California looks to pass new bill ending trucker misclassification. State Senator Ricardo Lara, who represents the Port of Long Beach, proposed bill, SB 1402, would create a public list of companies that committed labor violations and failed to render payment to truckers. Retailers who use carriers on the list could then be liable for any future state labor, employment, and payment violations. Such a move would hold major shippers like Amazon and Apple accountable for using trucking services known to commit wage theft. “Port-trucking companies that rip off their workers and are caught in the act often go out of business then pop up under a new name to avoid paying what they owe,” Senator Ricardo Lara told The Nation. “It’s a cycle of exploitation that is driving down wages for many of the 25,000 California drivers who haul for some of America’s biggest retailers.” The bill closes a loophole where carriers pay their truckers as independent contractors to avoid paying hourly wages, insurance, and other forms of compensation.
East Coast imports hit all-time record high in June. The top four eastern seaports saw volumes up 7.31% YoY. Spurred by the Panama Canal expansion in 2016, East Coast ports have invested heavily in improvements to accommodate post-Panamax vessels. That combined with retailers trying to beat trade war tariffs could be the main drivers of the record increase. Despite the elevated container volumes, the 16% increase in spot rates from China to the US indicate normal peak season volumes can be expected.
Imports to US major retail container ports on track to set more records as retailers aim to get ahead of trade war tariffs. June and July both broke records for containers imported in a single month while August projections look to as well, according to the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates. “Tariffs on most consumer products have yet to take effect but retailers appear to be getting prepared before that can happen,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold to Progressive Rail Roading. “We’re seeing new record levels every month this summer. Much of that is to meet consumer demand as tax reform and a thriving economy drive retail sales, but part of it seems to be concern over what’s to come.”
Broker profits up due to record second quarter load volumes. Net operating profit grew 23% compared to a year ago, according to a survey of 100 brokers conducted by DAT Solutions, LLC. In comparison, gross profits were only up 12.8% as brokers struggled with margin compression due to substantial increases in the spot rate market. With purchased transport costs of dry vans up 37% YoY rates are on trend to remain elevated for the rest of the year. “I don’t hear many [brokers] complaining about margin compression, because they understand the reasons behind it,” Eileen Hart, DAT’s vice president of marketing and corporate communications, told DC Velocity.
Major food manufacturers concerned as high transportation costs cut into growth and earnings. Dean Foods, Del Monte, Kellogg, Tyson, and more report that the capacity crisis has had a staggering impact on profitability which could cause food prices to soar. “Rising freight costs have been a challenge for all of our businesses. We now expect freight to be about $270 million more this year compared to last year,” Tyson CEO Thomas Hayes noted in an earnings call. “If you have a supply chain that was built heavily on taking advantage of transactional interactions with your carrier base, you’re paying a pretty penny right now,” Derek Leathers, chief executive of Omaha, Nebraska-based Werner Enterprises Inc., one of the largest U.S. trucking companies, said at an investor conference in late June, according to Fooddive. Unlike in the past, where shipping costs ebbed and flowed, companies are starting to realize that costs won’t be receding any time soon. “The increases aren’t coming as fast as they were a year ago, but it took us a solid nine months to realize…that these increases are indeed being permanently secured with metal bolts to our costs,” J&J Snack Foods Corp. Chief Executive Gerald Shreiber said in an earnings call last month.
CEO of American boat manufacturer says Trump’s tariffs hurt US business in three ways. Bill Yeargin, the CEO of Correct Craft, wrote of the challenges that US companies and the economy will face in an op-ed for the Washington Examiner. Yeargin identified increased costs of imported parts, market distortion, and reduced exports as his main concerns with the administration’s trade policies. “Many Americans are understandably tired of longstanding and unfair trade agreements, and President Trump should be applauded for concentrating the world’s attention on the issue,” the Correct Craft CEO wrote. “However, his administration’s current trade policies of increasing protectionism are unfairly targeting US manufacturing industries, and will cause lasting damage to US businesses, jobs, and families.”
3D printing is changing the way trucks are manufactured. 3D printing has opened the door for additive manufacturing, an industry term for using data to create parts on demand. “The challenge in the spare parts business lies in securing supply even for model series which are no longer produced,” said Stefan Kurschner, senior vice president of aftermarket for Daimler Trucks North America, to Trucks.com. “Tools often have to be retained and maintained for years. With the 3D printing process, these challenges are a thing of the past.” The technology helps companies lower tooling costs, reduce inventory, and accelerate manufacturing. 3D printing also allows automotive engineers to reduce the number of parts needed and overall weight of components by combining and refining parts. Although, 54% of automakers had tried 3D printing, only 4% are using it in scale use, according to a survey conducted by McKinsey & Co.
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