This Week in Logistics News (April 8-12, 2013)

By Adrian Gonzalez

I’m on borrowed time this morning, so without delay, here’s the news that caught my attention this week:

Lots of transportation and trade statistics to analyze this week. Here’s a quick summary:

The Freight TSI Index, which measures the amount of freight carried by the for-hire transportation industry, increased 1.2 percent in February from January. This was the fourth month in a row the index has risen, and it is now at the second highest level since April 2009. According to the press release, “This increase was consistent with several other indicators pointing to economic growth in February…[and] the index has exceeded its 2012 range for two months in a row.”

Truckload linehaul rates fell 1.3 percent from February to March, according to the Cass Truckload Linehaul Index. Year-over-year, however, rates are up 3.9 percent. “Supply and demand seem to remain relatively balanced,” but analyst Donald Broughton also added that “although tonnage has rebounded modestly to start 2013, we believe the effects of contractionary fiscal policy are likely to weigh on demand” for at least the first half of 2013.

Import volumes is expected to increase 2.7 percent in April over the same month last year, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates. “Economic indicators continue to present a mixed picture of the prospects for the remainder of the year,” Hackett Associates Founder Ben Hackett said. “Sequestration does not help but on the other hand is not yet a major factor to take into account.”

Meanwhile, according to a Reuters article, “the World Trade Organization cut its forecast for global trade growth in 2013 to 3.3 percent from 4.5 percent and said trade grew only 2.0 percent in 2012. That was the smallest annual rise since records began in 1981 and the second weakest figure on record after 2009, when trade shrank.” In its press release, the WTO said the weak growth in 2012 “was attributed to slow growth in developed economies and recurring bouts of uncertainty over the future of the euro. Flagging output and high unemployment in developed countries reduced imports and fed through to a lower pace of export growth in both developed and developing economies.”

To use a weather analogy, the economic skies are partly cloudy with occasional sun in some areas. But there’s an ongoing chance for rain, maybe severe thunderstorms, which can break out at any moment, so be prepared and carry an umbrella.

Is the freight brokerage model ready for re-invention? Last Month, Open Mile, which calls itself “The First High-Tech Freight Broker,” was acquired by Echo Global Logistics. This week, buytruckload.com — which calls itself “The First Fully-Automated Freight Broker” — was officially launched. According to the press release:

buytruckload.com has no sales force and provides instant rate quotes that can be ordered without any delay or haggling. The automated pricing model ‘learns’ a bit more every day, which enables buytruckload.com to continuously improve the prices that are offered to shippers. Shippers can book van, flatbed, and refrigerated loads with partial truckload options available for van and refrigerated shipments. buytruckload.com also supports and automatically prices more complicated requirements such as multi-stop loads, team-transit requirements, various accessorials and more.

The founders of the company, John Labrie and Sean Devine, have extensive experience in the industry, including leadership roles at Con-way, Echo Global Logistics, and CRST Expedite. So, presumably, they know the shortcomings of the traditional freight brokerage model and are looking to offer shippers and carriers a different way to work together.

The high level strategy of these startups is to leverage technology (analytics, optimization, mobile, social networking, and online self-service tools) to greatly reduce overhead and transaction costs, allowing them to offer more competitive rates to shippers, as well as greater visibility and transparency. While I agree with the strategy, I also believe that relationships matter in transportation management, so don’t discount the role and importance of people in the process. Also, the most efficient way for shippers to use these systems and services is to integrate them seamlessly within the workflow of their transportation management systems, so creating partnerships and APIs with leading TMS vendors will be important.

Well, I’m out of time and space for this week. Have a happy weekend!

Song of the Week: “El Carretero” by Eliades Ochoa (in memory of my Papi, who would have turned 78 yesterday).