Trucking news and briefs for Thursday, Dec. 9, 2021:
Securities traders have positive view of trucking heading into 2022
Trucking company operators’ financial health remains resilient amid heightened demand pressure from ongoing global supply chain issues, U.S. inland transportation backlogs and labor issues, according to asset-backed securities (ABS) ratings firm Fitch Ratings.
Fitch says that trucking companies are experiencing low default rates and stable transportation-backed ABS performance. Additionally, limited supply of Class 8 trucks and trailers cause increased asset values, driving up recovery rates within ABS transactions.
Fitch notes that the increase in goods demand as a result of the economic recovery has put a strain on trucking capacity, putting a strain on driver availability. To overcome this, fleets are increasing wages to attract and retain drivers, which could erode margins, Fitch adds.
“Inability to meet shipping demands will limit overall fleet gross profits and could drag on obligor credit quality,” Fitch says. “However, fleet operators are able to charge higher freight/shipping rates to partially offset restricted capacity and labor constraints in the near term, but if these constraints are prolonged it could negatively affect operator growth in the long term.”
Fitch expects shipping backlogs to work themselves out over the first half of 2022, alleviating pressures on demand and rates, though strong demand will likely remain robust. ABS ratings, which already incorporate default and recovery rate stresses, are expected to be remain stable.
New avenue toward insurance through SmartHop
The SmartHop partially automated dispatch platform and owner-operator business tools service is now also an insurance agency, hoping to reduce the stress the smallest trucking companies face when acquiring insurance and further "democratizing their access to the same resources of their larger peers," the company said. SmartHop’s insurance agency offers access to commercial auto and cargo insurance carriers.
“Trucking is a highly diverse market, which means drivers and small owner-operators require flexibility and customization when it comes to insurance to protect their fleets,” said Guillermo Garcia, SmartHop founder and CEO. “Our unique insight into the behaviors of truckers enables us to offer customized insurance solutions built for the varying needs of small carriers, the underserved majority of the trucking industry.”
Insurance remains one of the largest operating expenses small trucking companies face, eating into already-thin margins. SmartHop is aiming to utilize insights driven from deep levels of data captured by the company’s technology in the short-term to appropriately price risk to help truckers secure lower insurance premiums, as compared to traditional retail insurance agents. The company's long-term goal is to leverage this data and provide a product that allows its carriers to pay for insurance only when they are on the road, also driving premiums down.
The company's live in 20 states now for insurance, and will expand to 40 by the end of the first quarter of next year. "We are operating as an agency and not yet creating our own commercial auto product," SmartHop said, so "we do not face the same limitations on our rollout. We are focused on perfecting our service offering before expanding nationwide."
2021 was a record year for the five-year-old company, whose mission it describes as helping "truckers make smarter decisions, earn more money and have more control over their business as they face a tight labor market and limited access to the same resources as larger trucking companies."
Embark adds new autonomous lane in Texas
Autonomous truck tech startup Embark Trucks on Thursday announced its expansion into Texas and the launch of a new autonomous trucking lane between Houston and San Antonio.
To support the expansion, Embark announced a partnership with the Texas A&M Engineering Experiment Station to utilize their state-of-the-art test track, and plans to work closely with the Center for Autonomous Vehicles and Sensor Systems (CANVASS) and faculty in the J. Mike Walker '66 Department of Mechanical Engineering at Texas A&M University to perform research and testing as it prepares for its driver-out pilot in 2023.
“Texas is the center of America's trucking industry, and it’s the perfect home for Embark’s expanded operations. We’re excited by the talent and entrepreneurial spirit that Houston has to offer,” said Stephen Houghton, Embark chief operations and fleet officer. “Our new footprint in Texas will support our growing network of partners and fuel our rapid growth across the Sunbelt. As we scale our operations, we will continue to work closely with local and state governments and other organizations so that we improve the safety, sustainability, and efficiency of trucking with autonomous technology.”
Embark also unveiled its new autonomous trucking facility and plans to hire aggressively in the greater Houston area in 2022.
Meritor begins production of electric powertrain
Meritor announced its 14Xe ePowertrain is now available and will be in production this month.
As part of Meritor’s Blue Horizon advanced technology portfolio, the 14Xe ePowertrain is a fully integrated, all-electric drive system and is the only integrated electric powertrain in production for Class 8 trucks in North America, the company says.
“Our 14Xe ePowertrain has been thoroughly tested hauling loads and logging real world miles in various conditions and multiple applications, allowing us to offer the industry a proven, all-electric, zero emissions solution,” said Chris Villavarayan, chief executive officer and President, Meritor.
The 14Xe ePowertrain, produced at Meritor’s manufacturing facility in Asheville, North Carolina, is designed to provide efficiency, performance, weight savings and enhanced space utilization. It is based on Meritor’s 14X axle housing, which maintains existing axle mounting hardware for ease of OEM integration.
The modular design enables the interchangeability of key components, including electric motors, transmissions, gearing, brakes, wheel ends and housings to adopt to customer specifications.
It can be adapted to fit various powertrain needs based on vehicle application and duty cycle spanning Class 5-8 commercial vehicles.