Update on Market Climate

I receive a regular report from Morgan Stanley listing a Truckload Freight Index and according to the information provided on the report, truckload carriers are not doing enough to take truck capacity out of the equation to bring supply and demand closer together. Trucking companies are still purchasing new trucks to replace their older models, (they held off on doing this in 2007 because of emission standards being changed). It appears most carriers are in a Catch 22 situation, trying to gain incremental revenue by not reducing capacity. If capacity is not voluntarily reduced by the carriers, the market will correct itself when companies begin to go out of business.

This report takes me back to my previous post-higher fuel prices will cause carriers to change their strategy in the marketplace. We are seeing the continued corrections in the residential construction market and financial market. Freight rates have dropped tremendously due to competition for market share-the correction in the trucking industry will involve trucking companies going under unless the economy makes a quick U-turn. The problem is, we don't have a GPS to tell us when to turn, where we are and where we are going.