his year has been getting worse and worse for carriers, and independent owner operators.
Earlier this year in the first quarter the demand for trucks was higher than your usual type of first quarter and freight paid pretty well.
Everyone in this industry was beefing up their trucks and fleets excited for the produce season to kick in.
Produce season came and went very quickly in GA and FL areas. Laredo, TX and surrounding areas didn't have much better turn out either. California had almost no produce season at all.
July came, and July was your typically July. Best time to vacation. Expectation rose mostly for the start of the September, until the end of the year. Surely trucks will be in demand. So many holidays around the corner one after another, especially with school kicking in, and of course Christmas.
Here we are at the end of the October and is has only gotten worse. Low demand for trucks. Most of the loads paying cheap, and somehow there are carriers settling for peanuts and moving this freight.
Mega fleets such Swift Transportation, have seen a big decrease in their profits,truck demand, and their stocks have fallen dramatically. They are not the only ones. Majority of the mega fleets don't want to admit their losses. Imagine the panic it could cause their customers,and staff members. Not to mention investors.
Little guys that work the load boards are also being affected dramatically. They're left with 90% of the garbage freight they have to scrap for to cover their overhead.
This isn't only affecting carriers, this is also affecting manafacturing companies such as Cummins as well, and other truck makers.
Over the course of the years hundreds of owner operators, and small carriers have been trying to give an excuse why the freight is so cheap.
These are the reasons that many have claimed:
- Fuel prices dropped down, so freight pays less. Since fuel prices dropped down, and freight pays less, why aren't the products that we carry cost less as well? Rates should be the same, but Fuel Surcharge should be less.
- California ports are closed, and California drought.
Yes, this did affect the market, but it shouldn't have affected it as much as this. If it really was a big impact wouldn't the government agencies step in because an impact like this - it would cause great stress in economy.
- The brokers are pocketing all the money.
My Opinion: Sure, there are brokers that have taken advantage as much as they could. However, these brokers have been doing this for decades. There is a lot of great brokers in the spot market, and they are facing hard times as well.
So, what's the problem today in the trucking industry?
Driver shortage! There is no current driver shortage. There will be a future driver shortage. The whole driver shortage kicked in when 2012 until 2015 freight demanded more and more trucks. Companies kept buying more and more trucks and wanted to fill those trucks so they can accumulate more money. There is NO driver shortage.
Problem is the whole system in USA has never actually recovered since 2007-2008. It has been running on a steroid such as the oil boom. After 2007-2008 equipment was very cheap and a lot of carriers went out of business. As the demand grew for trucks, so did the prices for everything else, especially trucks and trailers.
Majority of the freight rates have stayed the same, and majority of driver pay has remained the same, but the cost of everything else has risen.
This is cycle that corrects itself every 8-10 years. However through this cycle a lot of people are left without a roof. These are your money hungry pencil pushers. Hate to call people that, but it's a fact. And of course the uneducated steering wheel holders who think they're owner operators.
Nobody really knows why there is low freight, and low paying freight.
But here is my prediction of what is coming.
A lot of carriers will be filing for bankruptcy. They will be closing doors down because operating a fleet will not be profitable anymore. Why risk everything for peanuts? Once those carriers close down, a lot of drivers will be looking for another driving job.
Carriers who haven't closed will lower their capacity, due to overhead costs, and will not be able to hire all the homeless drivers.
Carriers will have to lower driver pay to.30 CPM give or take, and drivers will either have an option to take it, or quit. Those carriers won't be affected because drivers will be hungry to even drive for $500 a week just to cover their rent and cellphone. They will have plenty of drivers to choose from. Trust me.
Brokers will be closing down their operation too. Especially the brokers we hate. When they close down they won't pay out any money to the carriers that are left who have hauled last few of their loads. They will let their 75k bond take care of that, which will be like a slice of pizza compared to chain of KFC that they will take with them.
Life on the road is going to become more violent. You will have cheap scum of the earth owner operators trying to steal fuel, spare tires, and anything that can help them make ends meet.
Less trucks on the road will also create less revenue to places like tolls, and also the DOT. Therefore they will have to pull over more trucks, and ding them for whatever they can just to keep generating revenue.
At first truck stops will have big sales to get rid off products before they expire. The last batch of products will be at a hire price than usual.
Things such as e-logs will still be pushed. At that point "good ole Randy the outlaw" will accept e logs just to keep moving.
Once the capacity of trucks tighten up, good brokers and good carriers will have to stick together. Customer will have to keep them going because they will be needed. Trucks will be sold for cheap, compared to now. Once low on oil again, prices will jump and so will the rates, and so will the work. US will find a way to get more fuel, and create more jobs, and we will be on another steroid again.
There is a fix to the economy crisis. This fixing creates a few years, new laws, regulations, and so much more. The rich and the wealthy wouldn't want that, but at the same time having all the money in the world means nothing when nobody has money, and learns how to live without it. Therefore the "world leaders" will find another hack for the system to blow breath in the lungs of what we call life today. The majority of the public doesn't even know what will hit them until it punches them over night.
Once again a lot of people will have to tell their wife "Honey, we need a new roof"... as they swallow their spit, to save hydration, and finish "cause this one is going to be gone". The Hurricane of The Trucking Industry...
Article Source: http://EzineArticles.com/9221126
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