As the trucking market seems to be past its bottom, carrier firms are becoming increasingly optimistic about the second half of the year — cue, the positive signs arising just before the peak season. With peak shipping demand expected to be right around the corner, the increase in demand and rates will possibly result in a profitable second half for carriers.

Carriers are now building capacity to meet challenges from a market experiencing increased demand. However, some of these businesses are still impaired from fighting a long market downturn, with high maintenance costs and long repair wait times leading to carrier exits. Some companies have suffered significant exits of their owner-operators. In this newsletter, we track this change, besides exploring stories highlighting the industry direction and how businesses prepare to take advantage of the evolving status quo.

The Logistics and Transportation Sector Welcomes Relief As Diesel Prices Dip

According to data released by the Energy Information Administration, the national average price of diesel has dipped 1.3 cents to $3.755 per gallon. The dip continues a four-week downward trend, which has resulted in a gallon of diesel costing 48.4 cents less than it did at this time last year.

According to the EIA’s weekly survey, prices dropped in all regions except the Midwest, which saw a slight increase of 0.2 cents. The Central Atlantic region experienced the largest decrease, at 3.7 cents.

Gasoline prices also fell, and the transportation and logistics sectors reacted positively to this news, especially because it provided some much-needed relief amid broader economic conditions. However, they remain sensitive to changes in global energy policies and supply chain factors.

As Demand Picks Up, Covenant Logistics Continues to Raise Rates

Covenant Logistics Group raised rates three times in 45 days after holding still for two years, signaling a pick-up in demand for the industry. The CEO's recent comments expressed optimism. "This is only the beginning," CEO David Parker said on a Q2 earnings call, pointing to increasing demand as the reason behind rising rates.

Parker expressed optimism over further increases, citing a sustained rise in demand since mid-May. However, his address was peppered with caution as well. "We don't have the momentum yet to go full-fledged and say, 'Roll out rate increases all over to every customer,' but we're looking at that," he contended. 

Due to these rate hikes, the company's operating income rose 15% in Q2. Other truckload carriers are also hopeful for a freight rebound, with Knight-Swift Transportation Holdings closely watching for signs of a seasonal volume increase towards the end of the year.

Renewable Diesel Gains Attraction in The US Trucking Industry

Renewable diesel has sparked interest across the trucking industry due to perceived gains, such as reduced carbon emissions and lower maintenance costs than petroleum diesel. According to California's Low Carbon Fuel Standard Certified Carbon Intensities, renewable diesel reduces carbon intensity by 65% on average compared with petroleum diesel.

It can also help distributors and fleet users save up to two cents per mile and works well for existing diesel engines because it is a drop-in fuel, meaning that it can used on the engines without modifications.

While HVO is currently a prominent solution, the increased availability of renewable diesel and clean fuel programs enacted by various states is driving its adoption. A combination of solutions, including renewable fuels and electric power, will play a significant role in achieving substantial decarbonization in the trucking industry.

LandStar Loses 14% of Its Owner-Operator Headcount in Q2

As companies such as Covenant Logistics Group get excited about the pick-up in demand, others are struggling to retain their workforce due to the impact of the past downturn on logistics operations. And Landstar is a victim of this challenge.

Landstar's owner-operator headcount dropped 13.9% year over year to 8,385 last quarter due to increased repair costs and longer wait times. The company had hoped its declining headcount would bottom out last year after acknowledging many had been struggling to keep their trucks in service in the fall of 2022.

As the market shifts and demand increases, revenue per mile remains above pre-pandemic levels, which provides some optimism for the future. The number of owner-operators in the market is expected to continue falling but at a pace slower than before. Landstar believes rates will stay higher than before the pandemic because of increased operating costs.

Korber Purchases TMS Provider to Boost Its Supply Chain Solutions

Korber Supply Chain Software is acquiring MercuryGate International Inc., a TMS provider known for its capabilities in multimodal optimization and execution. Korber will leverage MercuryGate's system to strengthen its supply chain software business. 

The move is strategic because it allows Korber to expand its capabilities to deliver a comprehensive and scalable supply chain execution portfolio. Following the acquisition, the company will offer solutions connecting inbound and outbound supply chain activities, improving cost efficiencies and customer experiences. 

Additionally, Korber aims to establish a resilient supply chain platform with visibility across inventory pools, providing simulation capabilities to evaluate future strategies and understand return on investment. This acquisition responds to the evolving supply chain landscape and aims to address the challenge of balancing resilience and cost-effectiveness amidst disruptions.

Navigating the Freight Market With Entourage Freight Solutions

Entourage Freight Solutions stands out with its extensive background and expertise in food service logistics. Our unique approach, honed in the food supply chain, ensures an unmatched service level and extreme attention to detail in meeting all our shippers’ needs.

We can achieve a higher service level on all movements by approaching every shipment, whether shelf-stable or not, with the same care and consideration as the regulation-laden food supply chain industry. We also leave nothing to chance, tracking all legs of transportation and driver activity to maximize available capacity without sacrificing quality.

Our platforms use the latest cloud-based, GPS-enabled technologies. They can track drivers regardless of location, continuously reroute shipments based on the dynamics at play, such as weather or traffic, and account for real-time changes in market rates. At Entourage Freight Solutions, we offer a broad range of unsurpassed services. These include:

• 
  Full Truckload (FTL): For shipment requiring a dedicated whole truckload.
• Less than truckload (LTL): For companies moving multiple LTL shipments to different locations or consolidating LTL goods from other companies to get a lower all-in rate.
• Refrigerated Transportation: Leveraged to avoid spoilage and damage to temperature-sensitive goods.
• Cross-Docking: With locations in Shelby, Ohio, Cedar Rapids, Iowa, and Romulus, Michigan, that serve as cross-docks for strategic consolidation, storage, and end-to-end distribution programs.

Request a quote today to see how Entourage Freight Solutions can help with your freight movement and other supply chain needs.