Archive for February, 2014

  • Ocean Freight

    Ocean rates fall after three weeks of price stability

    - by Tom Sanderson

    After remaining at a stable price level for the three week period following the Chinese New Year, ocean rates declined modestly last week. The Shanghai Containerized Freight Index (SCFI) for West Coast ports was $2,041 per FEU and to East Coast ports was $3,363 per FEU on February 14. The most significant move in ocean rates so far this year occurred during the week that ended January 17 as prices spiked 11.6% to the West Coast and rose 6.2% to the East Coast. West Coast rates have risen 20.1% and East Coast rates have climbed 13.5% from the 2013 lows that were reached in mid-December. Prior-year comparisons highlight the disparate pricing moves between the West Coast and East Coast ports as rates to the West Coast are down $323 (14%) over 2013 and rates to the East Coast are only down $154 (4%). Competition among the major shipping lines remains more robust in the Pacific as these companies resist moving any measurable capacity out of the Pacific, even as numerous dredging projects increase the capacity of many East Coast ports. To the West Coast, rates have decreased $741 and to the East Coast have fallen $735 since their August 2012 peak. The SCFI reflects spot market rates for the Shanghai export container transportation market.

    SHanghai

    Source: Shanghai Containerized Freight Index – Shanghai Shipping Exchange, The Journal of Commerce, Transplace analysis

  • Hours of Service

    Hours-of-Service restart rules contested

    - by Tom Sanderson

    The Federal Motor Carrier Safety Administration (FMCSA) said that a new study, by the Sleep and Performance Research Center, Washington State University and Pulsar Informatics Inc., indicates its current restart rules in the hours-of-service (HOS) regulations are more effective at combating fatigue than prior rules. This conclusion was immediately rebuked by the American Trucking Associations (ATA) and Owner Operator Independent Drivers Association (OOIDA), as well as by several members of Congress.

    The study involved 106 commercial drivers working for three carriers that provided 1,260 days of data from electronic log devices and wrist activity monitors. Drivers’ fatigue levels were measured three times per day by means of a Psychomotor Vigilance Test (PVT) and by means of subjective sleepiness scores. A truck-mounted lane tracking system measured lane deviation (variability in lateral lane position).

    The drivers totaled 414,937 miles from January to July 2013. That would indicate that each driver averaged 329 miles per day, so it is clearly not a study of over-the-road drivers who are most impacted by the restart rule. In fact, only 36 of the drivers were over-the-road drivers, 44 were local drivers, and 26 were regional. By type of operation, only 3 were running in over-the-road van operations, 48 were intermodal, 32 were dedicated, 13 were flatbed, 7 were temperature controlled, and 3 were owner operators.

    FMCSA said the study concluded that  “drivers who began their work week with just one nighttime period of rest, as compared to the two nights in the updated 34-hour restart break: exhibited more lapses of attention, especially at night;
    reported greater sleepiness, especially toward the end of their duty periods; and
    showed increased lane deviation in the morning, afternoon and at night.”

    The ATA immediately questioned the validity of the study. According to Transport Topics, “ATA said the study failed to evaluate the safety effects of the once-per-week restart restriction, commonly called the 168-hour rule, nor did it address the real-world safety implications of putting more trucks on the road during daytime hours, when more passenger vehicles are also on the road.” Dave Osiecki, ATA executive vice president and chief of national advocacy, said “While the study includes some findings favorable to certain portions of the new restart rule, the incomplete nature of the analysis and the lack of justification for the once-weekly use restriction is consistent with the flawed analyses that led the agency to make these changes in the first place.”

    Rep. Richard Hanna, R-N.Y. was also critical, stating: “Considering the study arrived four months late, I expected a robust report, but the study is worthless.” He continued, “First, FMCSA is telling millions of truckers when they are tired, but the study only examined 100 truckers from three companies. In addition, the study’s narrow scope does not address perhaps the most serious issue that could change the entire outcome of the study – forcing truckers to work in the morning rush hour when roads are most congested and dangerous. This half-baked study only underscores the need to legislatively delay the rule and have GAO conduct an independent analysis of the study so we can get a credible account of what this rule will truly mean for the safety of truckers, commuters and businesses.”

    OOIDA Executive Vice President Todd Spencer said, “Unfortunately this was a study that was sort of thrown together, but realistically we don’t think it’s representative of the industry that was supposed to be the beneficiary (or the victim depending on your point of view) of the new regulations. This was a really, really small sample size, only 106 drivers. And the majority of those drivers didn’t even run over the road. Obviously that is where the 34-hour restart provision was supposed to have an impact. I’m skeptical that you can extrapolate any conclusion from this to the broader population of truck drivers.”

    Common sense would lead one to conclude that putting more trucks on the road in morning rush hour would lead to more crashes, not fewer. In addition, the decline in driver productivity means more new drivers need to be recruited and hired, and they are not likely to be as safe as the experienced professional truck drivers on the road today. It also seems obvious that a professional truck driver is better equipped than Washington bureaucrats to decide what time of day he or she needs to sleep.

  • Diesel Fuel Prices

    Diesel prices rise as winter weather takes hold

    - by Tom Sanderson

    Weekly retail on-highway U.S. diesel prices rose 4.7 cents to $3.951 per gallon on February 3, the highest level since last September. Diesel prices rose dramatically in the New England and Central Atlantic regions as home heating oil inventories plunged due to prolonged bouts of extremely cold temperatures. Despite the rise in prices over the last two weeks, diesel is still 7.1 cents below the price from the same period last year. Diesel experienced a high but narrow pricing environment throughout 2013, fluctuating between the low of $3.817 on July 1 and the high of $4.159 on February 25. Prices rose steadily from the beginning of 2013 through the end of last February, so it will be interesting to see if 2014 diesel prices exhibit a similar inflection point. Although surging domestic energy production has prevented measurable price increases over the last few years, surging international demand for fossil fuels will eventually put upward pressure on diesel prices. In 2012, diesel exceeded $4 per gallon for a total of 26 weeks but only exceeded that level for 8 weeks during 2013. The recessionary low price point for diesel was $2.023 on March 16, 2009. A view of weekly prices over the last 4+ years exhibits generally higher prices in each year over the preceding year until 2013. Diesel prices peaked at $4.771 per gallon in July 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (13 months). Prices have exceeded $3 since October 4, 2010 (40 months).

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  • ISM Manufacturing Index

    Manufacturing sector disappoints in January

    - by Tom Sanderson

    The Institute of Supply Management reported that the Purchasing Managers’ Index (PMI) decreased to 51.3 in January, a significant drop from December’s 56.5. The manufacturing index exhibited robust growth throughout the second half of 2013, but the sector’s weakness last month has reinvigorated concerns about the pace of economic growth heading into 2014. Factory purchasing managers reported a sharp decline in orders through January indicating that manufacturing growth may stagnate for the next few months. The manufacturing sector helped propel the economy’s respective 4.1% and 3.2% expansions during Q3 and Q4. Many economists had anticipated a continuation of this trend, so estimates for Q1 GDP growth may prove overly optimistic. PMI over 50 indicates growth while a PMI under 50 represents contraction in the manufacturing sector of the economy. The index reached a low of 32.5 in December 2008 but then recovered more quickly than other areas of the economy. The vertical bars in the graph represent recessions.

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