Q3 2024
TRENDING
TRANSPORTATION / DISTRIBUTION / ECOMMERCE / MATERIAL HANDLING / INNOVATION
SUPPLY CHAIN
Truckload
TRANSPORTATION
REAL ESTATE
Industrial real estate expected to stabilize in 2024.
5%
Low
Net absorption is anticipated to remain on par with 2023 levels and taking rent growth will moderate to 8%.
Construction deliveries will taper off by midyear and finish at half of 2023’s total.
Early-year deliveries will raise the vacancy rate to 5% before a slight decline in the second half.
New development will stay low due to tight lending, economic uncertainty, and an oversupply of large warehouses.
In the News
Innovation Trends
Real Estate
In the News
Innovation Trends
Real Estate
Is this the end of the freight recession? June 2024 saw transportation prices expanding faster than capacity for two consecutive months, the first time since Q1 2022.
Source: https://www.the-lmi.com/june-2024-logistics-managers-index.html
Transportation capacity contracted for the first time since March 2022. This is partly due to more carrier bankruptcies, such as U.S. Logistics Solutions shuttering at the end of June, laying off approximately 2,000 employees. While this came as a surprise to many at the company, it does follow the trend of capacity exiting the market as freight moves back towards equilibrium. Peak season may move the market back into growth.
Parcel
FedEx continues to improve their operating ratio even though tunnage is down across the LTL industry. FedEx may be looking to achieve what UPS did by selling its LTL business and creating T-Force.
There are significant differences in these scenarios:
FedEx is the largest LTL carrier today while at the time UPS sold off their LTL business they were the nations 6th carrier in volume and was only 40% of FedEx’s revenue at the time.
UPS LTL was operating at 90.1% at the time they were sold and FedEx is operating at 80% today which as stated above is the 2nd best in the industry.
Whether FedEx decides to keep the LTL business or sell/spin off into a new business, the capacity will not go away. Unlike recent LTL carriers to close their doors, FedEx is not in this position and the FedEx trucks will continue to be used in the LTL industry.
Transportation Prices & Capacity 2022-2024
80.0
70.0
60.0
50.0
40.0
30.0
20.0
Breakeven
Transportation Prices
Transportation Capacity
Apr 22
May 22
Jun 22
Jul 22
Aug 22
Sep 22
Oct 22
Nov 22
Dec 22
Jan 23
Feb 23
Mar 23
Apr 23
May 23
Jun 23
Jul 23
Aug 23
Sep 23
Oct 23
Nov 23
Dec 23
Jan 24
Feb 24
Mar 24
Apr 24
May 24
Jun 24
DAT National Freight Rates
$3.25
$3.00
$2.75
$2.50
$2.25
$2.00
$1.75
$1.50
$1.25
$1.00
$0.75
$0.50
$0.25
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Spot Rates
Contact Rates
DAT Load to Truck Ratio
2024
2023
2022
10
9
8
7
6
5
4
3
2
1
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
USPS Announces 25% increase for Parcel Select
Fedex completes consolidation of operating companies
UPS focuses on core business after sale of brokerage business to RXO
TOP TRENDS
Significant focus on Safety/Security
5
Digitization of Supply Chain Transactions
4
Vision Enablement for Operations
3
Autonomous Operations
2
Flexible Automation
1
Significant focus on Safety/Security
5
Digitization of Supply Chain Transactions
4
Vision Enablement for Operations
3
Autonomous Operations
2
Flexible Automation
1
Significant focus on Safety/Security
5
Use of IIoT and AI to drive safe operations— Examples: Protex AI (security camera intercept and predictive coaching), StrongArm Tech (wearable IIoT devices for safe lifting, bending, twisting, coaching/ training), proximity sensors for Fleetcloud to ensure pedestrian safety.
Significant focus on Safety/Security
Digitization of Supply Chain Transactions
4
RPA, Discovery Tools, Mobile Applications to drive efficiency & engagement (First Year Experience, Shift Swap, Spotlight, LoadProof, DriverConnect Tools, Digital Andon lighting system, etc.)
Digitization of Supply Chain Transactions
Vision Enablement for Operations
3
Use of camera and computer vision tools to enable workflows like inbound verification, outbound quality checks, SKU capture, inventory management, augmentation to allow humans to pick more accurately, etc. Examples—Logistiview vision pick, Locatible camera vision inventory management, KARGO outbound quality check for pallets being exported, Rabot for packaging verification.
Vision Enablement for Operations
Autonomous Operations
2
Using robotics, automation, and mechanization with digital integration tools that creates autonomous, seamless workflows within warehouse operations—Autostore/Geek+/Packsize with box sealers and conveyors as an example.
Autonomous Operations
Flexible Automation
1
Financial flexibility, use case flexibility, allow for profile flexibility, easy to move/reallocate, and multi-use case vendors (GreyOrange is a good example—various types of robots, can handle various profiles of product, offers CAPEX or OPEX, works with multiple robotic vendor solutions, etc.)
Flexible Automation
TOP INNOVATION TRENDS 2024
Transportation
Transportation
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Vacancy Rate
8%
Rent Growth
1/2
Construction Deliveries
New Development
IN THE NEWS
Ground ^5.9%
vs.
Air ^8%)
AHS ^20%,
Oversize ^28%
Resi ^7%
"Headline" GRI only applies to "Base Transportation Charges"
Moving Forward
The days of stating my class is 50 for the last 15 years is over. This move will move most of the freight to density-based items. This means that data will be key. We must do everything in our power to get accurate dimensions and weight for each order. Getting accurate information will help with this change but will also help us get to the E-BOL which carriers are offering savings.
Headlined GRI
Inflation PCT
GRI Only Applies to "Base Transportation Changes"
9%
8%
0%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
-1%
7%
6%
5%
4%
3%
2%
1%
5.9%
4.9%
4.9%
5.9%
6.9%
Surcharges continue to surge at a higher rate than announced GRI
Minimum Charge increases vary by service
5.50
Apr
LTL Contract
Final reporting of average base rate per 100 lbs (United States of America)
5.00
4.50
3.50
3.00
2.50
55.00
50.00
45.00
40.00
35.00
30.00
25.00
Jul
Oct
2021
Apr
Jul
Oct
2022
Apr
Jul
Oct
2023
Apr
Jul
Oct
2024
DOE.USA
4.034
53.00
4.02
lTL
Truckload
ABOUT KENCO
Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, and information technology—all engineered for Operational Excellence. Building lasting customer relationships for over 70 years, our focus is on common sense solutions that drive uncommon value. Visit Kenco at KencoGroup.com.
CWT average has started off at $48 in 2024 - 6% increase over 2023.
Base rates have increased more in the last 6-8 months as fuel has returned to $4.00/gallon.
Overall tonnage is down from 2023 to 2024.
Although tonnage is down in the LTL industry most carriers have improved their OR with XPO making the biggest jump.
Carriers are being mindful of operating costs across the industry. As we see ODFL continue to operate in the 70's this is the benchmark for other LTL providers to get to.
NMFTA is making changes for 2025. As 2024 progresses, the process is set to become more intensive, informative, and inclusive. Both the NMFTA and NMFC expect the changes to streamline workflows, enhance communication and visibility, and increase the overall satisfaction of everyone involved. “We estimate to move as many as 3,500 single-class items to 13 subcategories,” said Nate Ripke, director of commodity and standards development for NMFTA.
Standardized density scale for LTL freight when handling, stowability and liability issues are not present;
Unique identifiers for freight with special handling, stowability, or liability needs;
Condensed and modernized commodity listings; and
Improved usability of the ClassIT® classification tool.
Parcel
FedEx to Explore Divestment of FedEx Freight
Prepare
Monitor
Moving Forward
Doing nothing now puts your 2025 budget at risk
CLICK TO EXPLORE
Prepare for imminent rate pressure as truckload carriers and brokers seek to return to profitability in the next 12 months.
Do you have the technology infrastructure to prepare, execute, and analyze competitive RFPs to ensure you are buying at the market rate?
Do you have the in-house expertise to know when to bid and how to tactically execute an RFP?
Do you have the carrier relationships and buying power to bring the right mix of RFP participants?
Act swiftly when required to balance your spot and contract usage, mitigating late 2024 and 2025 increases.
Recommend that shippers continue to monitor the external environment due to volatility.
Act
Act
Prepare
Monitor
