Court awards in liability lawsuits against trucking fleets are increasing dramatically, both in number and in size of awards, according to a report from the American Transportation Research Institute.
ATRI said its research is partially based on a newly-created trucking litigation database that provides detailed information on 600 cases heard between 2006 and 2019.
In the first five years of the data, there were 26 awards of over $1 million, but in the last five years there were nearly 300, ATRI found.
The research documents that during the 2010-18 period, the size of awards grew 51.7% annually. During that same period, standard inflation grew by 1.7% and healthcare costs grew by 2.9%.
Researchers also surveyed defense and plaintiff attorneys as well as insurance and trucking experts. They generated a qualitative analysis to find out why the litigation landscape changed; the best way to prepare for trial; how to develop litigation strategies and mediation approaches; and how large verdict awards impact both safety and insurance.
“This issue has had a stifling impact on motor carriers and industry stakeholders – well beyond those involved in a truck crash,” says Rob Moseley, who is a partner with Mosely Marcinak Law Group. “ATRI’s research on litigation provides important guidance on leveling the playing field between truckers and trial lawyers, both in and outside of the court room.”
Clay Porter, partner at the Porter Rennie Woodard and Kendall law firm, adds, “Runaway verdicts are increasing in both size and numbers. This study documents a frequency in excessive awards that, while not surprising, tells us that the trial system has gotten completely off track. Foundational changes are needed in the way we determine non-economic and punitive damages.”
Chemical Output Will Fall in 2020
Chemical production volumes, shipments and capital spending will fall this year due to economic and business disruption caused by COVID-19, according the American Chemistry Council.
In its mid-year industry report, ACC projects a rebound in 2021, although it admits that significant uncertainty remains about the future.
“U.S. industrial activity started the year on a weak note even before COVID-19-related supply disruptions emerged in February,” notes Kevin Swift, the council’s chief economist.
“After suffering the sharpest pullback on record in April, many industrial sectors are showing signs of recovery. Industrial production is set to fall 10.5% in 2020 before increasing by 3.1% in 2021.”
U.S. GDP will shrink by 6.0% in 2020 before expanding by 4.1% in 2021, according to ACC projections. Consumer spending will fall 6.4% in 2020, then rise 4.6% in 2021.
ACC forecasts business investment will fall 9.9% in 2020 and expand by 2.7% in 2021. Unemployment will fall steadily, easing below 5% by 2023.
Vehicle sales will decline from 16.9 million last year to 13.1 million in 2020, then improve to 14.9 million in 2021, according to ACC. Housing starts are expected to tumble to 1.19 million in 2020, then increase to a 1.24 million pace in 2021.
Partially offsetting this is strengthening demand for products used to fight the virus: synthetic materials for PPE, ingredients for cleaners and disinfectants, and plastics for ventilators and IV bags.
“As key end-use and export markets struggle, U.S. chemical volumes will contract as well,” said Martha Moore, senior director of policy analysis and economics at ACC. “Chemical volumes will fall 9.3% this year, while shipments will decline by 13.5%. In 2021, volumes will rebound 12.3% and shipments will increase by 14.5%. Capital spending will fall 17.6% to $29.0 billion in 2020, then increase by 15.7% to $33.5 billion in 2021.”
Ecommerce Remakes Logistics
As the economy enters a recovery phase following economic turmoil created by the Coronavirus pandemic, investors are taking a hard look at how changes in retail will impact commercial warehouse rentals in the near and long term.
The latest report comes from the research arm of Prologis, the giant global logistics real estate owner and services provider.
Prologis’ Industrial Business Indicator (IBI) activity index rebounded in late May to 45.1 from the historic-low point of 25.8 in April. The IBI is derived from statistical research combined with analysis of extensive surveys conducted with industry executives.
This has occurred because of the enormous growth in ecommerce taking place over a very short period of time, the company points out.
“The pandemic has accelerated the retail evolution,” Prologis researchers note. “U.S. ecommerce penetration jumped to more than 25% in April 2020 from 15% at year-end 2019, pulling forward several years of adoption.”
Prologis Research estimates penetration of nearly 20% for 2020 as a whole, when compared to a pre- pandemic forecast of 16.9%.
Ecommerce requires more than three times the logistics space of brick-and-mortar sale outlets, according to 2019 data. The researchers believe this persistently high ratio supports the need for additional e-fulfilment space should ecommerce penetration keep gains it made during the stay-at- home phase of the economy.
The Prologis look at 30 top U.S. retailers revealed 9% growth in logistics footprints during 2019, compared with 6-7% annual growth during the prior five years, as companies continued to adapt to growing ecommerce volumes.
“Online order fulfilment requires more logistics space because 100% of inventory is stored within a
warehouse (as opposed to store shelves), which allows for greater product variety, deeper inventory levels, space-intensive parcel shipping operations, and additional value-add activities such as processing returns,” the researchers say.
In the face of recent reports of major retail bankruptcies, they also conclude that brick-and- mortar disruption should have little impact on logistics real estate demand and supply.
Retailers account for around 40% of logistics real estate demand. Within this category, brick-and- mortar based retail is about 60-70% of demand and 30-40% is driven by ecommerce.
Prologis says that in addition to generating incremental demand within the retail segment, the shift to ecommerce is increasing activity for B2B segments of logistics demand, including parcel shipping players and paper/packaging providers.
“While bankruptcy does not necessarily imply shutting down operations, even should all occupied space come back, it would have a very limited impact on available logistics supply,” the researchers observe. “A trait of logistics real estate is the wide range of industries who occupy space, including retailers, wholesalers, manufacturers, and service providers.”
Prologis says a study it conducted reveals that its average U.S. property captures twice its income within 10 miles, compared to the logistics properties that were occupied by retailers who recently announced bankruptcies, which tend to be in less- populated locations, not well-suited for rapid replenishment or direct-to-consumer delivery.
“The window for customers to act on easing logistics real estate market conditions could be short,” Prologis suggests. Creative destruction in retail front may continue, but it expects turnover will offer little relief. Instead, it says that much of the retail industry may be transitioning to include more space-intensive e-fulfilment operations.