Folks, I hate to be a party pooper, but we haven't seen the worst of it
yet. Who's going to do the purchasing of American-made goods necessary to
keep the recovery going? Sure, I've got good credit, but how much stuff
(which I, by and large, don't need or want) will I buy at 20% interest?
I cashed out of all of my dollar-denominated investments and am now
investing in tangible goods - beans, bullets and Band-Aids. All stuff I'll
need eventually, just getting them before the prices start to take off. The
can of green beans I bought last year at Walmart for 50 cents is now 62
cents - and do you really believe that the prices will come down?
Our forefathers were prudent enough to set aside some goods in good times
to ensure their survival in lean times. How well prepared are you for bad
times? Are you like most people and have only a week's worth of food in the
pantry? Food seeds? Gardening tools? Land to grow a garden on? Knowledge to
do a garden successfully? The means to defend your garden from those who
would take your food? What about first aid supplies? Got extra meds? Spare
glasses?
What about your truck? How much food do you have in your cabinets? Do you
have enough cash on hand to pay for fuel home if the card readers don't
function? Any extra fuel in 5 gallon cans in those mostly empty sideboxes?
Any means of self-defense besides your tire thumper? What kind of shape are
you in physically?
Folks, I'm not an end-of-worlder or a prophet of doom, but I truly believe
that the wise among us should expect the worst and pray for the best. Be an
ant in a grasshopper world. He who dies with the most toys is still dead.
A very valuable resource, and my daily reading, is www.survivalblog.com .
You may have heard the site's author, Jim Rawles, on Coast to Coast the
other night.
No one knows when disaster of one form or another may strike. How prepared
are you?
2009 was a pretty bad year for most folks in the Expedite industry; a cursory glance at the EO
forums will tell you this. Carriers went out of business,
Owner/Operators and drivers left the business, miles and rates were
down. All told, it seems like most folks were driving in circles, so
to speak.
It's a new year, however, and after the
traditionally slow months of December and January are behind us (hang
in there), economists seem to be indicating that we'll see a definite
end to the recession in 2010. This is, of course, a good thing,
provided they're correct.
But what does it
mean for the Expediting industry?
More Loads, Probably...
When
the market crashed in late 2008, a number of trucking carriers (in the
larger shipping community, that is) exited the market. This trend
continued through the first half of 2009 and even extended to expedited
carriers. What this meant for those carriers, Owner/Operators and
drivers who managed to stay in the market was that if they managed to
position themselves the right way was that they'd eventually be able to
haul just as much product as they had in years past. To be sure, most
folks had to wait for this volume to pick up. All told, we're probably
looking at a situation where those who stayed in the business benefited
from a reduction in competition.
In a recent question I posted at the EO forum, davekc writes, "I think the freight levels came back a little, but [there were] a whole lot less
trucks available to run that same freight. A lot of o/o's and fleet
owners tanked last year leaving some great opportunities for the ones
that could capitalize on them."
Building on that, TeamCafee says, "Last year was an interesting year that started out very slow and
continued on that way.
The one thing you learn out here is when freight is good run like heck
and put money away for a rainy day. As the year progressed the loads
just kept getting better and so far this year we have been pleased."
So, with freight coming back around, everything's fixed, right? Yeah, not so fast.
What About Rates?
The
apparent impending upswing of the shipping economy, as evidenced by
2009's load increases, hasn't been coupled with an increase in rates.
This strips whatever comfort there might have been in increases in
freight away--especially given that it doesn't seem to have moved much
over the past several months. The reasons for this? Your guess is as
good as mine (well, your guess is definitely way better than mine).
Speaking
of what drivers and owner/operators have to say about rates, it's
certainly not optimistic. In answering this question asked by Bruno at
theEO forum, aristotle says he expects "A continuation of cheap rates." Eggd1ver adds, "The reason for cheap freight is that someone is willing to run that
freight at low rates. We also have to realize that in the last year
people and companies were running for their lives in this economy. I
think things will stabilize level off some will not like the rates but
if we have more work it will all work out if you're willing to do the
work."
BigRed32771 isn't quite so certain: "Things are balanced on the razor's edge, and could go either way. The
media is quick to proclaim any good news in the economy while staying
mum about some of the more serious challenges still lurking about. I
fear this gives a false impression that "We've turned the corner" and
"Recovery is beginning" when there is good reason to doubt. Few are
talking about the very serious possibility of another major [lag] in
the real estate and financial markets, this time due to the commercial
real estate situation. The resulting credit crunch could really hurt
things."
In
sum, it looks as though things are difficult to predict when it comes
to rates, and that drivers and owner/operators are, and will continue
to be, in a sort of "wait and see" mode. While it doesn't look as
though there's going to be too much change to this end in the
foreseeable future, one would expect this to normalize when the rest of
the economy has actually recovered in a way that's a little more stable
and predictable. Right now, we're not particularly close to that kind
of predictability. Even though things seem like they're starting to
turn around, and freight has begun to recover, owner/operators and
drivers seem at this point to be at the mercy of carriers, which are
clearly uncomfortable with bringing rates back up to levels competitive
with the rates of a few years ago.
So, What's Next?
The short answer is "Nobody really knows." The other short answer: "It
depends." At this juncture, it seems to me that many eyes are on the
standard shipping industry, as that seems to be where a somewhat
significant portion of the freight increase has come from. If those
companies continue to struggle as they have over the last several
months, the chances that the freight increase will continue to persist,
or at least stay at the levels they've been. Couple this with a cold,
nasty winter, and things don't so terrible. Of course, the problem with
this is that things are likely to be, well, unpredictable to say the
least. So, strap in tight, guys. Things are going to continue to be
interesting.
