Calm Before the Storm

Happy Hump Day. The spot market is cooling faster than historical patterns suggest, but a capacity hit could begin as early as this Sunday.

Plus:

• Do Not Disturb: Fraud in Progress

• Wall Street Is Warning About a Diesel Shortage

• Fake Rate Sheets, Real Threats

💡 QUESTION OF THE DAY:

Flatbed rates just posted their sharpest drop in a comparable week since ______.

🍳 WHAT’S COOKIN’ IN FREIGHT

🕵️ Do Not Disturb: Fraud in Progress. Armenia's Interior Ministry says a group operating out of a Yerevan hotel's commercial space spent months posing as employees of American freight companies, tricking businesses into handing over cargo, then reselling it and cashing out through cryptocurrency to cover their tracks. Investigators identified each member's role before raiding the operation in coordination with the country's Investigative Committee, seizing computer equipment and evidence. The ministry described the scheme as thefts of "particularly large amounts" but stopped short of naming a dollar figure or the carriers impersonated. Armenian cybercrime investigators are now working directly with U.S. law enforcement to trace victims and hunt for copycat groups operating inside the country.

⛽ Wall Street Is Warning About a Diesel Shortage. Diesel's national average price rose 19.7 cents to $5.454 a gallon for the week of Aug. 17, the highest since late May, per the Energy Information Administration. U.S. distillate inventories, which include diesel and heating oil, sat at 107.1 million barrels in early August, the lowest for that time of year since 1996. Diesel-to-crude refining margins hit a record $102 per barrel, driven by disruptions in the Strait of Hormuz and Ukrainian attacks on Russian refineries. Diesel is now, according to OilPrice.com, "the biggest concern" heading into the Northern Hemisphere harvest. Multiple Wall Street desks, including those at Goldman Sachs and Citi, are warning that the shortage could deepen before it eases.

⚠️ Fake Rate Sheets, Real Threats. FR8 Solutions just settled a lawsuit accusing it of doctoring rate sheets and threatening drivers who complained. FR8 promised owner-operators 88% of the linehaul rate, but drivers say the numbers they were shown didn't match what shippers paid, and one driver was paid 88% of $8,000 for a load FR8 had actually been paid $15,000 for. When driver Kenan Hujdur reported the scheme to the DOT, CEO Alen Kajdic allegedly texted a coworker that Hujdur "will not be alive." A federal judge had already rejected FR8's defense, calling its interpretation of the contract an "absurd result." The terms of the settlement weren't disclosed, and FR8 still holds active broker and carrier authority.

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This Dip Has an Expiration Date

"Not a lot of freight. That's what we're seeing. This is the slowest Monday this year," Ken Adamo said two days ago. Adamo was DAT's Chief of Analytics before becoming EASE Logistics' Chief Strategy Officer earlier this year.

Dean Croke, DAT's current industry analyst, reported rate numbers for last week on DAT iQ's Aug. 17 market update: dry van linehaul rates (a 7-day rolling average without the fuel surcharge) fell 3 cents to $2.25 a mile, and flatbed fell 7 cents to $2.72, while reefer held flat at $2.63.

Market Cooling Faster Than Usual

FTR's read of Truckstop.com data on spot rates (fuel surcharge included) last week found the market cooling far faster than historical patterns suggest: flatbed rates fell 2.3% to $3.34; the most in a comparable week since at least 2008, and van rates fell 2.6% to $2.62; a larger margin in a comparable week has occurred only once before.

FTR's Market Demand Index, a blended read on load availability versus trucks available, fell 7.0 points to 127.9 the same week, still up 56.7% year over year.

Shippers Got Ahead of Peak Season

Adamo has an explanation for the lull: shippers raced to lock in contract rates before peak season hit.

FreightWaves CEO Craig Fuller made a similar point a week earlier: "Don't get fooled by the short-term spot bit of decline. The contract rates rising is a huge part of that", citing van contract rates up 19.3% year over year even as spot eased.

Adamo's read on the mechanism: "The contract repricing effort happened so swiftly... that's pulling volume out of the spot market," he said.

The Capacity Hit Has a Date

Croke flagged one more thing: the Commercial Vehicle Safety Alliance's Brake Safety Week runs Aug. 23-29, targeting brake drums and rotors across North America.

"That's going to be a pretty big deal... I think there's going to be a bit of a hit in terms of capacity around events like this," he said.

Last year's edition put 15.1% of inspected trucks out of service. His advice, on air: "Make sure you lock in that capacity quickly."

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 🌎 AROUND THE FREIGHT WEB

🗺️ 51st State, or Just a New Zip Code? The White House shared a map labeling the Strait of Hormuz "New U.S. Territory", a waterway between Iran and Oman that carries roughly a fifth of the world's oil.

🛑 Truckers Push Texas to Ban Mexican CDLs. Texas lawmakers heard testimony Monday that Mexico's 2021 switch to digital licenses opened a fraud loophole, with industry leaders now pushing for a state ban on Mexican and Canadian CDLs.

🦑 Squid Game: Rhode Island Edition. A trailer hauling squid to a Rhode Island processing plant flipped mid-turn, dumping its load across an intersection for seven hours in the summer heat. A nearby fisherman, no stranger to squid smell, still called it "foul."

📋 Congress Wants to Make "Freedom Haulers" Permanent. A new House bill would lock the White House's veteran-to-trucker program fast-track into law, allowing active-duty members to test for a CDL in the state where they're stationed.

💔 A $30M Lawsuit Couldn't Save This Relationship. GlobalX Airlines dropped its $30 million lawsuit against former shareholder Ascent Global Logistics, but ended their exclusive brokerage deal.

🚛 50% Tariffs, Paused at the Buzzer. Trump halted a 50% tariff on $20 billion in Canadian goods hours before it was set to take effect, citing an unfinalized deal. The pause only runs until Friday.

🎣 THE FREIGHT CAVIAR CORNER

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