Profound Information for All Expediters

[ATeam]

It is often said in the Open Forums that operating expenses are going up while freight rates are going down. It is not hard to convince people that expenses are going up. Price increases in trucks, parts, shop labor, health insurance, tires, clothing, tools, and other such things are commonly seen.

The "rates are going down" part is not as clear because expediters do not often quantify that in the Open Forums. But one did in the General Forum and in the FedEx Custom Critical Forum:

Offering his answer in the "How are things going this year?" thread, redytrk said:

Its going great if you don`t mind running for 1992 rates.

I totaled up 15 consecutive runs in Sept 1992. Result $4450. Then I totaled 15 for Sept 2013. Result $4273.

I ran the CPI( Consumer price Index) and found out that 1992 dollars of $4450 should be $12,630.

In the FedEx Custom Critical carrier forum, he started a thread entitled Revenue 1992 va 2013 and said:

"I totaled up 15 consecutive runs in Sept 1992. Result $4450. Then I totaled 15 for Sept 2013. Result $4273.

I ran the CPI( Consumer price Index) and found out that 1992 dollars of $4450 should be $12,630.

I won`t comment farther. The figures speak volumes.

This is for a "B" unit. 1992 Van cost $16K, 2013 Cost $32K."

Diane and I have noticed the same thing in our ten years of expediting. While I have not quantified it in detail for our straight-truck operation like redytrk did for his cargo-van business, the circumstances are the same. Expenses are going up while rates are going down. Adjusted for inflation over the last ten years, the $2.50 per mile we were happy to get when we started in 2003 would be 184 percent higher today, or $4.60

(This table provided the 184% figure. The calculation is: $2.50 + 184% = $4.60).

 

[zorry]

This gets into a very tricky discussion

Ten years ago, I was doing 12,000 mile oil changes.
Today, 35,000 mile oil changes.

The cost per tire isn't important .
The cost per mile per tire would be important.

It would take extremely detailed figures to come up with dead on comparisons.

Expediting figures will look particularly dismal because ten years expediting was still a niche market, a great place to be. Years ago car hauling was the place to be.

Thanks to too many people chasing the big bucks, and simplicity afforded by the internet, both have fallen from the place to be to just another job.

There is still money in expediting. Phil's $2.58 all miles last week attests to that. Just for those that rise to the top.
Not for the masses. .

 

[ATeam]

This gets into a very tricky discussion

Ten years ago, I was doing 12,000 mile oil changes.
Today, 35,000 mile oil changes.

You are right. It is tricky. In addition to the miles per oil change, you must also factor in the increased cost of the oil and filters. Also add in the environmental fees that are tacked on to oil changes in some states. And if your present truck has four oil filters but your previous ones had two or three, that too must be factored in. And lets not forget the added cost of DEF and DPF maintenance on new trucks.

It would take a lot of figuring to do a true cost comparison over a ten year period, but I stand by the statement that costs are going up while rates are coming down.

We paid $1.25 for fuel in 2006 when we entered the industry, and about $3.80 at the most recent fuel stop. That's more than a 300 percent increase.

I don't care how many improvements to fuel economy you can make with improved driving techniques, new technology and cool gagets. No truck that got 10 mpg ten years ago is getting 30 mpg today, and no modern truck is getting anywhere near 30 mpg either.

Money that went in our pockets in 2006 is going to the oil companies today.

 

[WanderngFool]

I try not to think about how little I work for. I also try not to think about the money I spend and strictly speaking, don't have to.

Like right now I'm in a hotel due to the fact that it's going to be around 40 by morning and I don't have heat in my sleeper yet and I'm a wuss. Plus I needed a shower real bad. Plus, and this is the real reason I plunked down my $50, I wanted to feel like a human being and not a hunched over dweller.

But shouldn't we make enough that we can afford a day or 2 each week in a modest hotel?

 

[WanderngFool]

Money that went in our pockets in 2006 is going to the oil companies today.

I hope you don't mind me rambling.

Not to get political, but what part of the political climate that we've "enjoyed" for the last 33 years would make you surprised that huge companies would have even more leverage over the little guy and would use that leverage to improve their bottom line at our expense?

 

[zorry]

I wasn't questioning the premise in the op.

I just said putting real numbers together would be difficult.

Phil's thinking is right on.

I've been in the industry a little over 40 years.
Income has not kept pace. If I had stayed in my better opportunities they too, have declined through the years.

All I can do is look at opportunities available today.
Factor in risk, physical effort, lifestyle, and income.

Am I in the best place to be for my situation today ?
I believe so. I've got my eye on two retirement properties.

If i were younger, I'd be worried, looking for better options. I still am happy with present numbers, but not sure I will be six months or a year from now.

Glad I'm ready to pull into the driveway one last time.

It may just be a year sooner than I planned.

 

[ATeam]

Not to get political, but what part of the political climate that we've "enjoyed" for the last 33 years would make you surprised that huge companies would have even more leverage over the little guy and would use that leverage to improve their bottom line at our expense?

I stated an observation but did not express surprise. It does not surprise me a bit that huge companies seek to maximize their profits. That has been the case for more than 33 years.

 

[ATeam]

If I had stayed in my better opportunities they too, have declined through the years.

You are not alone. The decline of the middle class is one of the themes or our life in America.

 

[zorry]

And I don't see any reversal in the three or four years I plan to work.

 

[Mailer]

It is often said in the Open Forums that operating expenses are going up while freight rates are going down. It is not hard to convince people that expenses are going up. Price increases in trucks, parts, shop labor, health insurance, tires, clothing, tools, and other such things are commonly seen.

The "rates are going down" part is not as clear because expediters do not often quantify that in the Open Forums. But one did in the General Forum and in the FedEx Custom Critical Forum:

Offering his answer in the "How are things going this year?" thread, redytrk said:



In the FedEx Custom Critical carrier forum, he started a thread entitled Revenue 1992 va 2013 and said:

"I totaled up 15 consecutive runs in Sept 1992. Result $4450. Then I totaled 15 for Sept 2013. Result $4273.

I ran the CPI( Consumer price Index) and found out that 1992 dollars of $4450 should be $12,630.

I won`t comment farther. The figures speak volumes.

This is for a "B" unit. 1992 Van cost $16K, 2013 Cost $32K."

Diane and I have noticed the same thing in our ten years of expediting. While I have not quantified it in detail for our straight-truck operation like redytrk did for his cargo-van business, the circumstances are the same. Expenses are going up while rates are going down. Adjusted for inflation over the last ten years, the $2.50 per mile we were happy to get when we started in 2003 would be 184 percent higher today, or $4.60

(This table provided the 184% figure. The calculation is: $2.50 + 184% = $4.60).

Hi Phil, as zorry stated, these discussions can be tricky. If the 184% increases is applied to our sector only, then many would drop out of the law or medical school and start expediting. We are talking big income here

But the 184% collateral affects would not stop there, every businesses, things and cost that associated with servicing the expediters will also go up 184%(or close to it).

If we make more; "they" will find the way to take more. Back to square one, that is. Somehow this "system" balanced itself...to provide just enough income to pay our bills and expenses. And if we are lucky, may be the left over profits for the retirement

 

[golfournut]

My question is where's the money. My wife is in the retail business and I have some connections in the retail industry.

Often our conversation gets around to the price on the shelf for the consumer. In the grocery business for perishable items the price is adjusted daily for 2 factors. 1. What will the cost be for the next truckload for replenishment and 2 weather conditions for the next crop.

What is amazing to me is when fuel costs spike, they claim their shipping costs go way up. So where's the money going. I often speak with reefer oos in the truck stops. They aren't seeing it. So either it's not trickling down or the retailer is taking advantage of the end user. We certainly aren't seeing it.

The recent shut down of the port in Baltimore due to a strike is another example. A new strip center open 1 mile from my home. Houses a 135000 sq ft target and Old Navy as the two main anchors. The day of the grand opening I happened to be home so I went into the target. While it was stocked ok, there was a lot of empty shelves because, according to store leadership, the container was still on the ship in the Chesapeake Bay. Thought that was cutting it close for inventory purposes, but that's what I was told. The next day I drove up to the Target in White Marsh. About 15 miles north. Shelves were full and prices were about 17% lower on the few products I checked at the Baltimore Target. Baltimore is not a business friendly town, taxes and more taxes. Generally tho is about a 6% increase compared around the area outside of Baltimore. So, I went back to the Baltimore Target and the leadership personnel I spoke with the day before.
Here is what I was told. Some of the ships were diverted to Philly to unload. The extra cost of shippping the containers to their distribution is passed on. As the surrounding stores sell thru their inventory, the prices will change upon replenishment.

So once again I ask, where's the money?

Sent from my SCH-I605 using EO Forums mobile app

 

[ATeam]

What is amazing to me is when fuel costs spike, they claim their shipping costs go way up. So where's the money going. I often speak with reefer oos in the truck stops. They aren't seeing it. So either it's not trickling down or the retailer is taking advantage of the end user. We certainly aren't seeing it.

I can't speak as a produce-transporting reefer operator but in our case when fuel prices spike, we charge more to transport goods so that our profit margin will be retained. Our customers' shipping prices really do increase because we are charging more. What do we do with that extra money? We use it to pay the higher cost of fuel. Where does the money go? It goes to the oil companies.

 

[Tennesseahawk]

If you go by inflation, the money is long gone... by the government. Watching a video with Peter Schiff, he reminds us of the lies made when fuel was quickly rising 8 years ago... not on account of a shortage of oil, but rather our dollar losing its purchasing power. He said the same thing happened after Nixon changed us over to 100% fiat currency. They blamed OPEC for shortages, when it was our dollar not able to purchase the same amount of oil we were used to. Both times their extraordinary spending was on account of wars.

Where did the money go? Yeah, it eventually went to the oil companies; while the unseen, diluted parts went to Iraq, Afghanistan, the war machines, and other bloated spending projects.

 

[moose]

. Our customers' shipping prices really do increase because we are charging more.

you sure?
just because you are charging more- the end costumer pay more?
I'm not an expert of transportation logistic, yet something smells fishy here.
we all know the effects of:
long term contracts
volume contract.
FSC contracts.
dabble booking of freight.
dabble booking of freight bills.
to name a few.
do you honesty believe that industry wide, O/O's have a remote clue what the end user of their service truly pay for the service?
is it any of their business?
so we charge more for fuel....big deal. the carrier will stomach the increase & wright it off against the thousand of times O/O do not get a fare share. no biggy.

 

[TonyD]

We just got our insurance bill for next year. Not sure these numbers are going to work.

 

[zorry]

Just charge more.
Pass your increased costs along.

Or did I miss something ?

 

[moose]

O'Hhhhha, why do i need to explain everything...
when it comes to pay, as a leased O/O who is your costumer?
just because You charge your costumer more- doesn't necessarily make the end user pay more.
normally they won't.

 

[pearlpro]

Watching the MONEY channel today I saw a guy talking about the Bakken oil shale field in ND, there offering rough necks, truckers and workers pay up to 200,000 each to move there and service the oil fields, Yet the Infrastructure is failing, they have to make appts to take showers, guys live in Row style bunk houses, there are murders weekly, shortages of Gas, Parts, Food, Restaurants are over run....200,000 a year and guys are saying sorry.....yet they also said the Bakken is going to produce enough oil that within a year or possibly two we will be within 1% of producing as much oil as Saudi Arabia, and now theyve got the Grey Eagle in TX, and another in Canada so why does oil stay so high. If Diesel Fuel prices fell and Gas prices fell wouldnt it benefit the entire country. More discretionary Income + more stuff bought shipped and sold....BP and the other oil companys sure got it good when the Futures markets were deregulated, guys could buy 10 million in oil leave it on the ship, never touch it, sell it a week or two later and make 20 million ....

Insurance is getting ridiculous, myself and a retired military buddy are looking at starting an expediting operation, buying possibly a Straight truck and a Sprinter and Insurance is a full 1/3 of the costs....and weve talked to all the good companys....Fuel, Insurance, Maintenance...its beginning to add up and the business needs some relief for sure.

Lawyers sure have made truck insurance ridiculous, Truck Chasers, Lawsuits and our litigous society have driven costs thru the roof for many a industry....send the Lawyers to work in the Oil Fields maybe we can thin the herds...

 

[golfournut]

I can't speak as a produce-transporting reefer operator but in our case when fuel prices spike, we charge more to transport goods so that our profit margin will be retained. Our customers' shipping prices really do increase because we are charging more. What do we do with that extra money? We use it to pay the higher cost of fuel. Where does the money go? It goes to the oil companies.

2 weeks ago the fsc was .52. Yesterday it was .46. On a 200 mile trip that's a $12 difference for the whole trip. Hardly justifies the retail percentage increase for the whole truck load.

Only part of it is going to the oil companies. The other part is staying in the 3pl pockets.

Sent from my SCH-I605 using EO Forums mobile app

 

[blizzard2014]

We just got our insurance bill for next year. Not sure these numbers are going to work.

Me and a friend who run a small carrier operation just got our insurance renewal in the mail. It's 675 dollars a month for 1 million liability and 100k cargo insurance. All we have is one cargo van on the policy. I guess it's about to get pretty rough out there for a lot of people. That's why when I come back to work next year I'm gonna drive for one of the bigger companies again.