Truck Load Markets Report

This is something that I have thought and it boils down to us to, because we deliver the goods at the end of the day, over all LTL and Local Delivery as a whole I think are doing alright LTL in 2015 was only down -0.5% from where it was in 2014, which was a fairly busy year, however 2015 wasn't a record breaking year. The only company that really topped the charts in 2015 was Old Dominion as we've discussed. It always seems even in a bad market there's one or two companies that get lucky and manage to really find there way through. OD picked up all of XPO's mistakes, by the way Conway Truck Load what's XPO doing with them anyone know?

Right now I think were in a little bit of an economic down turn, although nothing like 2008. Where I work were busy, depending on the route, schools going to be out soon and that will slow my route down, but come August I'll be stuffed to the gills, however I was wondering how the truck load segment was doing and I guess there in a little slow patch right now. I see the O/O's over on there side of the board are wondering why freight is so cheap. Well I had thought about this and even brought it up to other members of the board when ever we talk about purchase transport and just as a person on the street putting 2 and 2 together I thought, it sure seems there are plenty of "firms" out there offering 53' dry van truck load service and the fact that LTL companies find it cheaper to hire out to these "firms" then use there own trucks and trailers which they already own and I guess depending on the company are paid for says something about the 53' dry van truck load sleeper cab companies. So then I thought there must excess capacity in the truck load market. I used to think I knew most of the trucking companies, but I wasn't even close there are truck load carriers out there I never even heard of before and I swear these are pop up companies they come and go. Drive by almost any LTL yard and you'll see trailers from weird companies and it's like who are these companies I've never even seen there trucks before? I'm sitting there going all these companies all doing the same thing plus these big huge companies like Swift, Schneider, Werner, Bar Nunn and Celadon and all these owner operators and then these fly by night outfits that are here today and gone tomorrow and I'm sitting here thinking there's a lot of 53' dry vans out there that's got to be driving prices down on that end?


Well sure enough I was kind of right.

I did some digging and Swift and Werner both said they were getting beat up on price a little bit and Werner is tired of getting beat up on price. That's my interpretation of it, they said it a little nicer and more flowery then that. Anyhow from the reports I read truck load companies are having a harder time finding loads. Apparently in 2014 there were more loads to be had and it was a problem with capacity to find trailers to put the loads in, now I guess it's swung the other way. Werner I guess parked a few trucks although the number of trucks they parked was a drop in the bucket compared to what there fleet is. It from the sounds of it thought doesn't really sound like the big truck load carriers are parking trucks and trailers and terminals are over flowing with equipment out into the street, what it sounded though more or less was there's stuff moving, but there's also empty trailers sitting in terminals and because of that prices have come down and basically truck load fleets right now are more then what they need to be equipment wise I guess driver shortage wise it's not a problem because these companies have such an overturn of people, however there not that much more then what they need to be so what I can deduct is the major firms are going to keep trucks they have and not really increase capacity because right now there's slightly more capacity on the truck load side then there are loads and shippers are demanding cheaper rates because you know fuel prices are down. So right now the truck load companies have them selves in a little bit of a hole.

The good news is LTL companies aren't in nearly as bad of shape there's fewer LTL companies then there are truck load companies and LTL is more of a niche thing with more of a niche customer base. It seems to me that 53' dry van freight is a feast or famine type deal, but LTL, tanker, distribution and delivery and food and beverage stuff is more stable. Now granted restaurant deliveries might go in the toilet, but food companies do way more then just restaurants that's just one spoke in the wheel. LTL does more then truck load, truck load is A-B usually maybe A-B-C sometimes, but LTL is A-B-C-D-E-F-G LTL is distribution mode actually getting the product to the end user, it's why some of the trailers and trucks have lift gates on them ha-ha.

According to the reports in JOC Swift reported 4.7% drop in the first quarter of this year and profits down 15.7%. However while customers on the truck load side are demanding rock bottom pricing, the truck load companies will not let these customers get away with it and when the "soft" economy of 2016 bounces back and truck load capacity is at "equilibrium" then shippers who demanded priority pricing will now have to pay. Overall though the whole sale truck load business thinks that shortly coming up here they will be back to normal and operating at full capacity so it'll be interesting we shall see. Oh by the way Swift has over 20,000 tractors which is just ginormous.

 

At the end of the day the Post Office has the capability to deliver to pretty much every address in North America, which is a lot of addresses and actually delivers to almost every address in the United States everyday.

 

There's a hobby shop I go to from time to time and the guy was telling me one of the makers of HO scale train stuff was going under and they got a good deal on excess inventory and bought it. The shipper used the post office and the guys at the hobby shop one day said they looked out the window and saw a post office feeder truck backing into there parking lot with all there shipment.

Did you ever see the 1996 Seinfeld Episode "Bottle Deposit" where Kramer and Newman were driving the Post Office step van to Michigan with all those empty glass bottles with the mothers day mail haul? It's one of the funniest Seinfeld episodes. I see the mail contractors out here quite a bit on the highway running from the big main post office down town to other big main sorting facilities. Target Logistics from Austin Town, Ohio is hiring $20.00 an hour. I see Clifford Finkle out on the road too, they have the sleeper cabs and there around. Area Transport from Pennsylvania I see them down town at the main post office and Kuchenreither from North Ridgeville, Ohio there a pretty big mail contractor in North East, Ohio. DTS is another one and Mailender I see them out and about a lot. There's more, but those are the big ones around here.

 

It's the hottest thing Purchase Transport and the LTL's are doing just that. FedEx rails a lot of stuff out and you see truck load companies trailers parked in LTL terminals. I think that they are doing just that consolidating and shipping out via truck load carrier what they can instead of linehauling stuff to a break bulk. The only company last I read that doesn't use very much purchase transport is Old Dominion. I know YRC and FedEx use the rail a lot and really go on the turnpike here in Ohio you'll see LTL carriers sure, but I don't think it's what it used to be and that's because I think a lot of the stuff is sent OTR truck load company.

The only thing I can think of that would stop the LTL's from being able to sub it all off on a truck load carrier is the LTL's probably at the end of the day have better control over there own driver and truck then they do with Swifts driver and truck. You know if there's a shipping change or something with the customer the LTL's can contact the driver right away and get things changed or whatever while en-route. Probably don't have that kind of flexibility with a truck load carrier. You know I bet it's like anything else the LTL's will take the high paying high value good customer freight and move it them selves with there truck and driver and pass off the slower less high priority not as good paying freight to the truck load guys.

The thing of it, is, is companies like Dayton Freight and Pitt-Ohio own there own truck load carriers Pitt-Ohio's truck load company is ECM and Dayton Freight's is Kelly Transport and I guess the reason for this is, sometimes there bigger LTL customers might need truck load shipments from time to time so why let a good customer go over to a freight broker or McMegga carrier when they can keep the money and the business. Well I'll say this I don't see Pitt-Ohio or Dayton Freight farming out freight. I think NEMF does a little bit of farming out, but I don't have as much of a problem with companies using there own in house truck load divisions that's a little different.

When I went to drop a car that I used to own off in Kentucky that I sold to my brother on the way down I saw a Schneider truck pulling a set of beat up YRC doubles north bound on I-71 so that's your purchase transport at work. I would see CRST pulling R&L carriers doubles as well and R&L is a big operation they have a lot of trucks a lot of trailers they own ABCO refer company from Florida they have there own truck load stuff and sleepers and all that it's cheaper to hire CRST then do it them selves, how much cheaper can CRST be? As far as buying power in terms of fuel and stuff R&L and CRST have to be on almost the same level as that and I guess R&L's drivers make a few bucks more, but CRST probably goes through more people and has probably a higher turn over rate and higher cost of hire so wouldn't that be all a big wash? I could see R&L and the other LTL's using truck load carriers if they were busy and were running at "equilibrium" and needed stuff move and all there trucks were out on the road, but I guess it must be like it is right now there is to much capacity in the truck load market place and rates are low and to keep drivers working and trucks moving and money coming in this is what they did. So that must also mean there really isn't a driver shortage. Driver retention problem I'll give that 100%, but shortage how can there be a driver shortage when the truck load carriers are saying they have available capacity? I mean wasn't it 5-6 years ago Schneider had a hiring freeze? I think what it is, is people leave at such a rapid pace that they even if they don't need a ton of drivers if they don't hire anyone then eventually they won't have anyone at all. The reasons people leave though are all kinds of things and actually I read the report a bad company on this forum and it's really not money that people leave the big carriers it's usually family problems or health problems stuff like that more then just the pay was bad. Don't get me wrong sure the pays a factor for some, but not all it's usually other stuff more then pay.