SIX.
LIZ: I MET TODAY GOING INTO THE
BREAK BUT I WANT TO SHOW YOU,
THE WALL STREET METRIC IN THE
GREEN IS THE VIC’S, THE FEAR
GAUGE 11 AND A THIRD%, YEAR TO
DATE GAINS OF 94%, SOMETIMES
DRIVEN BY ACTUAL FEAR AND
SOMETIMES BY LOTS OF VOLATILITY
AND AT THE MOMENT.
WE HAVE ATLANTA FED PRESIDENT
DROPPING A BOMBSHELL THIS
AFTERNOON DURING AN INTERVIEW
WITH REUTERS AS PEOPLE AROUND
THE WORLD STILL WAIT FOR MONTHS
FOR ALL KINDS OF DELIVERIES DUE
TO THE TANGLED SUPPLY CHAIN
BOSTIC SAYS SUPPLY CHAIN
CHALLENGES ARE STARTING TO SHOW
SIGNS OF EASING IN TRUCKING
COMPANIES ARE NO LONGER TURNING
DOWN REQUEST BECAUSE OF CAPACITY
CAPACITY.
AT THE SAME TOKEN DEMAND IS
STILL SIZZLING THE GLOBAL TRADE
DEFICIT AT $109.8 BILLION
RECORD, THE U.S. IS STILL
IMPORTING AND CONSUMING AND WE
PRODUCE AND EXPORT WITH CHINA ON
THE COVID DOCTRINE FROM THE
CUSTOM BUREAU SHOW CHINA’S APRIL
EXPORTS ROSE AT THE SLOWEST PACE
YEAR-OVER-YEAR SINCE JUNE OF
2020, MONTH OVER MONTH COMPS
3.9% GROWTH VERSUS 14.7% IN
MARCH, CH ROBINSON HAS A HUGE INTERNATIONAL SUPPLY CHAIN
INTERNATIONAL SUPPLY CHAIN
BUSINESS WHICH MANAGES BILLION
DOLLARS IN FREIGHT BY TRAIN,
TRUCK, PLANE AND OCEAN.
LET’S GET THE REAL STORY FROM
CEO BOB BIESTERFELD.
IF ANY WHAT IS IN THE SUPPLY
CHAIN TRENCHES IT IS YOU GUYS.
ARE YOU SEEING THE UNWINDING
THAT RAFAEL IS SEEN.
>> GREAT TO BE WITH YOU THIS
AFTERNOON, THERE IS A LOT TO
UNPACK AND THAT COMMENT.
MAYBE I’LL START DOMESTICALLY IN
TERMS OF CHOCOLATE THE GOOD NEWS
FOR SHIPPERS AND RECEIVERS AND
MANUFACTURES, WE’RE STARTING TO
SEE MODERATING IN THE BALANCE
BETWEEN TRUCKLOAD SUPPLY AND
DEMAND INTERNALLY WE TRACK WHAT
WE CALL ROUTING FIRST TENDER
ACCEPTANCE LIKE WE WOULD WITH HE
IS REFERRING TO WE DID SEE IN
FIRST QUARTER ENDED THE SECOND
QUARTER SOME IMPROVEMENT IN
TERMS OF HOW ROUTING GUIDES ARE HOLDING UP.
HOLDING UP.
MORE CARRIERS ARE ACCEPTING THE
FIRST TENDERS OF THE OFFERS BUT
CERTAINLY NOT EVERY CARRIER IS
EXCEPTING THE FIRST TENDER
OFFERS WE ARE STILL SEE THE MANY
CASES SECONDARY CARRIERS HAVING
TO COME IN TO MOVE THE FREIGHT.
GLOBALLY YOU MENTIONED CHINA IN
THE SLOWING RATE OF GROWTH,
GROWTH RATE NONETHELESS.
WE DELIVERED THE ON THE GLOBAL
SUPPLY CHAIN IN A TIME WHERE
CANDIDLY WE HAVE AS MANY PEOPLE
IN CHINA LOCKDOWN AS WE HAVE ALL
OVER THE UNITED STATES TO PUT
INTO PERSPECTIVE AND THE LARGEST
GLOBAL SEAPORTS IN THE WORLD
BEING IMPACTED.
LIZ: THAT’S WHY I ASK, WHAT IS
HE SEEING AND WHERE IS HE
LOOKING, IS HE REALLY LOOKING AT
THE BIGGER PICTURE, YOU GUYS ARE
ON EVERY COTTON AND WE DO GET
THE PLANES, TRAINS, FREIGHT,
SHIPPING EVERYTHING THAT YOU DO,
YOU HAVE ABOUT 85000 CONTRACT
CARRIERS AND 100,000 CUSTOMERS
TO SAY TRUCKING COMPANIES ARE
NOT TURNING THINGS DOWN ANYMORE
JUST AS DEMAND CONTINUES TO BE
STRONG YOU SEE ALMOST WISHING IT
TO HAPPEN THAT’S WHAT THE FED
WANTS THEY WANT DEMAND TO COME
DOWN TO THE SUPPLY CHAIN
PROBLEMS CAN USE.
>> WE’VE SEEN THROUGH THE PORTS
WHICH IS AN IMPROVEMENT WERE NOT
BACK TO PRE-PANDEMIC LEVELS.
WE SAW THE BACK HALF OF MARCH AT
THE BEGINNING OF APRIL SOFTENING
IN THE OVERALL TRUCKLOAD AND THE
BALANCE BETWEEN AVAILABLE TRUCKS
AND AVAILABLE LOADS OVER THE
LAST FOUR WEEKS WE HAVE SEEN
SEASONAL PROGRESSION AS A
BOUNCES OFF THE BOTTOM AND
PEOPLE PURCHASING TRANSPORTATION
THE RATE FUNDAMENTALS HAVE NOT
CHANGED THAT SIGNIFICANTLY DUE
TO THE FACT THAT WE HAD
TREMENDOUS INCREASES IN DIESEL
FUEL AND COST TO CONSUMERS AND
BUSINESSES REALLY REMAIN UP ON A
YEAR-OVER-YEAR BASIS.
>> THE CURRENT AVERAGE PRODUCER
IS ABOUT $5.55 A GALLON COMPARE
THAT TO WHAT WE SAW A YEAR AGO.
A YEAR AGO WE HAD $3.11 PER
GALLON FOR DIESEL, THAT MAKES ME
WONDER HOW CAN INFLATION COME
DOWN IF THE PASTOR COSTS ARE
GOING TO HAVE TO BE HIKED
BECAUSE FUEL IS SO EXPENSIVE.
>> FUEL IS IT’S A RECORD HIGH
FOR DIESEL FUEL AND FOR A MOTOR
CARRIER IN A TRUCKING COMPANY IF DRIVERS ARE THE MOST EXPENSIVE
DRIVERS ARE THE MOST EXPENSIVE
COMPONENT IN FUEL IS A CLOSE
SECOND.
THESE LEVELS FUELS IS THE MOST
EXPENSIVE COMPONENT OF THE
TRUCKERS BUSINESS.
CONSIDER A TRUCK ON AVERAGE GET
SIX AND A HALF MILES PER HOUR
GALLON.
IF A TRUCK IS DRIVING IN
CALIFORNIA RIGHT NOW WHERE THE
AVERAGE PRICE OF DIESEL IS
CLOSER TO $6.50.
THEY ARE PAYING A DOLLAR A MILE
AND FUEL COST ALONE WHICH MAKES
IT DIFFICULT TO TAKE COST OUT OF
THE SUPPLY CHAIN A THOUSAND
LEVELS.
LIZ: TRANSPORTATION TENDS TO BE
A CANARY IN THE COAL MINE WHEN
IT COMES TO RECESSION AND WHEN
IT’S REALLY HOT WE KNOW THERE’S
A TON OF DEMAND AND WHEN IT
STARTS TO SLOW WE KNOW THAT
MAYBE THAT IS THE PRECURSOR TO A
RECESSION PRE-TRANSPORTS ARE
FALLING BY TWO AND A QUARTER
PERCENT AND WELL OFF THE HIGHS.
WHAT DO YOU SEE IF YOU PUT ON
THE ECONOMY HAT ECON 101 AS THE HEAD OF THE GLOBAL SHIPPERS.
HEAD OF THE GLOBAL SHIPPERS.
YOU SEE A FREIGHT RECESSION?
>> I DO NOT I KNOW IT’S BEEN
LARGELY TALKED ABOUT IN THE
MEDIA.
WHAT I’VE SEEN IT OBSERVED OVER
THE COURSE OF THE LAST SIX
QUARTERS WE HAD ABSOLUTELY
UNPRECEDENTED INCREASES IN THE
COST OF TRANSPORTATION
SPECIFICALLY TRUCKLOAD AND IN
THE OCEAN.
WE SEE THAT MODERATE AND IT’S
COMING DOWN OFF OF ALL-TIME
HIGHS AT THE BEGINNING OF THE
YEAR.
BUT IF I LOOK AT THE SUPPLY AND
DEMAND FUNDAMENTALS DOMESTICALLY
RELATED TO TRUCKLOAD WE ARE
STILL AT LEVELS ABOVE WHERE WE
WERE IN 2018 WHICH IS THE LAST
PEAK OF THE TRUCKING CYCLE.
THIS IS A CYCLICAL BUSINESS
CAPACITY COMES IN AND OUT OF THE
MARKET BUT THE ONLY CAPACITY IN
BUILDING NEW TRUCKS THAT ARE
COMING OVER THE COURSE OF THE
PAST COUPLE OF YEARS ARE SMALL
BUSINESSES AND SMALL TRUCKING COMPANIES WITH THE AVERAGE FLEET
COMPANIES WITH THE AVERAGE FLEET
SIZE OF ONE OR TWO TRUCKS.
WE KNOW THOSE CARRIERS HAVE COME
IN AT ELEVATED COST BASE
CONSIDERED TODAY A 4-YEAR-OLD
USED TRUCK WITH THE SLEEPER ON
IT IS SELLING FOR TWICE OF WHAT
IT WAS PREPARED DAMMIT.
IT’S COSTING $100,000 FOR THE
TRUCK AND THE TEN-YEAR AVERAGE
WAS CLOSE TO $50000 FOR
SUSTAINABILITY PRINCIPLES WHILE
BUSINESSES WILL BE CHALLENGED AND WE HAVE TO HELP THEM THROUGH
AND WE HAVE TO HELP THEM THROUGH
OUR NETWORKS CLARIFYING, AS YOU
SAID IN THE TRENCHES WANTED A
FEW STOCKS IN THE GREEN TODAY