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What’s Tougher: Finding Drivers Or Trailers?

What’s Tougher: Finding Drivers Or Trailers?

By Todd Maiden of FreightWaves,

Supply headwinds facing the trucking industry were front and center at an investor conference on Wednesday and Thursday. While executives said driver recruiting…

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What's Tougher: Finding Drivers Or Trailers?

By Todd Maiden of FreightWaves,

Supply headwinds facing the trucking industry were front and center at an investor conference on Wednesday and Thursday. While executives said driver recruiting and broader supply chain bottlenecks are ever so slightly easing, the procurement of equipment has gotten tougher.

“I would predict at this juncture, in our looking out at the trailer OEMs (original equipment manufacturers) and the tractor OEMs, that it could even be more difficult in 2022 on production and delivery than it was in 2021,” said Mark Rourke, CEO and president of Schneider National, at the Stephens Annual Investment Conference held in Nashville, Tennessee.

Finding trailers won't get any easier in 2022 (Photo: Jim Allen/FreightWaves)

Lack of trailers becoming the new driver shortage?

Equipment purchasing for truckload carriers will be below normal replacement in 2021 given semiconductor and parts shortages as well as COVID-related labor issues that are plaguing the OEMs.

Derek Leathers, Werner Enterprises chairman, president and CEO, said current tractor and trailer orderbooks extend well beyond the OEMs’ manufacturing capacity for all of next year, meaning the industry fleet, which has gotten older and smaller during the pandemic, won’t be increasing anytime soon.

“I think you see continued contraction or at best case stabilization in ’22 but with an older fleet,” Leathers said.

Werner’s average truck age was 1.8 years heading into the pandemic with trailers 4 years old on average. While a recent acquisition skewed average ages slightly higher, an inability to get all of the replacement equipment wanted has really pushed those averages up, to 2.1 years and 4.4 years, respectively.

Leathers said Werner wants to refresh equipment but “there’s no line of sight to when that moment is, it’s certainly not in ’22.”

“The best-case scenario is you may see some return to normalcy by third quarter ’22 and that’s way too late to have any impact on the year in terms of additional capacity. So I think we have a structural cap that’s different than anything we’ve seen historically.”

Eric Fuller, president and CEO at U.S. Xpress, also pointed to the third quarter as the earliest date for relief. He said the OEMs are guiding to “a few more months” for tractors that should have already been delivered.

“A number of the OEMS are going back to some of their larger orders and reducing the amount of tractors they’re actually going to be able to produce in 2022,” Fuller said. “I think the trailer situation is worse. In some cases, to get a significant order we’re being told it could be multiple years … 24 months, 36 months.”

Trailer manufacturer Wabash said it would build only 50,000 dry van trailers next year compared to more than 57,000 in 2019. The company’s backlog, which extends into 2023, has increased to more than $2.3 billion from $1.9 billion at the close of the third quarter. It’s in the process of converting refrigerated manufacturing capacity to dry van production lines but that won’t be completed until early 2023.

Management from J.B. Hunt said delays in equipment deliveries will result in holding onto trade-ins longer than originally anticipated, which will drive its cost of service higher. The increased maintenance expenses associated with running older equipment will be an incremental component of its customer’s rate structure in 2022.

Less-than-truckload carrier Yellow noted a lack of trailers throughout the supply chain as trailing equipment sits longer at shipper facilities that are dealing with issues recruiting and retaining workers.

Yellow CEO Darren Hawkins said he’s most concerned about being able to take delivery of the trailers Yellow has ordered for 2022. He said the company can postpone planned trailer retirements if needed but noted that overall trailer utilization has become a material burden on operations.

“We do not have access to our own equipment as readily as what we’ve seen in the past,” Hawkins said. “And then when you do get that equipment, it’s in the wrong part of the country and we’re having to reposition it.”

Yellow would normally use the rails to reposition trailers but given current network congestion, they have more freight than they can handle.

“I have not seen it ease. I actually feel like demand is expanding for our services,” Hawkins added.

He said Yellow is focused on making timely freight pickups as that is its customers’ biggest concern. “They’re not as focused on transit times as they are getting their freight picked up and getting it into a system and being able to tell their customers that it’s actually in transit.”

Driver hiring issues have eased … kind of

Most trucking executives said that multiple rounds of pay increases and sign-on bonuses, as well as the end of enhanced unemployment benefits in September, have helped driver recruiting, but only on the margins.

Fuller noted that August was the toughest month for driver hiring, with only slight improvement since. “If August was a 10, it’s a 9.5 [now].”

J.B. Hunt said difficulties sourcing drivers have plateaued but at a high level.

“For drivers, we’re at a high watermark and we’re holding,” Shelley Simpson, chief commercial officer and EVP of people, commented. She said driver recruitment hasn’t really kept the company from bringing on new business because it can utilize its digital 360 freight platform for capacity and backfill with permanent resources later.

But she said the labor headwinds extend beyond drivers. Difficulty finding workers throughout all levels, from maintenance techs to office employees, has been a burden for the company.

“In the past, we were able to tweak pay or turn pay and that typically would fix 95% of the problem. Today, that’s not the case when it comes to labor,” Simpson continued.

The American Trucking Associations’ estimate of the current driver shortfall is approximately 80,000. But the organization sees that number moving to more than 160,000 by 2030.

“It’s the most difficult driver market I’ve ever seen,” Leathers said. “Has it stabilized at very difficult? That seems to be the case. So it’s staying very difficult but it doesn’t seem to be worsening.”

Searching for a cure

Werner has been bringing on drivers through its academies. It had four additional driver schools operating at the end of the third quarter, 17 in total. The company will have 22 open by the end of the first quarter. Driver sourcing costs and labor expenses incurred as a result of equipment downtime due to parts shortages led Werner to miss third-quarter expectations.

When asked about potential solutions to the driver issue, Leathers said he sees the most potential in opening the driver pool to include candidates as young as 18 years old. He said the plan to reduce driver ages would be “one of the largest advancements for safety” the industry has seen in a while.

“These are true apprenticeships. This is not, ‘You’re 18 years old and here’s the keys to a truck and good luck.’” He said the current proposal for preparing these individuals would require multiple months of training with experienced drivers as well as curfew restrictions. He believes it would also allow the industry to recruit people “from the front of the class.”

“What do you get at age 21? If you wait to 21 because you think that there’s something magical about the number, you get the people that were unsuccessful as an electrician, a plumber, a roofer or welder versus going to the front of the class and getting the best and brightest and putting them in a multi-month apprenticeship.”

He said relaxing hours of service rules wouldn’t be fair to the driver. “They should not bear on their backs our inefficiencies,” Leathers said, referring to the increase in the amount of dwell time drivers are experiencing due to congestion throughout the supply chain.

Leathers doesn’t think increased vehicle or cargo weights will help either “at a time when our nation’s infrastructure is already crumbling.” He said it will take at least a decade until recently approved infrastructure money results in material improvements to the highways.

Rourke said a new rule for entry-level candidates, requiring training from a certified institution listed on an approved provider registry, will further limit driver resources.

“For the state licensing, you have to then verify where this schooling took place and the accreditation of that school, which has a minimum number of hours, a minimum curriculum. It isn’t just, ‘I just took the written test, let me go out and take a test and I get a CDL.’ So it radically changes that entry point into the industry.”

Tyler Durden Wed, 12/08/2021 - 15:25

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Economics

Monitoring Investment Regime Trends With ETF Pairs

Markets move in waves and it’s valuable to keep an eye on the big-picture ebbs and flows for context with portfolio rebalancing, adjusting risk exposure…

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Markets move in waves and it’s valuable to keep an eye on the big-picture ebbs and flows for context with portfolio rebalancing, adjusting risk exposure and much more. There are several ways to track these broad moves. One of the more useful methodologies is watching the ratio of prices for a given investment theme.

Using various pairs of ETFs is a useful approach and on that basis this column marks the start of an ongoing periodic review of what I’m calling investment regime trends. There’s a long list of worthy ETF pairs to monitor, but as a start let’s limit the view to five in this debut. In future columns I’ll expand the vista, highlighting trends that are timely for one reason or another.

Portfolio Strategy
Here’s one way to quantify what might be called a measure of risk-on/risk-off at a high level for portfolio strategy via a pair of asset allocation ETFs. One is an aggressive portfolio mix (AOA), the other a conservatively run allocation (AOK). For this ratio, a rising trend implies a productive regime for risk-on strategies. By that measure, the strong rebound off the pandemic low has stalled in recent months and this trend appears to be at risk of rolling over and reversing.

US Stocks-US Bonds
Next up is the US stocks (SPY)/bonds (BND) regime. Here, too, the trend has stalled recently, although it hasn’t rolled over yet, largely because the loss for bonds has been greater than stocks in recent history, although this is starting to change. As a result, this indicator appears set for a downside reversal after an extended bull run.

Inflation/Reflation
The recent surge in inflation remains on the short list of risk factors that are driving market behavior this year and the price ratio for an inflation-indexed Treasuries ETF (TIP) and a nominal Treasuries ETF (IEF) suggests the inflation/reflation momentum remains strongly bullish.

US Treasuries
Tracking the risk-on/risk-off trend for US Treasuries via a set of medium-term (IEF) and short-term (SHY) ETFs reminds that staying defensive in this corner still looks timely.

US Cyclical Equities
Staying defensive also has merit by favoring shares of consumer staples (XLP) over so-called discretionary names (XLY).


How is recession risk evolving? Monitor the outlook with a subscription to:
The US Business Cycle Risk Report


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Economics

NRx Pharmaceuticals Leaders to Present at the H.C. Wainwright & Co. Global Investment Conference

NRx Pharmaceuticals Leaders to Present at the H.C. Wainwright & Co. Global Investment Conference
PR Newswire
RADNOR, Pa., May 19, 2022

Company to Present Corporate Update During Investor Webcast, May 24, 2022, at 7:00am ET
RADNOR, Pa., May 19, …

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NRx Pharmaceuticals Leaders to Present at the H.C. Wainwright & Co. Global Investment Conference

PR Newswire

Company to Present Corporate Update During Investor Webcast, May 24, 2022, at 7:00am ET

RADNOR, Pa., May 19, 2022 /PRNewswire/ -- NRx Pharmaceuticals, Inc. (Nasdaq: NRXP), a clinical-stage biopharmaceutical company, today announced its interim Chief Executive Officer, Robert Besthof, and other executive leaders will be presenting a virtual update to the company's business via webcast at the H.C. Wainwright & Co. Global Investment Conference.

Webcast Presentation Details: 

Event:  H.C. Wainwright Global Investment Conference (Hybrid Conference)
Date: Tuesday, May 24, 2022
Time: 7:00 a.m. Eastern Time
Link to register for the NRx Pharmaceuticals' Presentation: CLICK HERE

(A replay will be available on the NRx Pharmaceuticals website for thirty (30) days following the presentation at www.nrxpharma.com).

About NRx Pharmaceuticals

NRx Pharmaceuticals, Inc. (Nasdaq: NRXP) ("NRx Pharmaceuticals" or the "Company") draws upon decades of collective, scientific, and drug-development experience to bring improved health to patients. The U.S. Food and Drug Administration ("FDA") has granted Breakthrough Therapy designation, a Special Protocol Agreement, and a Biomarker Letter of Support for NRX-101, an investigational medicine for the treatment of severe bipolar depression in patients with acute suicidal ideation and behavior after initial stabilization with ketamine or other effective therapy. In addition, ZYESAMI® (aviptadil), for patients with COVID-19, has been granted Fast Track designation by the FDA and is in a Phase III trial for Critical COVID-19 patients which is sponsored and managed by the U.S. National Institutes of Health.

NRx Pharmaceuticals is led by executives who have held senior leadership roles at Lilly, Pfizer, and Novartis as well as major investment banking institutions.

Cautionary Note Regarding Forward-Looking Statements

This announcement of NRx Pharmaceuticals, Inc. includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995, which may include, but are not limited to, statements regarding our financial outlook, product development, business prospects, and market and industry trends and conditions, as well as the Company's strategies, plans, objectives, and goals. These forward-looking statements are based on current beliefs, expectations, estimates, forecasts, and projections of, as well as assumptions made by, and information currently available to, the Company's management.  

The Company assumes no obligation to revise any forward-looking statement, whether as a result of new information, future events or otherwise.  Accordingly, you should not place reliance on any forward-looking statement, and all forward-looking statements are herein qualified by reference to the cautionary statements set forth above.

CORPORATE CONTACT
Molly Cogan
Sr. Director, Global Communications 
mcogan@nrxpharma.com

INVESTOR RELATIONS
Tim McCarthy
Investor Relations
tim@lifesciadvisors.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/nrx-pharmaceuticals-leaders-to-present-at-the-hc-wainwright--co-global-investment-conference-301550902.html

SOURCE NRx Pharmaceuticals, Inc.

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Economics

JPY forecast amid the Bank of Japan keeping the monetary policy easy

The rapid depreciation of the Japanese yen (JPY) in the last couple of years led to one of the most impressive moves seen in the FX market in recent history….

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The rapid depreciation of the Japanese yen (JPY) in the last couple of years led to one of the most impressive moves seen in the FX market in recent history. The yen simply melted, losing value against all its peers – not only against the US dollar.
Speaking of the US dollar, the yen dropped to over 131 recently before gaining some ground in the last few days. How will the yen perform for the rest of the year, and is the Bank of Japan right in keeping the monetary policy easy?

Bank of Japan still sees inflation as transitory

The main reason for the JPY’s move lower is the Bank of Japan’s policy. The central bank sees inflation as transitory, and, for this reason, it keeps the monetary policy easy.

It keeps buying government bonds, despite PPI or Producers Price Index (i.e., inflation on the producers’ side) rising at a four-decade high.

But so did the Fed, before dropping the transitory word when talking about inflation. If the PPI transfers to consumers, as it should, then the Bank of Japan would have to reverse its policy.

Truth be said, inflation in Japan is below 2% for decades, hurting the Bank of Japan’s credibility. It might have dramatic implications on the FX dashboard if it rises considerably above the target.

Only that the FX market is a leading one. Traders speculate and position themselves well before a central bank acts.

So did we see the lowest point in the JPY or not?

AUD/JPY daily chart points to a possible reversal

All JPY pairs’ charts look more or less like the AUD/JPY daily chart below. It shows that following the COVID-19 pandemic dip in 2020, the market rallied relentlessly.

But the recent breakout in 2022 following the Bank of Japan’s yield curve control comments is only the last leg of an otherwise super long trend. In other words, the yen was sold well ahead of the Bank of Japan’s comments. It followed the US stock market higher.

Now that the US stock market is coming down (i.e., Nasdaq 100 dropped -28% YTD), the JPY pairs may follow. The AUD/JPY chart above shows a possible head and shoulders pattern at the top which might just signal the top of a bigger head and shoulders pattern.

In other words, should the recent highs hold, a move back to 80 should not be discounted, especially if the US stock markets keep falling.

The post JPY forecast amid the Bank of Japan keeping the monetary policy easy appeared first on Invezz.

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