What's your strategy for a deep recession/depression?

[lowrange]

Maybe you don't like to think about it, maybe you think that is too much negativity.

I've been hearing a lot about a serious downturn looming, the lastest is Kevin Rutherford talking about economic projections for the industry.

In America, because some freight has to move, or people die, there is sure to be at least some trucking even in the worst of times. Long gone are the days when the whole nation can live off the land and hunt and fish if they need to. Trucks move or people die, pure and simple.

But, in very bad economic conditions, which trucks move? I'd think owner operators have to be most vulnerable, since no one has a commitment to us. A company can cut owner operators and it costs them nothing.

I'm also thinking that the largest carriers with the most accounts will still be moving some freight even after many others have closed there doors. And, what trucks will they be using? Not owner operators. If the freight is really limited, they'll keep the company trucks moving and cut the O/Os first.

How reasonable does all of this sound? I just had the thought today, I wouldn't mind taking a company job with a major carrier. I'm thinking we're approaching a time when it's important to have the most reliable income possible, let someone else worry about cheap freight and a lack of freight, and even be eligible for unemployment if things really tank.

Sorry if this sounds too pessimistic, that's not my intention. I do think there is a potential for things to get worse than it's been since the Great Depression- I'm not crying, just thinking. I'm not giving up, I'm considering strategy.

Thoughts?

[fdmax]

The high-cost producer sets the price during boom times, and most competitors make money. In difficult times, the low-cost producer sets the price, thereby controlling the level of competitors' profit margins.

What if prices keep dropping precipitously?

Strengthen the bonds of loyalty
To help customers get back on their feet after the terrorist attacks, hundreds of companies, offered price breaks, from automotive services to advertising, even though it meant taking a financial loss.

Pay special attention to your employees. As the downturn becomes more severe, employees will feel added stress. Your efforts to support them will reap benefits for the company—friends in a foxhole often become friends for life.

Be a good vendor. Get close to customers; unless you're looking to exit your business, now is not the time for running short-term profit schemes. Clear-eyed expectations and strategic contingency planning will reassure them that your company can be counted on in a recession.




from automotive services to advertising

[LightsChromeHorsepower]

I'm looking for a big co. job. I thought about my own truck again, but it's just too scary right now. Lay low & wait for the winds to shift.

But then I got a really weird call from the recruiter where I'm supposed to be starting work this morning. At lunch I was reading the WSJ and there it is, a story about how bad the transportation industry is right now, complete with a quote from the CEO of my supposed new co. saying how they are laying people off, when they are usually hiring at this time of year.

Maybe I don't have a job.

You need to put a driver on that step-deck Mike, & go sailing for few months......lol

[lowrange]

The high-cost producer sets the price during boom times, and most competitors make money. In difficult times, the low-cost producer sets the price, thereby controlling the level of competitors' profit margins.

What if prices keep dropping precipitously?

Strengthen the bonds of loyalty
To help customers get back on their feet after the terrorist attacks, hundreds of companies, offered price breaks, from automotive services to advertising, even though it meant taking a financial loss.

Pay special attention to your employees. As the downturn becomes more severe, employees will feel added stress. Your efforts to support them will reap benefits for the company—friends in a foxhole often become friends for life.

Be a good vendor. Get close to customers; unless you're looking to exit your business, now is not the time for running short-term profit schemes. Clear-eyed expectations and strategic contingency planning will reassure them that your company can be counted on in a recession.


from automotive services to advertising

Some good economics talk, here. I thought about your first statement and it does seem true about the high cost and low cost producers. Of course, all the high cost producers are out of business when the low cost ones are setting the rates.

Now, that makes me think. I'm a relatively low cost producer stuck in a not so great contract. Maybe I could hold fast where I am while others are coming down, I might even still be around when many others are gone...the wheels in my head are spinning. Seriously- no truck payment; lower expectations than the guys with the plum jobs right now; and I sit better than most, as long as I can wander off into the cyber world- the politically conspiratorial youtube videos I've yet to get to!

The rest of that mostly applies to employers which I am not. There are quite a few on the board like that, though.

[lowrange]

I'm looking for a big co. job. I thought about my own truck again, but it's just too scary right now. Lay low & wait for the winds to shift.

But then I got a really weird call from the recruiter where I'm supposed to be starting work this morning. At lunch I was reading the WSJ and there it is, a story about how bad the transportation industry is right now, complete with a quote from the CEO of my supposed new co. saying how they are laying people off, when they are usually hiring at this time of year.

Maybe I don't have a job.

You need to put a driver on that step-deck Mike, & go sailing for few months......lol

Isn't that interesting! You still hear companies advertising for drivers. I've been filling out applications for tanker jobs but I guess I'm not good enough for most of those &%#*ers!

I don't know how many people realize it, but within a matter of months there could be almost no one advertising driving jobs! Advertisements for jobs could be a memory, a thing of the past. I'm not saying it'll happen a couple of months from now, only that if a sharp downturn does come, things could change very rapidly.

[Pirate]

The high-cost producer sets the price during boom times, and most competitors make money. In difficult times, the low-cost producer sets the price, thereby controlling the level of competitors' profit margins.

What if prices keep dropping precipitously?

Strengthen the bonds of loyalty
To help customers get back on their feet after the terrorist attacks, hundreds of companies, offered price breaks, from automotive services to advertising, even though it meant taking a financial loss.

Pay special attention to your employees. As the downturn becomes more severe, employees will feel added stress. Your efforts to support them will reap benefits for the company—friends in a foxhole often become friends for life.

Be a good vendor. Get close to customers; unless you're looking to exit your business, now is not the time for running short-term profit schemes. Clear-eyed expectations and strategic contingency planning will reassure them that your company can be counted on in a recession.




from automotive services to advertising

Interesting article on Traffic World the other day - logistics managers are concerned about what happens when the economy eventually does come back around. Large companies are chopping their fleets (JB cut ~1300 road tractors recently) so when things do come back around there is going to be a sudden lack of capacity. Some logistics managers are actually aware they could negotiate cheaper rates than they are getting right now but have instead chosen to maintain the rate they are paying in order to build loyalty from their transportation vendors. The idea is that if they take care of the transportation companies right now, when capacity is short after the economy turns the transportation companies they have contracted with will then return the favor and take care of their most loyal and trustworthy customers (and also not jack the rates TOO much on them).

[lowrange]

Interesting article on Traffic World the other day - logistics managers are concerned about what happens when the economy eventually does come back around. Large companies are chopping their fleets (JB cut ~1300 road tractors recently) so when things do come back around there is going to be a sudden lack of capacity. Some logistics managers are actually aware they could negotiate cheaper rates than they are getting right now but have instead chosen to maintain the rate they are paying in order to build loyalty from their transportation vendors. The idea is that if they take care of the transportation companies right now, when capacity is short after the economy turns the transportation companies they have contracted with will then return the favor and take care of their most loyal and trustworthy customers (and also not jack the rates TOO much on them).

Fascinating! That's an optimist, anyone already looking at the other side of the downturn. I'm preparing for a mulitple year malaise, the depths I have no idea.

[solo379]

If the freight is really limited, they'll keep the company trucks moving and cut the O/Os first.

How reasonable does all of this sound?

Not much, from my point of view....
O/O, cost nothing to company, if he is not running. Well, almost nothing, at least compare to the company trucks.
..As of to my "strategy"... To be honest, it didn't changed much, from a "good times";- Run profitable, keep your expenses as low as possible,(doesn't mean skip on a maintenance), maintain a sizeable reserve...

The only difference is, that i could except a bit lower profit margin, in exchange for a bigger gross. In another words, I'm trying to work a little harder, but still within the reasons....

[Chiefwhatdahey]

My wife and I ditched the huge mortgage, new cars in the driveway and name brand clothes for a simpler life eight years ago. My current financial situation can be done on one income provided the costs are kept down which being in this industry for twenty four years has taught me well.

If I do have to circle the wagons I'm fairly confident that I will make it.

[Bigmon]

I always thought it was cheaper for a company to have O/O's than company drivers. If that's the case, then I would think a company driver can be replaced by an O/O.

[GMAN]

It is much easier to get through an economic downturn when you have little or no debt. Unfortunately, most people today have a lot of debt. Carriers large and small are in difficulty. More than 20,000 carriers have gone out of business so far this year. Great Wide filed for bankruptcy a few days ago. This is a billion dollar corporation. I think this is much more than a recession. It is important to reduce your debt when the economy is down. Bankruptcies are at record highs and going higher. During the Great Depression of the 20th century some people did well. Things were not bleak for everyone. Most did suffer greatly during that time. Many of those who had savings and invested came out of those times very well off.

[lowrange]

I always thought it was cheaper for a company to have O/O's than company drivers. If that's the case, then I would think a company driver can be replaced by an O/O.

When they already own the truck, though, they need to keep it moving. That's why company drivers are run like slave labor, to get as much as possible out of the money sunk in the truck.

Lot's of good posts, here. The winter isn't so bad when you have wood for the fire and beans in the cupboard.

[Walking Eagle]

I think the big companies will shed company drivers before O/Os. An O/O costs very little and the company doesn't care if they sit him 3, 4, 5 days because of no freight. Their own trucks the payments still goes on. I think you will see them farming out more freight to either independant O/Os or small fleet owners (Like Gman) when they have more than their own O/Os can't handle then pull back to keeping their own people busy when it is slow. A company nets as much, or more, from an O/O than they do from their own truck. The main reason they have their own trucks is that they can sign big, multi load, contracts and garauntee they have trucks availiable to move it.
My plan for a major down turn, go fishing

[lowrange]

I think the big companies will shed company drivers before O/Os. An O/O costs very little and the company doesn't care if they sit him 3, 4, 5 days because of no freight. Their own trucks the payments still goes on. I think you will see them farming out more freight to either independant O/Os or small fleet owners (Like Gman) when they have more than their own O/Os can't handle then pull back to keeping their own people busy when it is slow. A company nets as much, or more, from an O/O than they do from their own truck. The main reason they have their own trucks is that they can sign big, multi load, contracts and garauntee they have trucks availiable to move it.
My plan for a major down turn, go fishing

We'd have to see the large companies stop buying trucks before it could happen this way. In the meantime, the trucks they have they'll want to keep moving. Over the next year or two, the easiest thing would be letting O/Os sit until they quit.

That is something to pay attention to, tractor purchases by large companies. If they stop buying trucks they'll start laying off drivers.

[Walking Eagle]

They have contracts they can't get out of, dive by any "Big company" Yards to see it ! The Werner yard on I-70 east of Columbus must have 500 new truck sitting there and a kid I know who drive for them wants a new one cuz his is a POS and they say "Can't do it right now, but hang in we will get you one".

[tweety bird]

When I'm feeling down or when I get worried about financial/economic issues, I listen to Dave Ramsey. His show always makes me feel better about life- it's about overcoming financial crises. Whether you're in one or not- it's good to hear his take on things.

[Walking Eagle]

But he always wanted us all to lease to Great Wide ??

[Walking Eagle]

And where is your avitar ?? it was there, it was gone, it was there, now it is gone

[GMAN]

We'd have to see the large companies stop buying trucks before it could happen this way. In the meantime, the trucks they have they'll want to keep moving. Over the next year or two, the easiest thing would be letting O/Os sit until they quit.

That is something to pay attention to, tractor purchases by large companies. If they stop buying trucks they'll start laying off drivers.

I am not sure that measuring whether carriers are purchasing trucks is s sign that layoffs are eminent or not. I would rather expect many carriers to keep what they have for longer periods to conserve capital. Some carriers can buy trucks but not have to start making payments until they are actually put into service. I know a carrier who is able to do this with their lender. They purchase the trucks, have them lettered and prepped but don't need to start making payments until they put a tag on them and start putting on the miles.

[GMAN]

When I'm feeling down or when I get worried about financial/economic issues, I listen to Dave Ramsey. His show always makes me feel better about life- it's about overcoming financial crises. Whether you're in one or not- it's good to hear his take on things.

I like Dave Ramsey. He makes a lot of sense. I know one woman who went through his course and is now debt free. Her credit was really messed up and now she has a nice home and great job that she enjoys. She didn't think that she would ever get out of debt or own a home.