Worst Freight Volumes Since 2009...(:-o...

Are you you able to define what Freight Volume is ?

 

Made up term to sound like someone knows what they are talking about.

 

You may not agree, but when most people talk about 'freight volume', they're talking about the number of loads available. Look through the annual and quarterly reports for any publicly traded trucking company and you'll notice that they spend more time talking about revenue per shipment and operating ratios than about ton miles, if ton miles are listed at all. Revenue per ton mile is good for tracking relative performance, and that's about it. It struggles to identify market/division differentials, doesn't offer insights into staffing/equipment needs, and certainly doesn't control rates.

Rates are set by a number of factors, but by far the largest factor is how many loads are available in an area and how many trucks are available to haul those loads. At the start of every day, Schneider updates all Operations Staff with their internal version of the Cass Index - focusing on how 'balanced' each market is which determines what loads Customer Service books and Logistics brokers out and at what prices. Ton miles are not mentioned at all. If a market is undersold, Schneider will accept freight in that market at lower rates or plan to dead head equipment out. In the same vein, if Schneider is offered a load going into a market that is undersold they will insist on a higher rate or not take the load. The reverse is also true - Schneider will look for any kind of freight to get equipment into oversold markets and demand a premium to book loads in it. It's the same for small carriers running the spot market - load volume and truck capacity drive rates.

If you graph the Cass Freight Index, truck load ton miles from the BTS and average rates Cass will track much more closely to rates than ton miles. Just look at truck ton miles over the last 4 years, 2023 saw an increase in truck ton miles, but a decrease in rates.

Again, you may not like it but that doesn't change the reality.

 

So now you'll look at actual statistics? I'm sure you knew of the BTS long before I mentioned it.
I know fully well how Schneider works, know quite a few people there.

 

Yeah, I knew about it which is why I said it wasn't germane to what I was discussing - which was loads to capacity ratio and what would happen if enough capacity was artificially removed to increase rates. The number of removed drivers/trucks needed to do that would be enough to have noticeable second and third order impacts which would then contract freight volume, creating a negative feedback loop. Ton miles don't play a meaningful value in this hypothetical.

 

Of course you did. LOL

Problem with your theory of pulling drivers(trucks)off would diminish production which would cause less loads isn't valid.

They are still going to purchase/use products either from other employment or Government handout. Unless they're shipped out of the country.

 

A 1% increase in unemployment tends to correlate to a 2% drop in GDP, and I'd think it would require removing at least 200K which would be roughly a 1.5% increase in unemployment, at least temporarily. The increase in job seekers will have a negative impact on wages - ie if 10 qualified people are applying for one spot there will be one salary range, but if there are 50 people applying it will be much lower. So will those removed keep spending at their current levels or will they cut back? Culling the trucking industry would result in slightly higher incomes for those who remain, but not enough to offset the lower spending by those cut. And what about second order impacts on truck manufactures, dealers and mechanics - not to mention the banks financing the industry? That's another 20k out of work, conservatively. Third order impacts are more unpredictable, and tend to cause structural shifts in society, like changing consumer behavior and long term investment trends (please see "no body wants to work anymore" and "millennials are killing insert industry").

Now consider the larger economic environment. Unemployment and default rates are rising and consumer confidence is falling as it is, so introducing a large shock is only going to make things worse.

 

When you're going to use a quick AI search you might use all of it. Not conveniently forget any part that doesn't bolster your argument. LOL

Complexity:
The relationship is not always perfectly direct. For example, unemployment might remain high even as GDP starts to grow again, as businesses may first focus on increasing productivity before hiring new workers. There can also be instances where GDP grows while unemployment rises, often related to specific economic conditions, as noted in the Federal Reserve Bank of Dallas report.

 

You are assuming these people will add to the unemployment dole. Many are being deported. I think you are arguing a hypothetical. Volume/tonnage is not going to drop with their departure

 

Tariffs were the stupidest thing trump came up with. That's what's holding back the economy. I think I am in a losing simulation.