The "R Word", Going Green, Fuel Costs & Expediting

[mypie]

Hi Yall,

I'm not really a newbie - I'm more of a wannabie. Things like the declining economy (specifically the "R Word") being thrown about on a regular basis; "Going Green" and the environmental effects of burning fossil fuels; and basically increasing fuel costs are all issues that seem to be in the news daily and all seem to affect the Expediting Business.

I am inviting you to give your thoughts, opinoins and personal experiences of how this is affecting you.

Thanks guys.

 

[cheri1122]

First: welcome to EO! (Hey, guys, I'm 'one of the guys', right?)
Second: HELLO - have you been here long? Giving our thoughts, opinions, and ideas is what we DO here, with or without invitation, lol. Read for awhile, you'll see what I mean- and you'll see that EO offers much more than that, as well. Informative & interesting articles by Jeff Jensen, seminars for wannabees, (see the sticky at the top for details), the opportunity to meet lots of us at the MidAmericaTruckShow in Louisville (March), and an Expo all our own, in July. (My favorite!)
I won't waste any more time, you've got a LOT of reading to do!

 

[Turtle]

I am inviting you to give your thoughts, opinoins and personal experiences of how this is affecting you.

It's not.

Right now we have the top economists saying a recession is probably coming, if we're not already in one. Probably? If? Nothing like a firm commitment from the experts. Either it's coming or it ain't, and if we're in one already, they should know it already. Every time we've had a recession, nobody knew about it until we had been it it a year. And every time we've come out of one, no one knew about that, either, until a year or so later. The worst recession American has experienced since World War II was from November 1973 to March 1975 yet no one knew for sure that were were in a recession until 1976.

The people predicting a recession are the very ones that will profit most from it. The media, because it pays very well when you can scare the bejezus out of people long term, and the traders and speculators who will profit from certain market downturns.

The opposite of recession is expansion. The economy is always, always, doing one or the other. After a recession it bottoms out, then starts back up. When it peaks it starts back down. It's kind of like breathing, and it happens all the time every day, it's constant, and relentless. Don't get so worked up about it. Just follow the money when it comes to recession talk, and you'll see where it all comes from.

Incidentally, have you ever seen daily News Breaks, Special Reports and headlines proclaiming the impending economic expansion? Of course not, cause that's not gonna scare anybody enough to keep 'em watching to keep the sponsors booking those scary ads for prescription medications for maladies we don't even have so we can pester our doctors to get.

Same with global warming, climate change, and the effects that humans have on it all. The planet is, and always has been, going through cycles of warming and cooling, of localized and global climate changes. Humans can have an effect, but just how much of an effect are we really having. Read the reports with a careful eye. If you follow the money, you'll have your answer. They scare the bejezus out of people about global warming and climate change, and once that has been accomplished, then they put forth their remedies and recommendations on how to fix it. Follow the money.

As for the increasing fuel costs, no matter what the cost of moving freight is, you will always get paid just enough to earn just enough of a living to keep on moving freight. If they don't pay enough to keep the freight moving, freight stops moving. Rates and FSC goes up, freight starts moving again. You will not get rich in this business.

 

[ATeam]

Whether general economic conditions are good or bad, it is always in an expediter's best interests to minimize fuel consumption. Doing so saves money that would otherwise be spent. By default, burning less fuel is also a green behavior.

Green behavior is also imposed on us as vehcile emissions regulations change. Two recent ones include ultra low sulfer diesel (ULSD) fuel, and, on newer trucks, diesel particulate filters.

Such items force up the price of owning and operating a truck. The industry has pretty much figured out how to pass fuel costs on to the customer in the form of a surcharge. Higher truck prices will also find their way to the customer's pocketbook but will take longer to do so.

Additional green behaviors that also produce cost savings for owner-operators and drivers that pay for fuel include driving with a light foot, thinking twice before deadheading anywhere, and putting a generator and shore power on your truck.

Among financial professionals, the debate has shifted from whether or not there will be a recession to how long (or short) and servere (or mild) it will be. It's coming. That's a given. We may already be in the leading edge of it.

Expediters that saw a recession coming and prepared for leaner economic times will still be in the business when economic growth returns. Regardless of when or how severe a recession may come, it is wise to be fully prepared for slow times. Even in the best of times, slow times can come because of a driver's broken leg, accident-damaged truck, or long illness.

In January, 2008, in our particular little one-truck, married-couple-team, expedite business, we have seen no change in freight levels or decline in rates from 2007 levels. But if things slow down, we will be able to ride it out and make the best of the increased free time we would expect to have.

 

[ebsprintin]

If we aren't in a recession then by definition that means a recession is coming. I don't have to have the title of "financial professional" to figure that one out.

As for the concept of green, I think it's easier to operate business in terms of efficiency. Efficiency is a timeless concept while green is a fad. Businesses can benefit from efficiency whether markets are good or bad. Always has always will. Green is a political marketing practice. How is it political? Certain groups no matter how hard they try will never be able to be green enough. Another anointed group can sit on their rear doing nothing and be praised for the shade of their green. Now try operating a business according to the physics of this kind of world.

As for the original question--yes I'm affected, but for me it is just part of the fluidity of the environment we call life. Adapt or fail.

eb

eb

 

[greg334]

Sorry guys/gals we are in a recession and it can be going into a depression.

The issue for many economist, ‘the experts’ and financial professions who study the economy is they really can’t figure out or agree on what the problems are and where we actually are sitting.

For me it is simple, I have lived in an area that has been in a recession since 2000 and I am used to it. I see where things are for us but for others they don’t or can’t figure out or even want to see things for what they really are.

So here are the problems as I see them;

We have low interest rates which sound good but because we depend on foreign investments to drive our economy and support our debt, we are cutting our own head off to save about 6.8% of the mortgage market and about 21% of the stock market from bad investments ever time we lower the interest rate. The lower the rate, the less investment we have coming into the country. Sorry if you over extended yourself, let the market adjust, let things fall where they need to fall and get government out of saving 42% of 6.8% of all the mortgages.

We have a huge trade deficit with a lot of countries and this has to be brought under control.

We have a huge debt in the country. Everyone blames Bush but no one seems to blame Clinton or who really has given it to us – congress. Also we the people need to wake up and understand that we the people also have a very high personal debt that needs to be controlled. I have heard one thing that makes me sick, some in congress feel that the student loans need to be increased to help students with college – my solution is to force the colleges and universities to lower their operating cost or not get any federal funding (which they should not get anyway). The students today have absolutely no idea on fiscal responsibility and they come out of college in more debt than I am right now. I can see if we get into another situation we had in 1930 or 1937, a lot of people will go off the deep end and end it all because we have become a dr. Phil society.

We have the worst tax system in the world but the best revenue intake – people fear the IRS but no one wants to change it. I wrote once that it is like the battered wife syndrome, you want to leave but can’t. Sorry guys and gals but we have to change it soon or we will never ever be out of debt.

We have the best political system in the world but the worst citizens in the world. We vote like it is a burden, we don’t care about who gets elected by the time we get to actually vote and we are not, as a country, engaged in the political process like other countries. Elimination of the party primaries is a right step in the right direction. If the parties want to have their party members chose a candidate, go for it but to have these 'elections' which are not part of the political process by any constitutional mandate.

We have more off shore work being done every day and we lose more jobs every day then we should. We don’t have the union strength to fight, we lost our will to fight but again we feel for the companies who have had problems.

My solution is the Fair Tax. Read about it – Fair Tax. It won’t hurt to change and it won’t hurt to be engaged either.

 

[Turtle]

Get out those hard hats, folks! The sky is a heavy thing.

 

[greg334]

Get out those hard hats, folks! The sky is a heavy thing.

NO! not at all, if we can recognize the problems and at least for some of us, correct them as we move forward, it will lessen any negative impact for the person. But if we sit on our hands and do nothing and let the government solve the problems, we will be worst off.

The problem is all these experts will not admit that they do not know what the real problems are and it is like 1928 and '29 all over again.

I have been asked this question and wonder if anyone knows - when has any government involvement create a better situation for business in this this country, and I am not talking about policy change, anyone?

I was just reading the 100k buyout post and the one thing that stands out there is the one thing I think we all miss, fiscal responsibility.

 

[mypie]

Greg, you've done your homework. I think there are more issues involved and your answers were fairly simplistic - but, this is in whole a very complicated issue and to resolve it we will need a government that is willing to head off this train. You're right, ignoring or denying a problem exists doesn't make it go away - it exacerbates it! Only by talking about it and taking action can we hope to head it off and change things. It is at this point that we all need to take personal responsibility by getting involved in the solution.

But, I think my question got diluted to a more political debate. I was specifically speaking about . . . "what you, as an insider in the Expedited Freight business see as the changes - first hand as it relates to the "R Word", Green issues, and fuel costs". Specifically, Expediting please.

Here is the reason. As I said, I am a "wannabie". I used to be a Realtor. I held my license prior to 9/11. For a couple of years after 9/11, I saw real growth in my business. Then it slumped off. As an insider, I could see some real concerns for the future of the real estate market - yet I continued to hold my license "hoping it would all straighten itself out". Afterall, the media was still reporting how strong the market was, and the NAR (National Association of Realtors) was always giving an upbeat projections for continued growth. This being said, let me add, I live within 5 miles of the hottest real estate market (at the time) in the country! Yet, as I continued to watch my market I saw greater concerns with the coming tide. As it turned out I held my real estate license for 2 years after my first instincts began. In the end I was right.

After the reported worst Christmas shopping season in many years - which has to affect the logistics business - What do you see as an insider for the future of Expediting (both short and long term)?

 

[greg334]

Mypie,
I understand where you're coming from and I will try to be a little more focus in my post. Sorry.

Look, the path we are on with the government trying to intervene in any crash will put us into a more difficult position in the near term. The worry has been the stock market and the housing market but every move towards a 'fix' hurts the bond market which is more important. The train left the station in the mid-90s and it accelerated in 2000, before 9/11. If you take a serious look at '28 and '29, we are doing about the same thing except they didn't use deficit spending, they didn't have a lot of the regulations we have or a progressive punitive tax system. It was the same policies we are trying to maintain today that actually made the depression last more than 3 years. My fear is that we can easily return to a 1937 without knowing what hit us.

Now you asked a really good question and I am going to try to give you my opinion if my fingers don't freeze off.

What we have today, a recession in a real sense effects my work this way; we have less production and we have less movement between companies. I see falling rates due to the need to be competitive between carriers and lower interest rates allow more competition for me as a contractor coupled with a less of a chance to save money and have a small interest accumulate on that savings.

The green issue is a big concern for me. I see it as a way to regulated more of everyone's lives and if the greenies get their way, many of us will be living in the box of the truck because of the regulations. I can't afford to go through the retrofitting of my truck to be certified to run in California if it comes down to that but I suspect that I will not be the only one.

Fuel, well I think that fuel is not killing the industry as long as the companies keep up with rate hikes and imposing FSC. the adjustment to the $1.25 needs to be more or less a fact of life for th shipper but many companies will adjust their tariffs to keep the customer happy at the expense of the contractor.

hope that post is alright?

 

[FEDEXCARHAULER]

this thread was addressed to expediters ,but it has to do with anyone in the transportation business.the single most emportant thing to increase your profits is your fuel mileage.at the fuel prices of today,save 1/2 mpg and you save 10000 bucks a year,and that my friends is almost someones truck payment.Sure your getting a fsc,but that doesnt mean you can just run as hard as ever.Slow down and put those bucks somewhere where they are needed.