Wednesday, March 12, 2008

The Tide is Beginning to Turn

The escalating diesel fuel prices are beginning to impact truck capacity, at least in the short term. We are finding it more difficult to assign trucks to loads on all of our lanes, not just specific ones. Locally, I know of one truckload carrier that had more than 100 tractors that closed its doors last week, more than likely a casualty of cash flow problems created by the spike in fuel prices.
Truckload carriers are beginning to park trucks after finally realizing they will lose less money with a truck parked than a truck hauling low paying freight and deadheading to pick up the next load of low paying freight. The cut rate brokers/logistics companies in the industry will have to take a different approach to gain market share in the near future as less trucks will be available to pick up freight and the available trucks begin to demand higher rates.
All of the information I can gather doesn't tell me that our freight recession is over. The information only tells me that we are seeing a correction in our market place with supply and demand coming closer to each other. Factor in the beginning of produce season and we could see more freight than trucks in certain areas of the U.S. soon.
In summary; carriers are beginning to see the light at the end of the tunnel. They are finally taking trucks off of the road, (some voluntary, some involuntary), and this will affect rates that shippers pay. Shippers and brokers will begin to see more service issues as the truck supply begins to become strained and relationships will be tested as service failures become more common. Higher rates are on the way.
Don't you just love our dynamic industry?!

Yours truly, the transportation peddler

1 comment:

Unknown said...

Ken, would you mind sharing the name of the TL who shut down last week?