I-40 bridge adds to ‘freight tsunami’ raising prices; Memphis tech firm sees solution
‘Logistics has been slower to change… We’re trying to change that. We do consider ourselves part of the new wave of tech-enabled logistics companies’ — Daniel Booth, Straightline.
If you wonder why prices in the store are shooting up, listen to Memphis freight broker Daniel Booth. Freight rates have soared eight-fold, driven in part by 40-day cargo backups at Los Angeles harbor, a scarcity of trucks and drivers nationwide, the wave of imports ordered by work-from-home Americans and the estimated 90 million miles that heavy trucks travel empty every year on the highways. Add to that the temporary shutdown of the all-important Colonial fuel pipeline on the East Coast at the hands of ransom bandits, the freighter Ever Given’s blockage of the Suez Canal in March, and now the breakdown of the Interstate 40 bridge over the Mississippi River at Memphis, choking off traffic on one of the country’s most important east-west freight highways.
“It’s not the worst thing in the world for shippers,” Booth said about the closed bridge. “It’s just one more thing. It’s one problem of many problems that shippers are encountering right now in the supply chain.” FOR SUBSCRIBERS: Small Arkansas town — and its two-lane bridge — feel the jolt of a shuttered I-40 bridge
FROM TONYAA WEATHERSBEE: The I-40 bridge crack is causing traffic delays. Be grateful it didn’t cause deaths
Looking for logistics solutions
From an insider’s viewpoint, supply chain problems help feed the rise in consumer prices. That calls for solutions.
Booth figures he has at least part of the answer. It is named Straightline, a two-year-old digital freight brokerage firm he co-founded. It is located in the Memphis suburb of Bartlett at 2995 Appling Road.
He’s chief operating officer. Booth, a 2005 University of Mississippi graduate in international studies, traces the firm’s origin in part to America’s £3 trillion annual appetite for imported goods. As the country this spring began to shake off the slow economy caused by the coronavirus pandemic, the import binge accelerated.
U.S. factories today account for only about 11% of the country’s total output of goods and services, compared to 20% in the early 1980s. More imports, particularly from Asia, emphasized like never before the nation’s reliance on a thin band of east-west highways and railroads bringing cargo inland from the Pacific ports. So much cargo is inbound ships now can idle 40 days before unloading at Los Angeles.
Indeed, the wait is longer than the voyage. Truck shortages contribute to the delay and add expense. Freight that cost a shipper £2,500 to bring over the ocean two years ago can now cost £20,000, Booth said.
Shoppers can see the result. Consumer prices rose 4.2% in April in part because of freight backlogs. Notes Philadelphia-area economist Joel Naroff in a letter to clients: “With households spending exuberantly again… (America) simply could not meet the rising demand.”
‘Freight tsunami’ hits America
“I’ve called what’s happening in the country a freight tsunami,” Booth said. “I think it’s a pretty accurate term. We have been inundated with freight in this country.”
Inundation is not new. True, it is heavier than ever, but the import trend goes back years and spurred the boom in Memphis’ logistics sector, today the region’s leading employer. More than 60,000 people move cargo across the city and the world working an array of jobs from freight cost analysts to railroad engineers to truck drivers.
Uber and Lyft transformed the taxi business, but nothing quite like them has transformed the logistics industry. “We certainly have our challenges in the industry,” said Booth, a former FedEx Trade Networks global account manager and current president of the World Trade Club of Memphis, a voluntary position. “Innovation is driven by need and overcoming problems, but logistics has been slower to change than other industries,” Booth said. “We’re trying to change that (at Straightline).
We do consider ourselves part of the new wave of tech-enabled logistics companies.” Straightline, which employs three, has enlisted 1,300 carriers, mostly truck lines, and 90 shippers such as chemical plants. Booth notes those numbers are small.
Across the nation, more than 100,000 carriers operate, along with tens of thousands of shippers and some 18,000 freight brokers, freight forwarders and third-party logistics firms like Straightline. He calls the industry fragmented and figures that is one reason hours are often spent lining up carriers to move cargo to its destination. Straightline, he said, cuts away the time.
A shipper using the firm’s computer app can locate a nearby trucker with open capacity in seconds and get the price quote for hauling the cargo. “Truckers are driving empty 100 extra miles to get to the next load, but we can show a carrier the perfect shipment might be 15 minutes away,” Booth said. “There’s a tremendous opportunity to leverage technology and eliminate the waste of driving 90 million extra miles. We can cut fuel consumption, carbon emissions and the use of under-utilized equipment.”
By itself the little firm can’t lower the price of consumer products, but in an industry inundated by freight, it seems to be a step in the right direction.
Said Booth: “We want to enable our customers to make smarter and faster decisions.”
Ted Evanoff, business columnist of The Commercial Appeal, can be reached at [email protected]commercialappeal.com and (901) 529-2292.
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