According to the ATA things are going to get worse before they get better -

The Road Ahead for Trucking Stocks
The slowdown in tonnage volumes is projected to continue into 2008. “Based on the latest economic data and the expected slowdown in the economy over the next few quarters, we anticipate lackluster freight volumes at least through the first half of 2008,” Headley said.

Tonnage trends have been abysmal since August, and coupled with the higher cost of fuel, disaster for quite a few truckers’ income statements in the coming round of earnings releases is all but a foregone conclusion. We still have a long-term bullish perspective on trucking industry shares, and believe that there will be a wave of consolidation, but feel that the backdrop could get much worse before it begins to get normalized.

Most everyone has figured that out by now. This same article goes on to say that JB Hunt is their favorite among the trucking stocks because of  

Company’s real earnings growth in 2008 will come from its logistics-like segment ICS as a result of the strong export market and the explosive growth that the segment has been experiencing over the past three quarters.

ICS = Integrated Capacity Solutions (provides comprehensive transportation services and solutions by utilizing a network of third-party carriers). Translation - They broker their freight their own trucks don’t or can’t cover.

Freight has been down the last three quarters, but JB’s 3PL is doing great. Anyone want to take a guess as to why?

Here’s my guess - Right now the market has too many trucks for the amount of freight. Brokers have no trouble finding trucks to haul their freight. Brokers base their line hauls on what they can get in a particular market. If there is a shortage of trucks in one region they may have to pay someone a higher price to haul something in or out of that area.

If there are plenty of trucks a broker can price their freight low and still get calls because carriers want to keep moving and will sometimes take cheap freight to move out of a particular area into a better paying region and brokers pocket the difference.  The popular opinion is that brokers make 10% on a load. The truth is, brokers make as much as they can on a load. Sometimes it’s a lot, sometimes it may not be as much. What if the entire country is a bad area for carriers?

JB’s brokers must be doing pretty well. They can probably broker something out cheaper than their own trucks can haul it for.

JB isn’t the only brokerage doing this. It’s something they all do and have always done business this way. The only difference is the entire country has a surplus of trucks all the time, instead of being seasonal or based on a particular region.

I wouldn’t think they could do this much longer. That’s my hope anyway. But thanks to driver shortage articles in the news and carriers pushing how great being an owner operator is, no matter what, I’m afraid this trend may continue for quite awhile.