog is at an all-time high of $86 billion, and it is growing by an estimated $2.5 billion each year. An additional $8.2 billion over current spending levels from all levels of government is needed annually to spend down the current backlog over the next 20 years.

There are several ways that our collapsing infrastructure and traffic congestion affects the nation’s overall economic productivity. Congested roads cause shipping delays and in turn, raise product prices. When traffic is slowed, businesses require more drivers and equipment to deliver goods and more inventory when deliveries are unreliable. With constant bridge and road closures, truck drivers are constantly rerouted off the highways. This leads to slower movement and adds to shipping costs, which everyone pays for.

Looking at the bigger picture, just as passenger cars compete for space on the highways, commuter trains and freight trains compete for space on the railroad network in metropolitan areas, according to a recent article by the DOT. Many businesses have invested over the years in their own supply chains. However, investments in leading edge supply chain technology and freight auditing goes to waste if trucks cannot deliver on time. For being a car-centric country, our GDP relative to spending on roads is not reflected.

On the other hand, the growth of freight is a major contributor to congestion, increasing traffic in urban areas. Long-distance freight movements in particular contribute to the nation’s congestion problem. The growing freight demand increases recurring congestion at bottlenecks and where there is simply not enough room. Congested freight hubs include international gateways such as ports, airports, border crossings, and major domestic terminals and transfer points, such as rail yards.

A journalist from US News recently spoke with Robert Puentes, Director of the Metropolitan Infrastructure Initiative at the Brookings Institution. In the interview, Puentes said, “We need to stop talking about infrastructure as an engineering prospect and more as an economic one.” According to the article, only about 27 percent of federal spending is designated to the sectors of transportation and water.  For other modes including freight rail, there is almost no federal investment. Infrastructure has been difficult to tackle because of how broad it is.

Many agree that the federal government has not made infrastructure a big enough priority. However, because the term “infrastructure” is so broad and consists of so many projects across the nation, Puentes says that we may not necessarily want the federal government getting involved with all of the projects that need to be done. Although Democrats and Republicans agree that our infrastructure is in trouble, there has yet to be a consensus on where the funding should come from and which projects should receive priority.

If you just look at surface transportation like roads, bridges and public transit, the federal government did pass a $300 billion law in 2015 that helped, but ultimately only covered the minimum amount of work that Congress had to do. Puentes says that when we talk about things like advanced industries and technology, or connecting low-income workers to economic opportunity, there are infrastructure components to those things. Eleven percent of the American workforce is employed in infrastructure sectors. When asked where Puentes sees this going in the next few years, he replied, “A lot of it is going to come down to the resources. We’re still a rich country, but we’re not making the right kinds of investments. We’re not making enough investments…We have to stop just hoping that something will happen down the pike. We need to be specific about where the money’s coming from.”

So, the next question is “How do we pay for it?” While the federal government does currently play a role, state and local governments perhaps play an even larger role. They key is collaboration between federal, state and local governments, along with philanthropic efforts.

The good news is that the ASCE Board of Direction has endorsed updated strategies to improve the state of America’s infrastructure and reduce the life-cycle cost of infrastructure by 50 percent. The society is expected to complete the work on the 2017 report card, which is scheduled for release in March 2017. The board will work with stakeholders and allies, such as environmentalists and health professionals, who are affected by building infrastructure.

You can help by letting your voice be heard. You can stand behind federal, state and local initiatives to fund infrastructure improvement. Hopefully, our leaders can come together and not just propose, but execute a solution because our livelihood depends on it.

How Elections Affect the Economy, Trucking Industry

With the election upon us, we have questions. We are anxious about how our decisions as a country will affect us and our companies individually. There are a lot of mixed opinions about whether or not elections affect the economy, and in turn the trucking industry. According a recent CNBC poll, only five percent believe that the election will have a positive effect on the economy, while 56 percent say that it will have a negative effect on the economy, and 39 percent say it will have no effect.

When we think about the economy, we often think about our jobs as well as the goods and services we use daily. Perhaps one of the most important things to consider is how we receive many of those goods—trucks. According to a 2014 report from American Trucking Associations (ATA), trucks moved about 67 percent of the nation’s freight by weight, resulting in $700.4 billion in gross revenue. In 2015, the numbers continued to climb with trucks moving roughly 81.5 percent of the nation’s freight and bringing in a record-breaking $726.4 billion. So, what happens in 2016 on the brink of an election?

A recent Washington Post article highlights a poll conducted by the National Association for Business Economics, which found that 11 percent of its members have postponed hiring or investing until after the November election. Additionally, more than half of the organization’s members said that this year’s election will be negative for the economy.

It’s no secret that Clinton and Trump have very different ideas on how to fix the economy, but with these ideas come uncertainty and fear. That said, many businesses are sitting and waiting to see what happens. A survey taken by small businesses found that politics ranked as the second reason that spending is delayed. For example, businesses are worried about how new tax rules and government regulations will affect them. Further complicating the election’s effect on the economy, many people are worried that even after the election congress will remain divided on many issues.

On the other hand, a recent article published by CNN Money states that politics have a surprisingly small impact on portfolios, and that stocks typically rise over time regardless of who is president. Rather, your emotional reaction is what matters. However, it is not to say that political values do not affect investment behavior whatsoever.

Analysis results published by Wells Fargo state that the notion that elections cause a slower economy holds no water. Further, they found that GDP growth, consumer spending growth and business fixed investment growth are stronger during election years than in non-election years. The study found that there are no statistically significant differences in government spending growth, federal government spending or job growth during elections. The analysis concludes that there are many different factors that can affect the economy.

Regardless of who gets elected for president, it is important for trucking industry professionals to influence government officials and policies as much as possible. This includes individuals scheduling meetings with powerful federal government officials, and explaining the impact that their products or services have on the public. Taking action also includes letter writing, lobbying, or hosting a party member at your place of business to show them how your operation works. Only by being proactive will trucking industry professionals shed a light on concerns and issues that face real people every day. This has to happen regardless of the election.

In a Transport Topics article, Steven Parker, President of Baltimore Potomac Truck Centers, highlights one the the most pressing issues in the industry. Parker argues that perhaps the most dangerous tax to fleet operations and the retail market is the federal excise tax (FET). According to his article, the FET was imposed in 1917 to defray the cost of World War I. The tax on highway heavy-duty trucks, tractors and trailers has grown from three percent in 1955 to 12 percent today. It is no surprise that trucking companies are severely struggling with the rising costs of regulatory compliance. Although there are bills underway opposing a hike on the FET, it is crucial that industry professionals contact their congress members and address this issue, among many others.

So does the election affect the trucking industry? It depends on who you ask. The opinions remain divided, but one thing remains constant: it is up to us, the people, to take a stance.