Good Monday morning. Today, we're looking into social media conversations on the operational costs of trucking and pulling in data from The American Trucking Research Institute to sort fact from fiction. We also spotlight Flexport's challenging layoffs, BGSA Supply Chain 2024's key highlights, and Marten Transport's financial downturn. Plus, check out the performance of the youngest forklift operator in Around the Freight Web.
🤔 Question of the Day: Can you guess the total marginal cost per mile for operating a semi-truck in 2022?Scroll to the main story to find out.
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In today's email:
Three Freight Headlines: Flexport Layoffs, BGSA Conference Insights, and Marten's Financial Struggle
The True Cost of Trucking
Around the Freight Web: Toddler Transporter, Q4 GDP Growth, and Texas Trucking Firm's Bankruptcy.
Freight Meme of the Day
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📉 Flexport Slashes Workforce. In efforts to restructure, Flexport is set to lay off 20% of its workforce, about 500 employees. This strategic move follows another 20% staff reduction in October. Recently, Flexport won a $260 million investment from Shopify, which could indicate a stronger focus on e-commerce. CEO Ryan Petersen, focusing on financial restructuring, aims to steer the company back to profitability by Q4 2024. These layoffs reflect Flexport's efforts to adapt to market changes and regain its financial footing after a period of rapid growth and investment.
🙏BGSA Supply Chain 2024 Highlights. The exclusive C-Level conference, held this past weekend at The Breakers, Florida, was full of strategic insights, networking, and more. BGSA CEO Benjamin Gordon shared a breakdown of the BGSA Supply Chain Index top performers. Standouts included XPO Logistics with a staggering 171% value spike, Manhattan Associates and WiseTech Global with over 50% growth each, and logistics leaders like Kuehne+Nagel delivering strong performance. The data highlighted the sector's adaptability and growth despite a volatile market.
📉 Marten's Q4 Results. Marten Transport's Q4 report shows a steep 50% drop in net income amid the freight recession. Key sectors like Truckload, Dedicated, and Intermodal faced revenue declines of up to 35.7%. Despite maintaining stable rates and lower expenses, rising insurance costs notably affected profits.
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FreightCaviar posted the above infographic to LinkedIn and X last week, generating a volley of discussion on the true costs of trucking.
This infographic, "The Economics of Trucking," was published earlier this month and breaks down the expenses and revenue per mile for trucking, as sourced from J.P. Morgan via Global X in 2023. Here's the summarized content:
Expenses Per Mile:
The total expenses per mile amount to -$1.82.
Revenue Per Mile:
The revenue generated per mile is $1.98.
Operating Profits:
The operating profit per mile after expenses is $0.16.
Infographic vs. ATRI Data
Meanwhile, The American Transportation Research Institute's 2023 update on the operational costs of trucking paints a more dire picture.
In 2022, the total marginal costs for operating a semi-truck escalated to an unprecedented high of $2.251 per mile, marking a 21.3% rise compared to the previous year. Fuel prices largely influenced this spike, which surged by 53.7% from 2021. Driver wages also saw a notable increase, climbing to $0.724 per mile, a 15.5% rise.
Why the disparity between the infographic and ATRI's research?
The infographic may be using outdated information from 2021.
ATRI includes a more comprehensive list of costs.
There could be a difference in the scope of costs considered, with ATRI's data possibly encompassing a wider range of expenses.
Voices from the Industry
The response from the trucking community to the infographic was multifaceted.
There's a recognition of the challenging nature of the industry's financial landscape, with many noting that operational costs are often higher than what's depicted.
There's skepticism about certain cost figures and a call for a more nuanced understanding of fixed versus variable costs. Additionally, there's a sentiment that the per-mile cost metric may not capture the full financial picture, particularly for owner-operators.
Looking Ahead
The dialogue indicates a sector at a crossroads with rising costs and market volatility. It's also a reminder that behind dry statistics are real people striving to navigate an increasingly complex industry. The conversations are far from over; even the ATRI figures reflect the 2022 trucking environment, so we can only speculate on what these costs will look like as we await the next update.
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AROUND THE FREIGHT WEB
😄 Toddler Training. A video of a young girl handling pallets with a toy forklift amused the freight community, with Reed Loustalot joking that she has "more real-world freight experience than most brokers."
📊 Q4 GDP Surprises. Jason Miller's analysis of Q4 2023 shows a 3.3% GDP growth, pointing to a positive economic shift with increased goods spending and exports.
🚚 Texas Trucking Firm Bankrupt. JJ Transport in Texas filed for bankruptcy just days before a wrongful death trial. The company, which had 19 drivers and 18 power units, cited assets up to $500,000 against liabilities of $100M-$500M.
🚂 Norfolk Southern's Tough Quarter. Norfolk Southern faced a 33% profit drop in Q4, largely due to derailment costs. Even without these costs, profits were down 14%. The railroad still delivered more shipments despite the challenges.
🅿️ Truck Parking Boost. USDOT's $292 million grant boosts semi truck parking facilities in key regions: California and Oregon's I-5 corridor, I-70, I-4 in Central Florida, and Wisconsin's I-90.
FREIGHT CONFERENCES WE'RE ATTENDING
Manifest Vegas, February 5 - 7, 2024, is the world's largest global supply chain & logistics tech event, bringing together Fortune 500 global supply chain executives, logistics service providers, cutting-edge startups, venture investors, and technology leaders. Join 4,500+ supply chain innovators to foster new strategies and relationships. Receive $200 off your ticket with our exclusive link.
FREIGHT MEME OF THE DAY
Also, check out:
🎧 The FreightCaviar Podcast. Listen to this week's podcast on Spotify & Apple Podcasts.
☕️ FreightCaviar Essentials. Purchase a FreightCaviar hoodie, long-sleeve, or mug by clicking here.
🎧 The Bootstrapper's Guide to Logistics is a podcast that highlights and inspires supply chain entrepreneurs, sharing their stories and building a community from the ground up.
Want to get your brand noticed by freight brokers? FreightCaviar can help. Work with us to get your services featured in our newsletter, podcast, and more. Plus, we write great articles about what you do. Get in touch with Paul at pbj@freightcaviar.com to learn more.
I’m Adriana, a writer and editor at FreightCaviar. I’ve covered everything from freight tech to industry lawsuits and market shifts, helping scale us to almost 14K subscribers. My goal: to make logistics stories digestible, clear, and fun to read.
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