This is the other big thing that can change the quantity of demand. Customers are going to be much more efficient about how they use trucks when trucking is more expensive. Efficient is another way of saying that they move their freight fewer total miles and that lowers demand. I've noticed this trend as well even though on a relative basis long lanes didn't gain in price as hard as shorter lanes did.
Rates are starting to skyrocket already
Discussion in 'Freight Broker Forum' started by Dave_in_AZ, May 17, 2018.
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As it goes, I can see how this happens. When a customer pays $5000 for a truckload of drilling mud, for example, and pays half that or more in the transportation of that material, the cost of the material goes up. That customer is as concerned more about price, than for instance, my customer that makes 8' long machines that retail at 500,000 a pop. They're a little less concerned about eating freight charges. -
The way i see it, a large amount of America’s trucking capacity was small carriers 5 trucks or less. I read that was about 70% of capacity. You change the way they run (elogs), you change the whole dynamics of how freight moves ($).
So if a trucking company was use to hauling say 5 loads a week at certain gross dollar amount, and now he can only move 4, the company will charge more per load to compensate the lost load. Plus you factor in the now decreased capacity; because guys on paper could basically make themselves available, fudge the logs here and there to still pick up and deliver. Now on elogs companies can’t accept as many last minute loads. Same amount of trucks, but less availability is the result. -
From my observations, owner operators want to make $100-150 year to feel satisfied when they are full time drivers or maybe the more accurate statement would be to say that it would be rather few who would complain that 100K is too little. In order to get that they need to generate about $180- 250K of revenue which takes about 70-120K miles to run, depending on some details and skills, some need to run more some less. The current rates enable that level of income with conjunction of enforced ELDs - arguably. I'd personally be happy with the rates I'm getting. Even to the point that if I knew that the rates are going to hung around for a few years at this level, I should be all right with a brand new equipment and keep working with brokered freight found on loadboards at the same intensity level. However, hopes like that are futile, considering easiness of entering CDL job pool or even acquiring trucking equipment as these potential and often reported earnings could be very attractive to a general working class population where current household median income is close to $60K.
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Crazy to risk everything on leveraged brand new equipment to operate on spot freight with zero experience but there's a 1,000 people reading this right now planning and figuring exactly how to do just that. And going to ruin their lives as a result. This week freight volumes have dropped about 75% from what I saw 2 weeks ago around me and rates are reflecting that. That's to be expected right after the 4th holiday but it still sucks. What's really fun is when that happens and it doesn't rebound. You never know when that's gonna happen but it always does at some point.
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I have a feeling that people running out and buying expensive equipment with BIG payments are going to be in for a big shock not too far into the future. Trucking is always under the microscope and it won't be long before congress does something to kick us in the pants...again! It's an election year so I'm pretty sure somebody is going to jump on the bandwagon about lowering transportation costs...after all...they are too hard on the poooorrrrrr!!!!Dave_in_AZ Thanks this. -
Not a yankee.
Woo ooo
Woo ooo
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Let's be really really clear... I think it's every persons job to maximize their own economic situation. If you're out there working for less than you could be making that's a choice, and not one I have a ton of respect for honestly. This means that I have exactly zero problem with trucking companies who have done everything they could to extract money from this market over the last 6 months. You didn't do anything wrong, and you don't have to apologize for anything. Even if it ends up being a major contributor to inflation (and I think it will be honestly...) you aren't the one who decided that everyone needed to have Elogs. Your rates going up personally because people were willing to pay more didn't drive inflation macroeconomic trends did.
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