Welcome to the WHAT THE TRUCK?!? newsletter. In this issue, drone delivery programs grounded; no parking in infrastructure bill; driver pay takes off; market outlook; space billboards; and more.
End of the Parcelcopter — Just days after declaring that “The flying postman is here” and “ready for the mainstream,” DHL has killed its Parcelcopter delivery drone program. FreightWaves’ Jack Daleo reports, “We are not continuing the Parcelcopter project,” Alexander Edenhofer, a DHL spokesman, told Benedikt Fuest of WELT. DHL also said it will cease its pilot program with German manufacturer Wingcopter. So, what happened to the 2016 German Mobility Prize-winning drone program, and why has the Parcelcopter been called an impressive (albeit expensive) “proof of concept?”
“Everything started collapsing inwards because they [Amazon] piled too much on, they put people in charge who didn’t know anything about the project and they oversold. It’s all one gigantic oversell — just so many promises that can’t be kept.” — Former Amazon worker to WIRED
Amazon effect — When both DHL and Amazon began drone delivery programs in 2013, it was in an environment that DHL recently said was “overflowing with unrealistic hype as overeager entrepreneurs and established drone-based companies overpromise on their innovative technology.” According to a report in Wired, Amazon’s U.K. drone delivery operation lost over 100 employees and was “collapsing inward.” Amazon’s drone development remained on pace with DHL’s: launched in 2013 with deliveries in 2016 before innovation appeared to lose altitude by 2019. Eight years later and now both programs may be looking for a new direction.
Use case: Nebraska — It hasn’t been all bad news for drones this week. The Nebraska State Patrol announced plans to use them to help keep cars and trucks moving by aiding in accident investigations. Col. John Bolduc, superintendent of the Nebraska State Patrol, said, “Clearing a scene faster means roads can open sooner, saving time and money for travelers and the trucking industry, and hopefully preventing secondary crashes.” The NSP already has 19 drone pilots in place to launch the program.
Demand — What has a yearlong perpetual peak season done for driver pay? FreightWaves’ Todd Maiden reports, “Low driver school enrollments due to COVID protocols and some 85,000 operators with failed drug tests (according to Drug & Alcohol Clearinghouse data) are just some of the obstacles the fleets face.” To attract drivers, carriers are opening up their purse strings..
“As a former driver myself, I have always been an advocate for drivers and their wages. I know it is a very difficult and stressful job. Every hardworking driver deserves every penny they earn.” — James Helwig, founder and CEO, J.S. Helwig & Son
While the getting is good — A recent spate of pay increases has come from all corners of trucking. Hazmat drivers for Chicago-based Mark-It-Express could see increases as high as 40%. J.S. Helwig & Son and BCB Transport have raised pay twice, adding an average of 10 cents per mile to their drivers’ coffers. Still, carriers are rejecting more than 20% of loads tendered under contract due to a lack of drivers and capacity. A new report by U.S. Xpress states, “any quick relief for the driver shortage” remains unlikely. If you’re a driver looking to improve your financial outcome, go make hay while the sun is shining.
Next gen — Crosscountry Truck Driving School in North Carolina is taking an inclusive approach to recruiting new drivers to its academy. Pamela Day, owner of Crosscountry Truck Driving School, told CDLLife, “We have got to work to ensure that we can get young people and people of all nations, colors, and creeds to be truck drivers because guess what? We’ve got to have our products.” The school just expanded its facility which can now accommodate 108 CDL students a week. Day is passionate about getting more women behind the wheel too. “If we can get women into the industry, that’s gonna help close that gap and that is my goal,” Day said.
State of trucking
How long is the cycle? — Over the past year, market reports have continued to move the goal posts on when this perpetual peak season will end. With Chinese New Year on Feb. 1 and yet another round of Olympics that same month, will we see any meaningful downturn in the market before the opening ceremonies in Beijing? FreightWaves’ Todd Maiden caught up with Deutsche Bank’s Amit Mehrotra to make some sense of the situation.
In sight — With U.S. net worth at an all-time high and household nonmortgage debt as a percentage of that net worth at 4.7%, there is little in the way to stop voracious consumer spending that has been driving freight demand. Mehrotra says, “Our positive stance on the truckload cycle incorporates both demand and supply considerations, and both remain firmly in positive territory with no meaningful change in sight.”
“Years of inaction on addressing the lack of truck parking has created a nationwide crisis that threatens the safety of millions of professional drivers, and increasingly the motoring public. By failing to include the Kelly/Lummis amendment, the Senate has missed yet another opportunity to enact meaningful policies that would immediately improve drivers’ lives and highway safety.” – Todd Spencer, President and CEO of OOIDA
Double-edged sword — While a robust U.S. infrastructure package could be a boon for flatbed and dry van, it’ll also rob Peter to pay Paul in the form of siphoning off potential drivers to their nearest competition: construction. Mehrotra says, “If we get an actual bill passed — which may or may not happen — drivers will move from the cab to the construction site, which will keep drivers away for years.” Even if it doesn’t, where will those drivers park? $0 have been added to truck parking in the latest infrastructure bill that passed the Senate.
Drivers — One narrative surrounding driver hiring is that truckers are waiting out unemployment and stimulus benefits before returning to the wheel. Mehrotra points out, “If you take Knight-Swift’s unseated truckload count today, that number would amount to one of the largest fleets in the country. That hasn’t happened before.” Major carrier investments in autonomous trucking companies like Embark and TuSimple highlight how the industry is looking toward a future where it doesn’t have to rely on a driver.
Will there be a downturn in ’22? — With truckload contract rates up in the mid-teen percentages in 2021, how much more room is there to run next year? Mehrotra says, “Our best guess is 3% to 5% yield improvement next year for the TL industry.”
California weed invades Mexico
How the turntables — In a reversal of fortune, the marijuana drug trade in the U.S. has found footing in Mexico. South of the border, where marjuana is still illegal, demand for boutique Californian strains like “Babba Kush” and “Gorilla Cookies” are fetching 200%-300% above street value. One dealer in Mexico City told The Washington Post, “It’s aspirational for many of my clients. They want to be seen smoking the best stuff, the stuff rappers brag about smoking.” According to Forbes, California’s marijuana market reached $4.4 billion in sales, up 57% in 2020. Meanwhile, Mexican cartels may be more interested in avocados.
Marketing, the final frontier — SpaceX and Geometric Energy Corp. are teaming up to take advertising to heights well beyond those of Branson and Bezos. The companies plan to launch small satellites into space aboard Falcon 9 rockets, which will display pixelated ads on display screens known as CubeSats. Advertisements can be bought using Ethereum (and possible Doge) but there’s a catch. According to Interesting Engineering, “Since pixels are too small to be seen from Earth or from space, a selfie stick on the CubeSat will capture the image and live-stream it on YouTube or Twitch.” Looks like the beauty of the night sky will be free from neon for now.
We’re talking reefer — Wednesday, WHAT THE TRUCK?!? is coming to you live from the FreightWaves Cold Chain Summit. Refrigerated supply chains impact everything from chemicals to produce to pharmaceuticals, and every piece of the cold chain puzzle must be closely planned and monitored to ensure these delicate items reach their destination intact. What are leaders in the industry experiencing and how are they addressing new challenges? How have cold chains adapted in the past year to meet new demands? Join us for the Cold Chain Summit to learn how to better serve your customers, carriers and partners and to explore the emerging trends in this vital industry. Register for free now and tune in on Wednesday at 9 a.m. ET.
Friday — Overcoming addiction to build the world’s first-ever full collection of sustainable clothing that is backed with a 30-year guarantee; improving the customer experience for truck insurance; building a carrier in Atlanta. With special guests Hope White, CEO, H.D. White Logistics; Tom Cridland, CEO, Tom Cridland Clothing; and Devin Bostik, founder, LuckyTruck.
Catch new shows live at noon ET Mondays, Wednesdays and Fridays on FreightWavesTV, FreightWaves LinkedIn and Facebook or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player.
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Alarm bells or jingle bells? — How dire is the outlook for getting your freight on shelves prior to Christmas if you haven’t booked it yet? According to SEKO Logistics’ Brian Bourke, that ship may have already sailed. Take a look.
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