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FedEx Freight Slashes Spending 62% Ahead of Potential Spinoff: FedEx has been reviewing the role of FedEx Freight, its less-than-truckload (LTL) operating unit, and its relative value to the company. The review, which they expect to be completed by the end of the calendar year, is being conducted in connection with the potential sale or spinoff of this unit so FedEx can focus on its parcel and logistics business.
In anticipation of a sale or spinoff, FedEx Freight slashed its spending on trucks and trailers during its first quarter, which ended August 31. The unit’s capital expenditures dropped 62% to $35 million from $91 million for the first quarter of last year. Reduced vehicle and trailer spending will typically result in an increase in a carrier’s average fleet age, and the move would pass on equipment spending costs to a potential new owner or a spun-off independent LTL. The spending reductions add to FedEx’s emphasis on cost savings across the company. As a result of the above actions, FedEx nearly halved its company-wide spending on trucks and trailers with a 46% year-over-year decrease to $90 million in the first quarter of the current fiscal year from $167 million in the same quarter last year.
During the first quarter, FedEx also launched its International Deferred Freight service, which offers slower transit times for non-time-sensitive freight. “We will use this extra time to both build dense skids and increase the proportion of volume that is trucked to its final destination,” said EVP and Chief Customer Officer Brie Carere.
Volvo Unveils New Long-Range Electric Semi: Volvo recently unveiled a new long-range electric semi-truck that could change the trucking game for good. The new Volvo semi can travel over 370 miles on one charge, twice what the company’s current version can accomplish and what Volvo refers to as “a breakthrough.” What makes this possible is a fully electric axle that Volvo first revealed in 2022. The e-axle integrates the electric motors and the transmission into the rear axle, allowing more space for batteries, which increases range capabilities. The new long-range FH Electric semi is expected to go on sale sometime during the last half of 2025. It’s just one part of what Volvo Trucks calls its “three-path technology” approach to a clean energy transition that includes “battery electric, fuel cell electric, and combustion engines that run on renewable fuels like green hydrogen, biogas, or hydrogenated vegetable oil.”
Introducing trucks that can travel an entire day on clean energy, recharge at night, and be ready to run again the next day is a significant step towards decreasing the negative environmental effects of the industry. “It will be a great solution for transport companies with a high annual mileage on their trucks and with a strong commitment to reduce CO2,” said Roger Alm, president of Volvo Trucks. “Besides the important environmental gains that electric trucks bring, they offer truck drivers a much better working environment, with much lower levels of noise and vibrations.”
This technology from Volvo is just the latest development in the clear shift the trucking industry is making toward clean energy. A Swedish trucking company is already in the process of developing hybrid solar-powered trucks covered in solar panels. Walmart Canada has also begun to integrate electric semi-trucks into its fleet. These are just a few examples of a positive trend in the trucking industry toward a cleaner future.
Number of Women Drivers on Decline: According to the National Transportation Institute (NTI), women currently represent around 10.7% of student drivers and trainees, down from more than 15% in 2022. The industry is seeing a regression in the strides made from 2019 to 2022 in recruiting younger people and women into trucking jobs, said NTI President and CEO Leah Shaver. The representation of women as student drivers and trainees has fallen to 2019 levels, at which time they comprised 10.1% of the industry workforce. Similarly, the percentage of young people in this training area is also back to people in their 30s again, as opposed to 2022 when younger people were more prevalent, Shaver said.
The regression in the number of women drivers comes as fleets have pulled back on recruitment efforts in general amid a prolonged freight downturn. In the broader data point of truck transportation, federal data shows that the percentage of women was nearly 13% in 2019. That fell to 12.4% in 2020, rose to 12.6% the following year, increased to 12.8% in 2022, and fell below 12% in 2023.
The American Transportation Research Institute noted one of its top priorities in 2023 was identifying barriers to entry for women truck drivers, focusing on research efforts that included a June 2024 report about identifying and mitigating challenges faced by women truck drivers.
Freight Fraud Ramps Up with Hurricane Season: With the Hurricane season in full swing, the risk of freight fraud in the trucking sector is reaching new levels. Fraudsters never let a crisis go to waste. There’s a strong possibility these fraudsters are on the load boards either trying to steal loads or offering FEMA loads, said Lewie Pugh, Owner-Operator Independent Drivers Association vice president. “They may offer a load, and you haul it, but you never get paid because they’ve brokered it from someone else. Or they may have it hauled to a fake warehouse and then steal the cargo outright. We usually tell our members that if a rate is too good to be true, it probably is. But now, because of the demand for emergency supplies, you’re going to have some really good rates going into these disaster areas, so the chance to separate what’s real from what’s fraudulent is going to be tougher for a while.”
The window for an uptick in freight fraud could last for months as the devastation left by recent hurricanes is unfolding as a massive recovery effort. According to the Transportation Intermediaries Association (TIA), these major storms came at the same time that freight markets were “under siege” from increasingly sophisticated fraud schemes. In its State of Fraud Industry 2024 Report published in September, TIA emphasized that truckload freight, which provides a significant amount of hurricane recovery capacity, is the primary target of fraud, with 98% of respondents to TIA’s survey identifying it as the most vulnerable mode.
TIA highlighted eight types of fraud in the report: spoofing, unlawful brokerage scams, fictitious pickups, phishing, identity theft, email/virus, inbound phone calls, and text messages, all of which could see an uptick in the midst of recovery efforts. The loosening of federal regulations to make response efforts easier and more efficient can also inadvertently provide fraudsters loopholes to exploit, including the decision by the Federal Motor Carrier Safety Administration not to enforce Temporary Operating Authority Registration fee provisions. “We usually see broker fraud conducted by people that haven’t had their authorities very long, so lifting fees for temporary authority could be another way to invite in bad actors,” Pugh said. “Unfortunately, there are people that are going to do anything to take advantage of folks.”
Trucking Wages Continue to Rise Despite Challenging Economy: In September, the American Trucking Association released the results of its latest Driver Compensation Study showing that, despite a currently challenging freight market for motor carriers, driver wages across the industry continue to increase post-pandemic. The study provides detailed wage and benefit information for drivers based on a wide-ranging survey that collected data from 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors.
Key findings in the survey based on 2023 compensation levels are as follows:
- Drivers earned a median annual amount of $76,420, a 10% increase over the previous two years.
- Linehaul less-than-truckload drivers earned a median annual amount of $94,525, while local LTL drivers earned a median of $80,680.
- Median annual compensation for drivers at private carriers reached $95,114, up 12% since 2021.
- Leased-on independent contractors for carriers earned an annual median amount of $186,016.
- Compared to 2021, carriers offered smaller referrals and fewer sign-on bonuses for new drivers but more frequently offered tenure bonuses to their current drivers with a greater median value. By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention.
“Trucking is one of the few roads in today’s economy that lead to the middle class without requiring a college degree and the debt that comes with one,” said American Trucking Association’s President and CEO Chris Spear. “As this study shows, those pursuing a career as a professional truck driver will find strong earning potential in this field, which remains in high demand and will only continue to grow higher in the years to come.”
Trends in Used Equipment Values
According to ACT Research, the average retail sales price of a used Class 8 truck in August was $64,499, down 9.5% year-over-year but up 4.6% from the prior month. At the same time, mileage decreased 0.7% to 418,000 from a year ago and 2.6% from the prior month.
“Same dealer Class 8 retail truck sales faltered in August, returning to a pattern of slowing,” said Steve Tam, vice president of ACT Research. “The 7.7% decrease was counter to the ten percentage point seasonal improvement indicated by history. August is typically the second-best sales month of the year, running almost 9% above average.”
J.D. Power’s monthly market report found that auction volume increased in August while pricing dipped. The report noted that retail volumes were typical and depreciation was normal, with day cabs continuing to depreciate at a rate greater than sleepers. Prices for 4- to 6-year-old auctioned sleepers were 5.6% lower than in July. The report also noted that depreciation this year is substantially lower than the historical average at 1.3% per month.
Charles Bowles, director of strategic initiatives at Commercial Truck Trader, stated, “It’s interesting to note that while inventory levels continue to rise, there exists some growth in demand.” “When that occurs, one expects to see prices rise to meet the demand. We weren’t surprised by the bump in retail prices in August, but I wouldn’t say that it will be a trend in the short term. There’s simply too much inventory in the system right now.” Bowles expects the resulting pricing volatility to continue but depends on the specs and ages of trucks. In the more immediate term, he said he saw conditions in the used truck market decline somewhat in September. “We saw a very slight decline in September demand versus August for both used day cabs and used sleepers, which may be a harbinger of a lower sales volume and a downward adjustment in average retail prices in the coming weeks,” Bowles said. “We’re seeing a much larger drop in demand in September for new day cabs and sleepers.”Throughout all of 2024, Irontrax has seen a slight decline in the pricing of all late-model used trucks and trailers, particularly those with higher mileage. However, the correction has not nearly been as drastic as that from historic highs experienced last year. Late-model vehicles with low mileage are still difficult to find. With the cost of new trucks and trailers returning to a somewhat normal level, declines in value from initial purchasers to ones in the secondary market are narrowing. Tiers, specs, mileage/hours, and age are starting to play important roles again in secondary market pricing.