Schneider Quoting Rates at $0.69 per mile.

[ATeam]

Interesting article about how large trucking companies are running at a loss to keep hauling freight, thereby forcing smaller companies out of business.

"This downturn has lasted so long most of us are in survival mode."

Also of interest is this piece:

How Much More Capacity Needs to Exit the Trucking Industry?


"The slump in U.S. freight demand has reached 34 months, according to my charts. It's the longest slump since trucking was deregulated in 1980, and really shows no signs of a turnaround yet."

 

[aileron]

That is just crazy.........

 

[greg334]

That is just crazy.........

Why is it crazy?

 

[pjjjjj]

Isn't that a common ploy when big-box companies plan to take over the market and deplete the smaller guys - offer services at a rate that'll get the business, wait for the little guys to fall off since they have too little business, and when the biggies own the market, they can do what they wish with their pricing, as the competition is gone?

 

[Poorboy]

Why is it crazy?

Just makes ya wonder if their Trucks were Damaged (Sabotaged) by "Other Truckers" If Any because of their Rate Cuts?

 

[dabluzman1]

This is just another version of "savy" business, in an attempt to survive. It is on the extreme side of business as it is a re-action to the economy. It may have been because of poor managment in the past or current financial environment this course is required..
Unfortunately, it is at the expense of the small business
that this plan is aimed. Yes it will keep cash flowing to survive but it will also reduce competition.
Supply and demand.
As the supply of trucks dwindle the demand will go up and rates will as well.
All basic economics.
It is not an easy situation, but not a mysterious one either.

 

[davekc]

Certainly no mystery. This is going on in expediting, although much is not for a certain level of market share. I think it is more survival, especially among some of the smaller carriers.
I am amazed at some of the rates being quoted out of certain areas. There still is some good paying loads out there but a lot of companies regardless of size are reducing rates to the drivers on some or all to compensate for the others. The less available freight you see, the more price manipulation your going to see.

 

[greg334]

Isn't that a common ploy when big-box companies plan to take over the market and deplete the smaller guys - offer services at a rate that'll get the business, wait for the little guys to fall off since they have too little business, and when the biggies own the market, they can do what they wish with their pricing, as the competition is gone?

But see Pjjjj, I am thinking they are moving not to wipe out the competition but trying to maintain their market share in an industry that is hurting and contracting. If companies go out of business because of this move, it means more than the competition that discounted the rates are at fault, a lot of factors are involved outside of just a general rate deflation.

It is the deflation that has me worried for other reasons and it is the fact that many here have obligations that they based their decision to obtain on a continuing of stable or increasing rates. Fuel has gone down and so has the FSC which a lot of people count on to cover other costs and many complain that the companies are offering them low rates which many of us have been running at for a long time.

What I am getting concerned about is the effect of these high level articles with these grandious comments have on the moral of some of the members here who are not looking at what happens in trucking because they are not truckers. Maybe I am only hearing how some feel about the doom and gloom that seems to be cropping up here a lot in the last week.

 

[BillChaffey]

It sounds similar to a Wal Mart business model. Move into a Rural area. Drive the locals out of business. Then increase your prices gradually. With no competition, shoppers are lead to believe they are getting the cheapest price.
Plus at Wal Mart you get what you paid for. Buy CHEAP get CHEAP goods.

 

[piper1]

While it may be survival mode tactics, here is a thought.

You run at a loss and drive the little guys out of business. In the process you incur a LOT of debt.

The little guys or other competition go away now you start to raise your rates. You need to raise them to not only return to profitability, but you need to pay off all that debt.

Your rates now are pretty high. Trucking is not a very hard business to get into, the "little guys" come in and can offer lower rates that are very profitable for them as they may not have the huge debt or the overhead of a large company. They can likely offer the customer better service as they don't do the "big company stupid" type of things.

Now what happens to the big carrier with all the debt and a dwindling market share? Think they made it all back before the competition returned?

Running at a loss for any length of time in trucking RARELY ever pays off. It's far too easy for new people to get into this business and knock a "fat cat" off it's perch.

What is market share really worth if it isn't at a profit?

We also need further clarification as to what the 69 cents/mile is. Is it truckload, LTL, Ton/Mile, pay, what?

 

[dabluzman1]

While we do need to have more info on what type of frieght is being quoted .69, what really needs to be seen is a company doing what it feels it needs to survive.
Logical or not to you and me, it must make sense to Schneider.
They are not here to play by your or my rules.
Their game plan is soley based on their need as your plan is only based on your need.
When was the last time you took into consideration anyone but yourself when it came time to accepting or declining a run.
Did you worry, oh if I take this cheap freight my other buddies in the industry are going to suffer, or was your concern, well it aint the best rate but it will put food on the table.
Now, if you are accepting loads that do little more than replace fuel, runaway, get out ASAP, the end is near.

 

[FIS53]

Well cheap rates are here and are going to be around for the rest of the year by the looks of things. The run to Que I did went for about 2.1/mile. The rate I should have got was 2.32/mile so not too bad a discount. But the best rate the customer got quoted and has been charged only paid 1.52/mile! Only reason they went with us was a little faster service and the boys gave away my waiting time and extra miles (so actual pay per mile slightly lower) as they apparently agreed to a fixed price with no extras. Such is business today.
Rob

 

[greg334]

See Piper, the reason I don't think this is a move to take over the industry but to do what has to be done to survive is because of the number of articles I have read about other industries, IBM is making moves in some markets by lowering their rates to the point that they have to borrow money to stay competitive. If their debt is too large, then IBM will trim back on services and may even leave a market but they react too slow.

The problem with the big boys in this industry is clear, they are either really slow to react or they are changing directions before things happen at the expense of the people who haul for them. The gaps that are left because they fail to react fast enough and pretty much fail, open up opportunities for fast reacting small mom/pop places to fill the gap. Schneider is reacting slowly to the economy, and this may come back and bit them on the butt through poorer customer service and an inability to adsorb the losses in the long run.

One example of a over the horizon approach has been FedEx. FedEx has changed their direction, moving out of this world of expediting and focusing on freight end of it. This was because they "see that the two markets are almost the same with little difference between them and there is more competition in the expediting field then there is in freight", which means they shifted their sales a few years ago out of CC, they took the approach of the all inclusive one stop shop to capture the customer and they have simply refocus their energies on maintaining the customer base, their overall market share over rates all to hedge against harder times. The losers with FedEx are the contractors who will be handed lower rates and less incentives to do a good job.

 

[Jack_Berry]

i still see crst expedite van trailers out there. any handle on their pricing?

 

[Moot]

It's about time Schneider raised their rates!

While we do need to have more info on what type of frieght is being quoted .69,

The $0.69 rate is most likely being offered to their better customers and on specific lanes; probably drop and hooks and intermodal moves.

 

[dabluzman1]

"It's about time Schneider raised their rates!"


Yup, one mans ceiling is another mans floor.

 

[greg334]

Moot, could it be part of a 69 cent reaction drill?

 

[Rabbit]

So, Schneider's building up a pile of debt to stay in business and be ready and rarin' to go when the competition is gone.

This ploy makes perfect sense if one is predicting hyperinflation. Borrow the money now, then pay it back later when it's worth nothing.

Just a thought...

 

[DougTravels]

Hey Blues man: I like your Jefferson Quote.
Although I do like this one better
"that young slave girl is looking pretty fine, Where's my hemp pipe LeRoy"

I'm only funning a little slap happy tonite Jefferson was truly an American Icon.

 

[dabluzman1]

Hey Blues man: I like your Jefferson Quote.
Although I do like this one better
"that young slave girl is looking pretty fine, Where's my hemp pipe LeRoy"

I'm only funning a little slap happy tonite Jefferson was truly an American Icon.

Glad you liked it Doug.
Did you know that 12 of our Presidents owned slaves.
Of the 12, 8 of them owned slaves while in office.