Recovery Schmecovery

[ATeam]

Wall Street optimists are pointing to certain indicators as evidence that the recession will soon be over and recovery is at hand. Their spirits are bouyed by recent stock market increases.

In a pig's eye!

I caution expediters from buying into the same optimism and making decisions based not on facts but on hope. Trucking has its own story and it is not pleasant to tell.

The June 1-14 edition of The Trucker reports that Schneider National is giving all office and shop employees, and all executives, a one-week unpaid furloughs. The company is switching to unpaid holidays for company drivers. Independent contractors who lease their tucks to the company will have to repay the cost of base plates and permits that the company used to cover.

YRCW (Yellow-Roadway) has been gutting itself for months to stay afloat and continues to make desparation moves, the most recent of which is to delay or alter pension fund payments they are required to make.

FedEx and UPS just recently downgraded profit and freight volume projections.

Volvo and Navistar have recently announced sales figures that are astonishingly low, even in these slow days.

May unemployment numbers just announced show increases in unemployment in all but two states. See this.

These things did not happen yesterday. They are happening today. They are not happening because the economic downturn will soon end. They are happening because the economic downturn is continuing.

I could go on to cite other companies but believe you get the gist.

Any upward blips that can be found in trucking indicators are just that ... blips. To the suprise of many, meaningful upward trends have not yet appeared.

Expediters who plan to survive the recession will need more than Wall Street optimism to see them through. The recovery is not at hand.

 

[mjolnir131]

i have noticed a snmall bunp in large resource shipping (coils of metal, large ingots of AL or other metals bulk rubber etc etc) the base stuff things are made from it not a big bumpnothing to get exited about really just an improvemt over Mar-May

Also a down turn in personal iron maountian runs which is a good thing really, i hate those they are sad.

What i am saying is with fuel prices riasing, that maybe we are at the bottom of the swing now,i would not call it a upswing by any stretch just maybe the platue at the bottom

 

[greg334]

Why is this thread here?

Is Phil finally echoing what others have been saying?

I even said it will get worst before it gets better....

I don't see anyone fawning over any recovery in this economy and it seems more people ignore the little picture (their own) and only worry about the big picture either because they are in a panic or they have too great expectations from this work.

I remember a few threads warning people not to listen to the experts, these experts are usually wrong about the economy but our experts said otherwise.

But then again it seems that many just don't get that if Schneider or yellow or even FedEx changes drastically, we will all benefit from it. The less competition will help get those prices up and bring us some needed relief.

 

[Falligator]

Oh well, I guess the sky is falling...might as well pack my bags and move to Russia....NOT!!! or maybe Canada.....NOT!!! I still like my warm weather. The Azteks say the world is supposed to end by 2012 anyway....LOL

 

[chefdennis]

there is a very simple reason why the MAYAN calender ends when it does .....:

 

[mjolnir131]

Oh well, I guess the sky is falling...might as well pack my bags and move to Russia....NOT!!! or maybe Canada.....NOT!!! I still like my warm weather. The Azteks say the world is supposed to end by 2012 anyway....LOL

no the Azteks says there calinder starts over in 2012 not unlike the japans running a 63 year cycle ot ours a 17,everybody has just misquoted what they said ...

 

[Falligator]

Azteks, Mayans....who knew?! could have been the Incas....LOL

 

[OntarioVanMan]

I still don't see the connection between the LTL world and ours...In fact loads from these companies have been on the increase as they try to out do each other in next day delivery and contract it out to us....
Business is up about 30% this month...

 

[aristotle]

We are far away from any economic recovery. Maybe we've hit a false bottom, but not the real bottom of this downturn. Wal Mart and Dollar General stores are turning a profit while most businesses and individuals are scrambling to hold on. Consumer confidence is weak.

 

[Turtle]

Economic experts are always wrong. Always. I don't care what it is, whatever report that comes out, it's always better or worse than expected. Always.

 

[greg334]

I still don't see the connection between the LTL world and ours...In fact loads from these companies have been on the increase as they try to out do each other in next day delivery and contract it out to us....
Business is up about 30% this month...

OVM,
There is less and less of the priority freight being moved as it was. Most of our work was based on exclusive automotive freight and that is almost gone. If you haven't noticed a lot of shippers are not concern with getting it there on time opposed to just getting there. The rate drop that some are complaining about seems to be in line with LTL freight.

FedEx and others still push for the "expedited" freight through their sales but in fact that is a selling point among many. Sit with a customer for a while, I have, it is amazing what they are told and by who.

In fact if you look at some of the loads from NLM board and other places, some of the smaller stuff is cheap and sits a while on the board. Eventually it gets picked up by someone who needs a backhaul.

I remember only once to have a true expedited load out of the hundred or so I have done so far this year. Production was down without the stuff on my truck and they paid a lot to get it there, a LOT.

 

[ATeam]

I still don't see the connection between the LTL world and ours...In fact loads from these companies have been on the increase as they try to out do each other in next day delivery and contract it out to us....
Business is up about 30% this month...

If you compare the monthly results of one expediter or even one expedite carrier with the LTL world, a one-to-one correlation would not likely appear. However, if you compare the long term trends of expedited, LTL, truckload, rail and air freight, I believe you would find a correlation. It will not be a precise one-to-one correlation but the general up and down volume trends will match.

One thing happening now is true expedite freight volumes are being reduced because a number of shippers of true expedite freight that have vanished into thin air. Shippers still in business are under intense pressure to cut costs wherever they can. This leaves them less willing to pay for premium services than they were before and more willing explore other shipping methods.

On the LTL side, companies are searching out cost savings too. In some cases this means revisiting old opinions and practices that were done instinctively before, like sending a tractor and trailer to the edges of their regions to pick up or deliver a tiny volume of freight. Contracting those loads out to cargo vans and straight trucks is on the table now when it would not have even been thought of in LTL before.

In all modes of shipping, companies are looking at the customers they serve and asking if the customer is worth keeping or if better shipping practices and packaging solutions can be developed. Shippers have not forgotten the high fuel surcharges they had to pay not so long ago. That is another incentive for them to reconsider old shipping practices. As you read this, thousands of smart shippers are thinking harder than ever about how they can cut costs by using shipping services less.

The longer the recession goes on, the more difficult it will be to predict what the transportation industry will look like a year from now. Fundamental assumptions and time-honored practices are changing as new technologies make new practices possible, and under the pressure that a deep and prolonged economic downturn creates.

 

[greg334]

OK, right on Phil....

Contracting those loads out to cargo vans and straight trucks is on the table now when it would not have even been thought of in LTL before.

Between the trend watching and all the other stuff, we can now see what is really happening.


Yea right!


The problem is that the carriers many of us are contracted to are capturing these LTL loads to produce revenue and have been for a long time. The carriers who are generating these loads have been practicing the same thing for the past 5 or 6 years which is simply to allow others to handle the freight that they book and capture some of the revenue in the revenue stream. Nothing new and if one would to follow a lot of the work behind the scenes, it proves the point. It has been more and more prevalent in the last year or so simply because of the competition and the lowering of available freight.


But here is an example, FedEx (the mother ship) uses CC to cover a bunch of FedEx Freight to produce revenue, the contractor is the tool used. The contractor doesn't see it because how it is handled within the company (peer to peer) so it is transparent to them and most of the time the 'dispatcher' doesn't talk about it. Even if Freight has to pay more for the freight to be moved, the cost to FedEx is less than one would think. The contractor covers the cost of the use of the truck, they get compensated for the run with a little more than what the cost is to FedEx, FedEx still makes some money and the customer is happy - it is not all about making the money.


Is this LTL freight?


Yep sure it is by the nature of the load and it has been for a long time.


Does this mean it is handled like normal LTL freight?


No because of the system and policies that FedEx CC has, even though it is considered freight from an internal customer, it is handled the same exact way as does say a load for an outside customer – meaning that FedEx CC puts the 'exclusive use, time sensitive' flag on the freight as they do with 99.9% of everything they handle, not the customer.

In all modes of shipping, companies are looking at the customers they serve and asking if the customer is worth keeping or if better shipping practices and packaging solutions can be developed.

Not true, carriers, especially carriers in this niche market are not considering turning away customers unless they are too big or too stupid. Their marketing strategies have change within the constraints of the market itself but many are leveraging the ultimate service of exclusive use or within so many hours to remain competitive. A few companies continue to become more diverse in their offerings to a larger customer base and let themselves 'fall' out of the market in order to reduce the dependency on "specialized" freight – Panther comes to mind.


There are trucking companies that also provide 24 hour delivery service in many markets. They are also looking at how to maintain their company with ever increasing competition.


The company that does look at the customer as one that can be disposed of will undoubtedly fail in a highly competitive market, but the company that comes to terms with the fact that every customer has value and learns how to leverage the customers, like taking on the customers needs and farming the work out will be the one who captures that revenue and survives.

The longer the recession goes on, the more difficult it will be to predict what the transportation industry will look like a year from now. Fundamental assumptions and time-honored practices are changing as new technologies make new practices possible, and under the pressure that a deep and prolonged economic downturn creates.

Well as I was told in Memphis at FedEx's Headquarters by FedEx that the 'experts' can not predict anything, it is something that they can only prepare for..... there are no assumptions other than what has happened, meaning the freight already delivered matters and the freight that hasn't been booked is nothing but speculation and not counted on.

 

[FIS53]

So where are the experts garnering the info of a recovery? Well of course part is retail sales, part is unemployed figures going down. I have to question those unemployed figures as I think many going off the gov't money have run out of benefits. So either welfare or maybe some part time jobs. I've noticed that several fast food and other service industries have quite few new faces as well as the old faces but no one seems to be available for a full shift.

On trucking most shippers I'm visiting are trying to utilize not only a fairly cheap method of getting their goods to a customer but also one that fits timing for the customer. We have a few customers who have cut all their rush stuff to only the emergency runs and all others are shipped by transport or other overnight cheap method as customers are not demanding immediate delivery.

While I am seeing some signs of recovery they are few and far between as more companies are still cutting just to survive. I think many are cutting too much and if it keeps going then our industry is going to see a nice blip upwards come later in the year as they try to fill orders and they come out late. Service is going to become a competitive advantage for some and that's where we'll have the work!
Rob

 

[Falligator]

One thing I have noticed going down the road is a "lack of" car haulers. Few and far between.

 

[OntarioVanMan]

What I am seeing somewhat...is companies are ordering only what they need...say they need 10,000 widgets for a job...thats what they order not 50,000 and inventory the extra...companies are still mindful of inflation if it rears its ugly head and raising interest rates...The companies that are running albeit slowly are being more conservative with their shipping and they have the time to actually think about it...They have the lead time...

 

[inkasnana]

One thing I have noticed going down the road is a "lack of" car haulers. Few and far between.

I've noticed the same thing. Most of the car haulers I've seen have been less than full, a few with only 2 cars on the trailer. Several of the haulers that I've seen lately were hauling older used cars. One hauler was loaded with damaged vehicles. Every car on it looked like it had been in a wreck.

 

[greg334]

One hauler was loaded with damaged vehicles. Every car on it looked like it had been in a wreck.

That is their new back haul loads.

 

[Falligator]

However, a lot of my trucker friends have said that their miles have been picking up lately. Just not automotive

 

[RLENT]

This past week I was heading across western Ohio/eastern Indiana to my drop in Auburn, IN .... running on some back roads, a few miles south and parallel to US 6. I happened to switch on the CB (rare) and caught what I would assume to be guys running big trucks. The reception wasn't all that great and occasionally dropped out a time or two.

What was interesting was the topic of the conversation - the current state of freight and the trucking/transportation industry .... and how cargo vans were increasingly taking their freight .....

Dunno who these guys were, but from the sound of it, I'd guess they were running general LTL freight ....