09/09/09

09/09/09...time for a quick update on our wonderful industry.

For those of you who have not had a customer plant closure or customer bankruptcy over the past 9 months; consider yourself extremely fortunate. The economic slowdown created ripples that are still being felt and I have no idea how the true asset based carriers have been able to survive over the past 12 months, especially after last years spike in diesel prices.

Every company continues to battle for business and truck capacity seems to have tightened a little over the past few weeks. Shippers have been inundated by 3PL companies who saw the perfect environment for their services by being able to offer lower truckload and LTL rates. Bid packages have slowed down with the middle of the year being here, but I predict they will be back in full force after the end of the year.

As a particpant in the industry I would like to make a general observation. As things have evolved post deregulation I have heard some people say it was the best thing to ever happen in the transportation industry and I have heard others say it was the worse thing. I must agree with both of these statements.

The postives that have come from deregulation have been: lower prices; the ability for small companies to compete; and just a general openness in the transportation environment.

The negatives I have seen are: Commoditization of services; the ability for crooks to scam shippers/brokers/trucking companies without any punishment; and a general erosion of professionalism.

In theory a down economy is supposed to weed out the weak companies, but I am not sure I have noticed many brokers or 3PLs close their doors. However there have been asset based companies who shut down. And the remaining asset based companies still in business will get their reckoning on the brokers, shippers and 3PLs when the economy finally turns the corner.....make no doubt about it.

Transportation Industry Update

Just a quick update to keep everyone in the know on what is going on the transportation industry.

Markets continue to deteriorate and with this meltdown truckload rates are plunging to depths not seen in 9 or 10 years. Fuel prices have dropped and stabilized to a point where most carriers and brokers are quoting flat, all in prices as everyone scrambles for scraps of business to keep companies afloat.

Trucking companies are shedding drivers, office staff and equipment in an effort to balance demand with their capacity, and balance expenses with their bottom lines. Their revenues are plunging, but so are their expenses to a certain degree. Certain lanes are worse than others when it comes to depressed rates and we will more than likely see additional trucking companies close their doors this year. The ones that can hang on through our recession will thrive and carry a big stick when things turn and truck capacity falls below truck demand. Companies that have a diverse customer base are situated best to survive these hard times.

Shippers are taking advantage of the markets by sending out as many RFPs or Bid Packages as possible. Times are tough for most companies and I don't blame them one bit for shopping out their freight. Their transportation costs went through the roof last year with high diesel prices and it might balance things out a little if they can experience cost savings this year.