Current rates are now below fleet operating costs! It's official!

Publicly traded fleets are not in the same situation, they can absorb a decline where small fleets and single operators can't.

operating costs are subjective.

 

I can haul it for less!

 

I can’t see any small private fleets (5-10+trucks) surviving this downturn. The ones running spot market van anyway..

Publicly traded companies will survive until their investors flee..

Seeing too many loads posted that won’t even cover basic driver pay and fuel..never mind anything else. These same loads that are “flying off the shelves”.

Been a solid year of decline now so I’m betting not many have much savings left..

 

In on 1

 

When capacity is reduced to under 15% of parity, we should see rates rise again.

This is all a normal cycle and many fleet owners prepare for the bottom of the cycle. What makes this time rather harsh is the very high amount of capacity that the segment has experienced because of the rebound from the Covid shutdown.

The good thing is the thinning of the herd in the fleet end of the industry, we have too many arm chair “investor” type fleets that need to go.

 

This is the most important aspect many newer owner ops and lease ops fail to realize when I see them whine about current rates, especially on reddit. Carrier A might have operating costs of $2.15/mile and would be running at a loss with loads paying $1.70 a mile, meanwhile Carrier B has operating costs of $1.30/mile and would be thriving on that same load pay.

 

These cycles has have existed in deeper and deeper oscillations since deregulation in 1980.

Is the understatement of the century.
What used to constitute the calculation of the various components, driver pay and working conditions, cost of capital, maintenance dollars, typical equipment utilization etc are impossible to predict in this totally free for all marketplace. Even fuel costs and insurance vary so widely among the players as to be meaningless when plugged into any industry formula.
Here is why:

Driver pay/conditions: Many drivers who are new to the business, coming from a marketplace outside of North America will work for a fraction of the standard calculation.
Maintenance: Need i say much more than standards for small carriers in the above group above are different.
Cost of capital(truck payment): Many newcomers cited in this business do not rely upon legacy sources(banks, finance arms of manufacturers, etc). they have a peer to peer arrangement which is far more flexible.
Equipment Utilization: Again, many advantages if most of your fixed costs are lower than everyone else.

And many of them are quite sophisticated in dodging other costs, like taxes, various regulatory burdens and business location costs, none of which would turn up in typical industry calculations.

In summing up, we are no where near the bottom.

 

I agree..and appreciate that you share your knowledge with us all. I’m one that’s learned a lot from you over the years.