Is anyone surprised?
In my best Ronald Reagan voice: “Gee, I wonder what’s behind that?” [:-,]
Obviously it’s the shippers who are to blame for their unwillingness to pay a fair price for service. [D)]
As I’ve said before, I watch truck rates from a site called DAT. Out of habbit I suppose.
Anyway, those charges have crashed. DAT tells me that the average dry van rate is down to $1.57/mile. A good part of the North American economy has been shut down. There’s less freight to move. Trucking companies, most of which are quite small, are in a bind. They’ve got to have cash coming in, but there’s less cash to bring in. So they compete by cutting their charges. I can’t see a lot of them surviving long term at $1.57/mile.
If I was doing pricing for a railroad I would never loose business to a trucker on price. At least on a 500+ mile haul. But I’m retired.
So a shipper is faced with a trucker literally begging for business and offering dirt cheap rates. It goes from there.
The return of the Zombie Truckers?
http://cs.trains.com/trn/f/111/p/170391/1870840.aspx#1870840
Jeff
I confess that I want to hear ttrraaffiicc’s ‘explanation’ how we get to a pervasive environment of autonomous electric trucks with the whole support infrastructure for guidance and power, probably with hard time limits on battery-pack life under load, with these margins.
It’ll be amusing, anyway.
I don’t see how either rail or trucking survives if demand for transportation fails to cover the cost of capital investment.
Can you tell me what the old rate was, for comparison?
We’ll find out who saved for a rainy day.
In February DAT shows the average dry van rate was $1.79/mile. In May they show $1.57/mile. (-$0.22/mile, a 12.3% decline.) Truckload carriers are in a market that approaches perfect competition. So, they just do not have that kind of margin to give up and survive long term. Hopefully, for my sanity and other things, this isn’t long term.
Edit to add:
The Wall Street Journal (paywall) covered the issue today. The Mr. Green they quote is apparently an Owner Operator leased to Freymiller Trucking.
"Freight prices, meanwile, have plunged amid falling transportation demand.
Loads that once paid $2.80 a mile are now going for as little as $0.80 a mile, not enough to cover the cost of moving them, Mr. Green said.
‘I’m making the truck payments and barely keeping my stuff afloat. Thank God I’ve got a landlord that’s great. Other than that I would be in bankruptcy.’"
Hopefully fuel cost should be lower than it was in February as well, so there should be some offset.
Here is an interesting turn of events, related to freight rates & such- We get carloads of siding from a mill that is about 450 railroad miles away. Highway miles are closer to 400. The siding company just came out with a proposal they think we should simply love. Instead of shipping a full carload, they would ship the same material on 4 semi-trucks, all on the same day, at the same price! So instead of having our normal 2-1/2 days to unload a car, we would have to unload the same amount off 4 trucks on the same day as they came through the gate. And for that, we would get siding at the same price! Me thinks some corporate folks don’t get out much.
If someone was handing me that offer, I’d be curious if te other shoe had yet to fall.
Perhaps they are offering you this opportunity at the “same price” before they tell you that the rail alternative is about to get an increase.
You know, they are giving you this GREAT OPPORTUNITY to dodge the looming price hike.
Those are the kinds of ‘opportunity’ people usually extend to me.
Close. I bet the next move is to eliminate the rail option with those of us too close to the mill to ship competitively by rail. Of course, they’ll say that’s a reason to raise the prices as well. [:-,]
Drug dealer trying to get you hooked.
Does your facility even have the ability to handle 4 trucks at the same time? What are the penalties for driver/trailer detention? Would the trucks be guaranteed to arrive when your staff could handle them at straight time? Just like everything else - the devil is in the details. If you are offered a ‘deal’ that is too good to be true - after the details are accounted for, it is too good to be true.
We can handle the trucks. We’ve always been trucker friendly, because that’s the right thing to do. If a truck can get to us before 4:00, we will get them unloaded. In extreme condtions, we’ve accomodated for later deliveries.
The majority of truckloads that come to us utilize 3rd party trucking firms. Shippers, for the most part don
Observation - Shippers and Consignees don’t care about any transportation mode - at least not until penaltie$ begin to accumulate.
That pretty much nails it . Anyone remember 2018? Rates were sky high…and as usual people called it “the new normal” and that the good times would go on forever. And here we are in 2020…the rates are in the toilet… the intelligent operators put money aside for just such a situation…because they understand the ebb and flow of the market. The dummies expanded their operations while also taking advantage of low interest rates… and here we are… Chicago to Brooklyn for 800 bucks… of course its never their fault…blame it on covid, the middlemen logistics people…other carriers who refuse to keep their rates artificially high…
Are shippers really any different than anyone else? Hell even the railroads will try to squeeze a nickel hard enough to make it spit out six cents.
Who doesn’t look for the best deal in our personal lives either. Places like Walmart, Sam’s, Costco and do on don’t exist because people are willing to pay top dollar for stuff they need or want. By extension; the folks producing what’s sold must also work to drive out costs so they can afford to sell the stuff no one wants to pay too much for.
I believe it was Pogo who noted he had met the enemy and it was us.
Murphy Siding
The majority of truckloads that come to us utilize 3rd party trucking firms. Shippers, for the most part don’t care about the truckers. They typically are just looking for somebody to haul cheap.
Observation - Shippers and Consignees don’t care about any transportation mode - at least not until penaltie$ begin to accumulate.
[/quote]