Import Volume Spike Ahead Of Holiday Season

Why/When will import volume spike?

Retailers are predicting up to a 9% jump in US containerized import volume before new tariffs hit on December 15.  The spike in imports is due to retailers front-loading their inventories.  This is to account for depleted inventory levels in the coming holiday season.  The National Retail Federation predicts that 2019 holiday sales will increase nearly 4% over last year.

Furthermore, a large percentage of that merchandise shipped by the end of September ahead of Golden Week celebrations in China.  Due to retailers front-loading their inventories, predicts that October import volumes will fall 5.5% over 2018 October import volumes.  However, starting in late October to early November, import volumes will recover and rates will go up as a result as shippers rush to bring more inventory into the country ahead of the December 15 tariffs.

New industry regulations effect on import volume

The National Transportation Safety Board (NTSB) recently commented on the FMCSA’s proposed changes to HOS regulations.  NTSB Chairman Robert Sumwalt made a statement indicating that the proposed changes will weaken aspects of the HOS rules.  Although the changes in the rules seek to improve driver flexibility, they also open the door to potential driver abuse and coercion.

Furthermore, a 9% increase  in freight costs is predicted to happen next year due to IMO 2020 regulations.  With many ocean carriers already implementing measures to adhere to the upcoming IMO 2020 regulations, shippers should expect to see higher fuel costs for over-the-road carriers in the upcoming holidays.

Additionally, carriers costs are higher than ever before after the turbulent year of falling rates and new regulations in trucking.  As a result, the end consumer may end up being the one who absorbs the higher supply chain costs over the upcoming holiday season.

BM2 Freight Services, Inc.

Phone: (859) 308-5100


Reefer Shipping Under Pressure In Turbulent Trade Environment

Reefer Freight Shipping Navigating New Trade Policies

Fluctuations in trade policy over the past 18 months have caused increasing adversity for shippers of perishable commodities.  Reefer shippers are feeling the impact the most, specifically at congested cargo terminals, due to the time and temperature sensitive nature of the commodities.

Semi truck driving on a wet road carrying a refrigerated trailer.

As a result, inland ports are being utilized more frequently to keep shipments rolling.  There are a number of notable benefits to using inland ports for shippers with reefer freight.  One of which avoids the transloading of freight from a 53’ truck to a 40’ container.

However, the Port of Los Angeles is using nearly 50 acres of land to build more transload facilities for the port to improve transload efficiency.  The transload facilities at the Port of Los Angeles help minimize container detention charges and demurrage charges.  The Port of Oakland is also experiencing an increase in reefer freight as a result of the completion of its new reefer transloading and distribution center.

When searching for ways to mitigate costs for your reefer freight there are two main variables to consider when routing your supply chain.  First, we recommend moving your freight through a cost-efficient gateway.  Second, the gateway that your freight routes through needs to offer the necessary infrastructure and transportation networks to get your freight to its destination.

Diversifying Your Reefer Supply Chain

A key factor in overcoming the current and newly emerging obstacles in your supply chain is diversity.  Diversity in your available carrier network helps in keeping your supply chain efficient.  For example, having alternative routes with a diversified carrier network can benefit you when re-routing reefer freight to ports that are more efficient in handling the freight.  Additionally, many larger carriers in recent months are seeing declines assets while smaller owner-operators have grown.  As a result of the declines, larger carrier fleets are seeing a decline in the diversity of services they can offer.

Small carrier companies represent over 60% of the carrier market.  However, larger carriers historically dominated market share due to technology barriers.  With new technology integrations emerging every day, the market seems to be shifting in favor of smaller carriers.  However, accessing these smaller carrier companies can be an extraordinarily time-consuming task.  2019 has seen a capacity crunch unlike recent years with new regulations for commercial trucking.  Reefer freight shipping in particularly has been severely affected by the lower capacity.

As a strategic broker we utilize our extensive network of available carriers that we spent over a decade building.  That is where we come in.

BM2 Freight Services, Inc.

Phone: (859) 308-5100


Freight Market Predictions For Q4 2019 And Early 2020

Hurricane Dorian’s Effect on Freight Market

Last weekend many east coast ports were closed due to hurricane Dorian.  Ports affected by Dorian include the ports of Wilmington, Morehead City and the port of Virginia.  Freight market volume is typically affected by weather, and in hurricane Dorian’s case this is no exception.  DAT reported outbound reefer volume was up 14% from Lakeland, FL ahead of the storm.  Furthermore, rates followed suit with the average per mile rates jumping 8 cents in the Lakeland area.  Similar trends echoed up the East coast of the United States as the storm moved north.

According to the Director of Customer Operations at GlobalTranz, trucking demand increased as the storm moved out over the Atlantic.  However, companies are avoiding shipping on the spot market in the immediate aftermath of Dorian.  This is to avoid inflating the market further.  Shippers are waiting for market rates to return to normal before shipping commodities back into the affected areas.

Understanding the impact that extreme weather can have on the freight market is essential when planning ahead for your supply chain.

Q4 2019 and Early 2020 Freight Market Insights

The recent uncertainty of the U.S. economy, starting in late 2018, is causing confusion amongst market analysts, shippers and carriers alike.  According to, the best solution to predicting the market conditions moving forward is to watch how the market shifts over the next 4 months.  Additionally, it is important to note the impending IMO 2020 regulations coming that will drive fuel costs up for the supply chain.

Between November of 2018 and July of 2019, the average spot rate fell nearly 20 cents per mile.  However, the market recovered some in August from the decline, down only 16% year-over-year, similar to 2017 market levels.  Furthermore, the end of August saw a 2% increase in DAT dry van rates. (See our previous article).

According to Mark Montague, DAT’s manager of industry pricing, the slight recovery at the end of August may indicate the market is not as bad as some people say.  Montague believes that September to December will provide good insight into the conditions moving forward into 2020.  During those months in 2013, DAT dry van spot rates rose $0.10 per mile, and in 2017 they rose $0.22 per mile.  Both 2014 and 2018 saw a strong freight market following their preceding years.  Additionally, 2015 and 2019 both saw a weak freight market following weak market conditions in the last 4 months of the preceding years.

Contracted freight predictions are based off of a number of indices, most notably the ATA monthly tonnage index.  ATA reported that truck tonnage was up 7.3% in July this year.  However, despite load volumes being up, multiple indices show that dry van contract rates are down year-over-year.  Going into 2020 shippers are expecting lower contract rates pending the spot rates stay low.

We recommend locking in contract rates for 2020 sooner than later while spot market rates are low.  If the spot market recovers at the end of 2019, shippers may find themselves looking at higher contract rates as a result.

BM2 Freight Services, Inc.

Phone: (859) 308-5100


Diesel Fuel Price Ahead of IMO 2020 Regulations

Diesel Fuel Price Spike Ahead?

A recent report from Fitch Solutions forecasts a price spike in diesel fuel prices at the beginning of next year.  The report says that new fuel regulations from IMO 2020 regulations will cause a sizeable shift in demand for diesel fuel.


Gas pumps in line

The IMO 2020 regulation states that sulfur content in marine fuel must be reduced to 0.5% sulfur from the current 3.5% sulfur content.

To meet the new regulation, ocean carriers are switching to either marine gasoil (MGO) or very low sulfur fuel oil (VLSFO).  MGO is a diesel product.  VLSFO contains a large amount of diesel molecules produced from an intermediate product known as vacuum gasoil (VGO).  Furthermore, VGO is currently used to make both diesel fuel and regular gasoline.  There are other solutions to meeting the new IMO regulation including scrubbers and liquified natural gas.  However, MGO, VLSFO and existing diesel with be the primary solutions ocean carriers will use.  Additionally, the report predicts that there will initially be a large gap between supply and demand of diesel fuel for the early phases of the new IMO 2020 regulations.

With the impending IMO 2020 regulation, exploring cost-saving strategies for fuel consumption is of the utmost importance for carriers and shippers alike.  According to American Trucker, carriers can improve fuel economy by roughly 1% with a 10% reduction in idling.  However, drivers expect comfort in their vehicles.  The means drivers let their trucks idle for the allowed federal, state or local allowed idle time to achieve those comforts on the road.  For this reason, fleets are exploring other idle reduction technologies.  The recent NCFE idle reduction confidence report found that there are several solutions to address the need for new idle reduction technologies.

Results from the NCFE report point to 4 different solutions that involve a combination of technologies to reduce idling.

  • Driver controls and a fuel-operated heater
  • Diesel APU combined with a fuel-operated heater
  • Battery HVAC used interchangeably with a fuel-operated heater
  • Automatic engine start/stop technology

Diesel Fuel Prices Today

However, despite the forecasted spike in diesel prices in early 2020, the price for diesel just hit a 2-week low at $2.983 per gallon.  The 2-week low comes amid the recent heating up of the tariff crisis between the U.S. and China.  Therefore, the demand for marine fuel is down.  This fall in demand is causing diesel fuel prices to drop for carriers across the country.  The price for diesel fuel has fell for 7 back-to-back weeks since mid-July.  Year-over-year, the price per gallon of diesel fuel is down approximately 24.3 cents.  Crude-oil price per barrel is also down $2.47 week-over-week further corroborating the recent fall in demand.

If the market volatility of the tariff crisis continues into 2020, the IMO 2020 regulations will most likely still cause an increase in diesel prices.  However, the price spike will not be as severe as anticipated by Fitch Solutions.

Visit BM2 Freight Services, Inc. for a load quote.

FMCSA Rolls Out Proposed Changes to HOS Regulations

FMCSA HOS Changes Aim to Increase Driver Safety and Schedule Flexibility

This past Wednesday the FMCSA made public their proposed changes to the hours-of-service (HOS) regulations.  The announcement comes just 1 month after the agency proposed new CDL regulations.  The FMCSA highlighted 5 changes to the regulations.

The most notable of which allows drivers to split up the 10-hour break from driving into 2 separate breaks.

One break of at least 7 hours for sleep and a second break of at least 2 hours spent off duty is recommended for optimal driving. Additionally, drivers can use their half-hour break requirement on the “on-duty, not driving” status under the new changes. However, the 14-hour time window will pause whenever drivers take an off-duty break.  This allows drivers to extend their workday up to 17 hours.  However, the maximum time driving per 14-hours will remain at 11 hours.

The proposed changes to HOS rules seek to address schedule flexibility in the wake of ELD (electronic logging devices) regulations.  The FMCSA’s overall goal in publishing these proposed rule changes is to enhance road safety.  Additionally, the FMCSA said that these changes aim to result in cost savings for carriers by improving driver productivity.  The U.S. economy will save $274 million in costs under the rule changes.  The proposed changes are open to public opinion for 45 days, beginning on last Wednesday, August 14.

Freight Industry Voices Opinion on the Recent FMCSA HOS Changes

President of OOIDA stated that the proposed changes are a step in the right direction.  Furthermore, the American Transportation Research Institute (ATRI) reports that traffic slowdowns in 2017 resulted in overall operating losses in the industry of over $74 billion.  The thought behind the new 3-hour break rule is that in addition to adding flexibility to driver’s schedules, traffic congestion can be mitigated.

However, despite positive outlooks, some drivers believe that the proposed rule changes allow a way for carriers to force their drivers to work fatigued by extending the legal workday up to 17 hours.  Additionally, the main issue is that most drivers receive pay by the miles driven and not for the hours worked.  Therefore, by adding mandatory extra unpaid hours to their workday, drivers are missing out on pay.  President of Aerodyne Transportation, Alec Costerus, stated that if drivers are paid by the hour like everyone else, then there would be no driver shortage in the industry.

The last time hours-of-service regulations changes were proposed in 2003, freight industry leaders delayed the implementation of changes until 2011.  The delay came in the form of litigation in federal court and was based on claims that the initial changes would have a negative impact on drivers’ well-being and highway safety.

Lawmakers believe that there will be a repeat of litigation regarding the newest changes in hours-of-service regulations.  Furthermore, if the recent HOS rule changes go to federal court, then the rule changes will take a while to be final.

Visit BM2 Freight Services, Inc. for a freight quote.

Is The Freight Market Starting To Recover?

Uptick in Freight Market Volume

Freightwaves market data indicates that the freight market may be at the beginning of a recovery.  For the first time in a year, load volumes are up over 2018 numbers.  With many carriers cutting capacity and rising freight volumes, trucking rates are starting to come back up.  Major markets across the U.S. are seeing week-over-week upticks in volume.  Additionally, spot market volume is up 7% over the first half of 2018.

Furthermore, top carrier executives in the industry predict a tightening of capacity in the coming months to adjust to the decline in volume.  However, if capacity tightens too much prior to the end-of-year freight rush, then the market rates could skyrocket again.  We recommend securing relationships with carriers ahead of time so that when capacity tightens up again your shipments are covered at the right cost for your supply chain.

Freight Market Forecasting & What to Plan For

In addition to the driver shortage in the freight market, there is a shortage of mechanics.  According to Andy Dishner, COO of Konexial, the freight industry is feeling the consequences of a shortage of mechanics and technicians.  Another report from the U.S. Bureau of Labor Statistics projects that nearly 67,000 diesel service technicians and 75,000 mechanics are needed to replace retired workers and meet demand in the industry by 2022.  Carriers are now seeking to employ their own maintenance work force to battle higher outsourced maintenance costs.

Another large cost for commercial trucking fleets today is fuel.  Fuel costs currently represent about 22% of a fleet’s total operating cost.  This takes away from front end talent acquisition for freight carriers.  However, new idle-reduction technologies are becoming a primary consideration for fleets.  Not only for reducing costs, but also improving efficiencies in a number of areas including hiring new talent.  According to a North American Council for Freight Efficiency (NACFE) report, the group expressed high confidence in electric engine idle tech, driver training/incentives and driver comfort in the cab.  The report goes further to state that companies should see a return on their investments in new engine idle tech in under a year.  NACFE predicts that trucks can save 1% in fuel economy with a 10% reduction in idling.

BM2 Freight Services, Inc.

Phone: (859) 308-5100


New CDL Regulations From The FMCSA

Easier Access to CDL Knowledge Tests

Federal regulators are discussing easier access to knowledge tests for prospective trucks drivers to obtain their commercial driver’s license (CDL).  The American Trucking Association published a report on July 24 stating that the industry is short nearly 61,000 drivers.  Due to commercial truck driver shortages in the recent months, the Federal Motor Carrier Safety Administration (FMCSA) is taking steps to get more drivers behind the wheel.  The goal of the CDL regulation changes is to reduce burdens and expenses to CDL prospects without compromising safety standards.

The proposal says that states may choose to offer the CDL general and specialized knowledge tests to out-of-state drivers.  Furthermore, states that offer tests to out-of-state drivers will send test results to the applicant’s state of residence.  States that elect to test out-of-state drivers will need to modify their commercial learner’s permit (CLP) and CDL upgrade processes.  Additionally, states with higher entry-level driver standards will accept out-of-state skills test results from prospective drivers.  However, concerns arose regarding this ruling that states with higher standards will not accept out-of-state test results.

This proposal by the FMCSA is the most recent effort to reduce regulatory barriers for prospective drivers to obtain their CLP or CDL.  Additionally, in March of this year, the FMCSA presented another rule to reduce the cost of upgrading CDL classes.  The March rule alone will save prospective truck drivers an estimated $18 million per year.

FMCSA CDL Regulations Timeline

According to a recent Federal Registrar notice, published on July 18, the FMCSA is delaying provisions to its entry-level driver training.  The rule, originally set to go into effect on February 7, 2020, is currently set to go into effect on February 7, 2022.  The rule will set minimum standards of knowledge and on-the-road training for carriers.  Furthermore, the program will require out-of-state training providers to send electronic notifications and test results to the FMCSA driver’s state of residence.  The hope of extending the deadline is that the agency and parties involved have more time to complete the IT infrastructure needed to implement the program.

Additionally, the FMCSA opened a 60-day public comment period to gather feedback on the newest proposed regulation.  Authorities worry that states with higher testing standards than the federal minimum will not be okay with accepting out-of-state test results for drivers-in-training.  California and Washington are the 2 most notable states with higher testing standards for drivers.

BM2 Freight Services, Inc.

Phone: (859) 308-5100


Freight Recession Hits Trucking Industry

ACT Research Indicates Freight Industry Recession

Recent data from ACT Research indicates a freight recession.  According to ACT President Kenny Vieth, the metrics that ACT tracks show two back-to-back quarters of negative growth, meeting the technical definition of a recession.

Some of the metrics indicative of the freight recession are higher inventories on lots and consistent declines in spot rates.  Additionally, the Cass Freight Index saw 6 months of consistent declines at the beginning of 2019.

Spot market loads are down 50% year-over-year in June.  However, the spot market is still up over rates from two years ago.  LTL and rail freight are also down over several consecutive months of declines in volume.  Additionally, 55 of the top 72 DAT reefer lanes saw a decrease in spot market rates over the past 2 weeks.  The rate decreases are a result of agricultural volume leaving a hole in capacity as main produce seasons in Texas, Arizona, California, Florida and the Carolinas are nearing their ends.

Furthermore, falling spot market rates are creating a shipper’s market.  Shippers are moving to the spot market for lower rates than their agreed upon contracted rates.  Capacity surplus and low freight volumes are driving market rates down.  ACT Research predicts that truckload and intermodal contract rates will continue to fall for the remainder of 2019.

Freight Market Conditions and Forecast

The volume push from late 2018 tariff talks with China drove rail and port volume up temporarily, but numerous variables including the record-breaking flooding in the Midwest drove down freight volumes as a whole.  New truck orders surged mid 2018 ahead of a promising freight market for later on that year.  The lack of volume in the market and declining market rates in early 2019 are leaving trucks sitting empty.  Progressing trade talks between the U.S. and China will continue to affect market conditions.

However, lower numbers of new truck orders and increasing adaptation to new market conditions by the trucking industry indicates an eventual recovery in spot market rates.  According to ACT Research, the freight market will bottom out in the foreseeable future and start to bounce back.

Furthermore, the recent restarting of trade talks between the U.S. and China is promising for businesses, even though uncertainty remains.

Get a freight quote here.

Phone: (859) 308-5100


Truck Speed Limiter Bill On Increasing Highway Safety

Trucking Groups Voice Support for Speed Limiters

U.S. senators Johnny Isakson and Chris Coons proposed a bill to limit all heavy truck speeds.  The Cullum Owings Large Truck Safe Operating Speed Act of 2019 will require trucks weighing over 26,000 pounds to have speed limiters set to max out at 65 mph.

What are speed limiters?

Speed limiters are govern-imposed and are used to stop the speed of a vehicle up to a certain limit.

Repercussions and Speed Limit Supporters

Trucks unable to install the new speed limiting technology will be in violation of federal safety standards.  Trucks without the tech will receive a citation instead of a speeding ticket if caught exceeding the 65mph limit.

Two trucking groups, the Truckload Carriers Association (TCA) and the Trucking Alliance, are in favor of the proposed bill.  Additionally, Vice President of TCA, David Heller, cites that trucks will experience improved fuel efficiency and environmental friendliness under the new act.  Furthermore, a 2016 rulemaking decision by The National Highway Traffic Safety Administration and FMCSA cites that implementing speed limiters will save nearly $848 million per year in fuel savings and green-house gas emissions reductions.

Speed Limiter Downfalls and Opposition

Some truck drivers are against this bill stating that the new rules make roads less safe.  One truck driver stated that people speed to get around trucks.  OOIDA provides more detail into the safety issues created by the bill stating “the interaction between large trucks and passenger vehicles will increase” with the new bill.

Furthermore, OOIDA states that “there is no clear evidence that supports the use of speed limiters will improve safety.” Furthermore, the data put together on the issue shows that high speed truck crashes are rare.  This highlights the point that lower truck speeds may have negative effects on safety.

Furthermore, other opinions on the matter state that many larger carrier companies already implement speed limiters in their trucks.  So this bill will serve to level the playing field between small and large carrier companies.  Additionally, the American Trucking Association is currently reviewing the details of the bill.

The ATA has supported federal speed limiters for all vehicles including commercial vehicles.  ATA Press Secretary, Sean McNally, states that the speed limiters must account for speed differences between commercial and pedestrian traffic to identify potential safety risks.

Drive for BM2 Freight Services, Inc.