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Old 11-21-2007, 01:49 PM
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Default shippers in drivers seat for 2008

http://www.financialweek.com/apps/pb...711190311/1036

ut oh
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Old 11-21-2007, 03:50 PM
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Also, in a related story Sonny Pruitt Enterprises announced a rate increase to 7 dollars a mile. More on this later...............

Seriously though, I do work for Pulte Homes, which is one of the biggest builders in America and they are as dead as I've ever seen. I got one house coming up in December, that's it. Don't look for housing to bounce back for a while, I think. I never realized how much housing affects the economy. You'd think with commercial construction going strong it wouldn't make that much of a dent in the economy. Maybe one of the boards chief economist can elaborate.......no_worries, care to comment?

I also think fuel is way overpriced, perhaps like residential housing got before the bubble burst. I think the fuel bubble will burst, when, I don't know. If you think about it though, think how much just a 10 cent increase in fuel yields world wide or just nationwide, now look how much it's gone up recently. The numbers don't seem to make sense to me. But what do I know, probably not enough as usual. Maybe some deep analysis from the chief economist here will help............no_worries, I'm putting you to work again.
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Old 11-21-2007, 04:02 PM
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Part of the fuel price comes from the falling dollar on the world market. The dollar buys less so oil costs more.
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Old 11-21-2007, 06:38 PM
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I'm fielding a few calls trying to sell $4/mile to Denver...thought I had one, oh well :lol:

I didn't read that story, although it's not new news. This downturn has been on the horizon for quite awhile. I know I've been talking about it since summer of '06. Rosty, your rationale has been shared by Wall Street and the Fed from the very beginning, so you know as much as they do. They have consistently underestimated housing's drag on the economy for a year now. The housing industry encompasses so much more than just construction. When it sneezes the entire economy catches a cold. It's happened before, so it always amazes me when they think things will be different this time. Oh well.

I think housing reaches a bottom sometime next year in terms of construction levels. Prices will continue to decline for awhile after that as the market works off inventory. Then I think we're in for a prolonged flat period until the economy gets going again. I look for freight to maintain this slow spiral downward through next year and then flatten out. We'll see the uptick in freight before the rest of the economy shows signs of recovery, so that's good. Unfortunately, I think we're headed for recession, and it could be an ugly one, so I'm not making any recovery predictions yet.

The good news is, that those that survive the downturn should actually see a bump in rates before freight volumes actually increase. I say this because I see capacity finally shrinking starting next year. High fuel prices (make no mistake, they're here to stay) and lower rates will force many small companies to fold. Larger companies will let their fleets shrink. When this happened before, there were always tons of new O/O's ready to jump into the void. I think the credit crunch is going to drastically affect that this time around. Banks are losing money on "safe" investments. They're not going to be eager to lend to an industry in the midst of a bad downturn. Watch for a big push in companies trying to sell their lease-purchase deals. As margins shrink it's infinitely more attractive to put the burden on an O/O than own company trucks. As freight dwindles, your O/O's go out of business and you're not stuck with a non-revenue producing asset.

How's that for a sunny outlook? 8)

Now back to the hunt. $6000 to Boston...over a holiday? Please! :lol:
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Old 11-21-2007, 08:12 PM
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Quote:
I also think fuel is way overpriced, perhaps like residential housing got before the bubble burst. I think the fuel bubble will burst, when, I don't know. If you think about it though, think how much just a 10 cent increase in fuel yields world wide or just nationwide, now look how much it's gone up recently. The numbers don't seem to make sense to me.
If prices don't make sense now just wait 10 years.

The US gov. has announced it will ELIMINATE oil co. subsidies (corporate WELFARE) gradually within 10 years.

$10 (minimum) per gallon will the norm.



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Old 11-22-2007, 09:56 AM
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I would not put too much emphasis on the shippers being in the drivers seat. If freight sits on their docks or warehouses long enough rates will go up. Contrary to what we hear from the media, these major carriers don't have as much power as one might think. Much of it is psychological. These carriers only account for 20% of the freight hauling capacity. Those who will mostly decide what rates will be are the smaller carriers. If these people pull back then capacity will shrink and there could be a true tightening of capacity. That will make it more difficult for shippers and brokers to handle available freight. Based upon demand, rates should rise. I think a lot of people are running scared right now. A friend of mine told me that a broker told him that they had owner operators who were taking freight to California for $1.20/mile. According to my friend, the broker could not believe that owner operators would take freight that cheap to a bad freight area. That tells me that people are running scared and would rather run at a loss than use good business sense. There seems to be plenty of loads in most areas of the country. The main problem are the lower rates. I could have taken a legal load to Southern California for over $2/mile this week. Surely, I am not the only one who sees higher rates. I could see more of a reason for lower rates if there wasn't plenty of freight to haul. Whether there is a lot of freight or not you must make a profit to survive in ANY business.
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Old 11-22-2007, 12:15 PM
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http://www.scdigest.com/assets/newsV...&ctype=content



we are waiting for the rates to rise but according to the above article
80% of the shippers believe the is an over capacity of truckers
its a tough sell
when their perception is we are a dime a dozen
actually I think cheapo freight may stay cheapo because the higher the fuel goes up
the more truckers will not be able to "deadhead to better area"
thus putting more demand for cheap freight
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Old 11-22-2007, 12:47 PM
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Those who take these cheap loads would be much better off sitting or deadheading out of bad areas. Unless they do, they will eventually find themselves broke and out of business. In reality, these low rates and high fuel may just be the best thing that could happen for this industry. It will take some of the capacity out of the marketplace which will help rates rise. I don't like to see anyone fail, but if you continue to haul freight that doesn't pay enough, you are not only hurting yourself, but the entire industry. Unfortunately, there aren't enough who seem to understand this fact.
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Old 11-22-2007, 01:16 PM
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http://www.purchasing.com/article/CA6499680.html

some hope? in the last paragraph?
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Old 11-22-2007, 02:28 PM
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I see no need to be overly concerned about the current situation. It is serious, but we can talk ourselves into about anything. Some carriers mostly rely on their own freight rather than brokers. Most smaller carriers rely more on brokers than direct shippers. That can offer the smaller carriers more options for freight. It still requires greater negotiating skills. There are some 3rd party logistics companies who will handle a number of shippers. Some offer fair rates and more year around freight. For instance, I know of one logistics company who handles a lot of steel plants, mostly East of the Mississippi. While their rates aren't the greatest they can keep a truck busy pretty much year around if you run their lanes. Their rates probably average around $1.50 or so plus fsc. Some flat bedders don't like hauling steel. There are other types of freight that pays better but may be more seasonal.
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