🎣 TQL's $35M Expansion

Happy Friday. Today's newsletter covers TQL's $35M HQ expansion, the effects of heat waves on truck idling and fuel costs, and changes in American manufacturing. Plus, scroll to the bottom to check out our new section, the Acquisition Rumor Mill, where we share two acquisition rumors we heard this week.

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🐔 WHAT’S COOKIN’ IN FREIGHT

💰 TQL Celebrates $35M HQ Expansion. Total Quality Logistics (TQL), the industry's second-largest freight brokerage, recently celebrated the expansion of their headquarters in Cincinnati, OH. The company, often a target of industry memes due to widespread carrier dissatisfaction, continues to grow despite the criticism. Their expanded HQ offers space for over 3,500 employees and features basketball and pickleball courts, a golf simulator, a 24/7 gym, a full-service cafeteria, 11 mothers' rooms, and more than 40 new meeting spaces. To celebrate the expansion, TQL Product Manager Chris McMahon ran a full marathon in and around the building, covering 26.2 miles and showcasing the extensive amenities.

🚨 Labor Day Cargo Theft Alert. CargoNet has issued a warning about the increased risk of cargo theft over the Labor Day weekend, highlighting California, Texas, and Florida, especially areas like San Bernardino, Los Angeles, Dallas, and Cook County, as hotspots. Thieves are particularly targeting electronics, appliances, and vehicle parts, with high-risk locations including warehouses, truck stops, and large retail parking lots. Historically, the Friday before Labor Day sees peak theft activity, and theft incidents during this period have reached record highs in recent years. CargoNet urges enhanced security measures and vigilance throughout the holiday week to protect shipments.

🚛 California Truckers AB 5 Battle. The California Trucking Association (CTA) has ended its legal challenge against California's AB 5 law, which mandates that independent truck drivers be classified as employees rather than contractors, after more than four years of fighting. However, the Owner-Operator Independent Drivers Association (OOIDA) is continuing its appeal, arguing that the law unfairly impacts small business truckers by using the "ABC test," which restricts independent contractors from performing work that is part of the hiring company's regular business.

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Shifting Landscape of American Manufacturing– What it Means for Freight

Over the past 20 years, U.S. manufacturing has undergone some big changes. Since 2002, the number of manufacturing establishments in the U.S. has dropped by over 45,000. This infographic from Visual Capitalist illustrates the declines for various industries.

These declines reflect the impact of globalization, automation, and shifting economic priorities. However, not all sectors suffered. Some, like beverage and tobacco, saw growth, adding 9,600 new establishments, while the food industry grew by 5,100 establishments.

The Present: New Legislation, New Opportunities

In recent years, the U.S. has taken steps to revitalize its manufacturing sector. The COVID-19 pandemic exposed vulnerabilities in global supply chains, particularly those dependent on China. Lockdowns, shipping delays, and shortages during the pandemic highlighted the risks of relying heavily on overseas manufacturing.

Additionally, rising tensions between the U.S. and China further underscored the need for more domestic production. In response, the Biden administration introduced the Inflation Reduction Act (IRA) and the CHIPS and Science Act. These laws are designed to encourage U.S.-based manufacturing, especially in critical and high-tech industries like semiconductors.

These legislative efforts have led to the announcement of billions of dollars in new manufacturing projects across the U.S. However, many of these projects face delays or have been paused due to various challenges.

Several factors have contributed to delays in these new manufacturing projects:

• Labor Shortages: The ongoing struggle to find skilled workers has slowed down the implementation of new projects.
• Regulatory Hurdles: Navigating complex regulations has also contributed to delays.
• Slowing Demand: U.S. consumer demand for EVs has dipped, setting back manufacturing plans. For example, Samkee, a Korean auto parts maker, delayed EV production in Alabama by two years.

All these current delays mean that the expected freight demand might not come as quickly as hoped. But that doesn't mean preparation should slow down.

The Future: What This Means for Freight

Here's what to watch and prepare for.

Food, Beverage, and Drug Manufacturing:

• Reefer Demand: As one of the fastest-growing logistics sectors in the supply chain, reefer demand will continue to grow. Earlier this year, Lineage Logistics delivered the largest IPO of the year.
• Cold Chain Maintenance: Brokers must ensure reliable reefer capacity to maintain the cold chain for perishable goods.
• Regionalization: Routes may shift to more regionalized distribution centers, affecting load planning and delivery schedules. For example, J&J Snack Foods has opened three new regional DCs, with 85% of its orders being shipped from the new network.

High-tech manufacturing:

• Routes: New freight corridors and increased trucking demand, especially in semiconductor manufacturing regions like Texas, Arizona, and Ohio.
• Specialized Equipment: High-value electronics may require climate-controlled or air-ride trailers to prevent damage during transit.
• Driver Training: Specialized training for drivers will be necessary to handle sensitive and valuable loads.

Increased Cargo Theft Risk:

• Security Protocols: Carriers should implement stronger security protocols, such as real-time tracking, security escorts, or using secured drop yards.
• Insurance Considerations: Insurers may require additional coverage or specific security measures for high-value shipments.

Shift from Traditional Manufacturing:

• Decline in Dry Van Loads: Expect fewer dry van loads from declining sectors like textiles and furniture.
• Diversification: Brokers may need to diversify their customer base or explore emerging sectors to fill capacity.

Strategic Planning for the Future

By staying informed and adapting to these changes, freight brokers and carriers can position themselves to take advantage of emerging opportunities and navigate the potential challenges that lie ahead.

The future of U.S. manufacturing is evolving, and those who plan strategically will be best equipped to thrive in this new landscape.

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🌎 AROUND THE FREIGHT WEB

🚛 High Cost of Summer Truck Idling. Samsara data revealed that high temperatures significantly increase engine idle times, leading to higher fuel costs and emissions for fleets.

🧠 Getting Load Details From AI. Fleetworks' latest video showcases how effective AI is becoming in carrier sales. We spoke with their CEO, Paul Singer, about these advancements last week. The podcast will be released in a few weeks.

💰 TuSimple's $189M Settlement. TuSimple has agreed to settle a federal fraud lawsuit with a $189 million payment, aiming to resolve their ongoing legal challenges. Their company’s future remains uncertain.

🚨 Trucker Arrested. A female truck driver was arrested after crashing her vehicle while fleeing the scene of a previous wreck.

🤖 Open Source Freight Slack Bot. Our friend Anthony Fecarotta, founder of linehaul.ai, created a Slack bot, which enables companies to perform Carrier Risk Assessments using the MyCarrierPortal inside Slack.

📈 Nearshoring Challenge. Increased nearshoring has led to a rise in meth seizures at US borders. Laredo Port Director Albert Flores believes freight companies and border officials can team up to stop drug smuggling.

🚂 Canada Rail Post-Lockdown. The swift post-strike recovery and pre-strike planning minimized companies expected negative impact of the Canadian rail lockdown.

ACQUISITION RUMOR MILL

We've received two DMs from followers this week about possible acquisitions in the logistics space. While we haven't confirmed these rumors yet, we wanted to keep you in the loop, as they seem credible.

1. Bay and Bay Transportation has acquired Minnesota-based Q-Carriers.
2. Cargomatic has acquired Illinois-based ITG Transportation.

FREIGHT MEME OF THE DAY