Life on the Road – Trucking News Blog

Found this at Dan Goodwill’s blog. Dan has the best technical analysis of trucking on the net. Quoting a truck industry stock analyst, “The freight recession is over.” According to tonnage indices and demand trends, the freight economy is on an upswing.

Don’t start throwing parties yet. Dan goes on -

This view is supported by a number of trucking companies and shippers with whom I have spoken in the past six weeks. Several interesting events have been taking place. They include:

• Carriers are deciding to no longer serve certain accounts (e.g. “firing customers”) and are allocating capacity to better paying accounts.
• Carriers are no longer providing capacity to certain freight management companies either on specific lanes or no longer doing business with these companies altogether
• Carriers are submitting freight bids on specific blocks of traffic and then pulling their bids
• Carriers are submitting rates on designated lanes of traffic and then not showing up to meet with the shipper
• Shippers are finding a tightening of capacity and are experiencing more difficulty covering some of their loads

The upshot of all this activity is that there is a “buzz” in the industry that has not been there for the past year or two. There is an optimism that this incredibly difficult freight drought is coming to an end.

Dan mentions this too, but I don’t think the freight recession is over, it has more to do about trucking’s downward spiral is getting closer to demand. Here are my reasons:

• The economy isn’t picking up – How can it? What has changed from six months ago?
• The Fed is still printing dollars so fast the ink is still wet. That’s not going to help.
• The Saudi’s just announced another increase in production. A band-aid, when we need a tourniquet. The Saudi’s will do anything to keep us hooked on their oil and will do anything to delay or disrupt any attempts to get them off of our backs. A small drop in the barrel price is a really small drop in price at the pump. How long will that last? The reason speculators are going nuts is from all of the tension / conflicts in the Middle East. If we had plenty of supply, no one would care about the Middle East, including the speculators. If the price does drop, so do fuel surcharges / rates. But unless it’s a significant drop, shippers aren’t going to be jumping for joy and shipping their stuff.
• Unemployment is starting to move upward. How can the economy recover when people are unemployed?

The “correction phase” might be over. The number of trucks are closer to the amount of freight, which is not entirely bad and those that have survived so far will hopefully be able to hang on longer. According to Dan, if we can hang on for another six to nine months trucks will have the upper hand and Happy Days will be here again! (Not a direct quote from Dan.)

Six to nine months… That’s first quarter of next year, which means it’s going to be a long summer and the Christmas shipping season (Fall), probably won’t do much this year because of the economy, unemployment and the uneasiness of what next year’s Government will look like.

Bottom line? Who knows. The truck / freight balance is probably pretty even right now. Dan thinks everything will bust open next year and carriers will be in control. My opinion is that unless something happens to kick the economy in gear the freight / truck supply may move closer together, but I don’t see carriers having the upper hand any time soon.

Set a reminder in nine months to check back!