The Source for Trucking News, Opinions and Trucking Jobs | As the Market Turns…

This starts out being the same old story of the trucking companies are doing well, except for the driver shortage and fuel costs.

NWAnews.com :: Northwest Arkansas’ News Source

Analysts expect positive results from trucking companies when they start filing quarterly reports this week, but a prolonged driver shortage, stubbornly high fuel costs, and uncertainty about federal regulations present challenges to the industry. Those barriers are constraining growth by keeping trucking firms from adding new trucks to their fleets, and discouraging financiers from investing in startup companies. Unless more drivers start to materialize, companies will probably not buy more trucks. The upside is that tight capacity is helping truckers raise their rates. “Overall, what we are anticipating is for truckers to report strong revenue gains and earnings per share growth, driven by both an improving economic environment, and a strain on capacity.” said Jack Waldo, trucking analyst with investment bank Stephens Inc. in Little Rock.

But despite all the bad news analysts expect strong revenue gains and earnings. Now for the interesting part.

PENDULUM HAS SWUNG Starting at the end of 2003, nationwide shipping demand picked up, and trucking companies responded this year by steadily raising the rates they charge for shipping. “There has been a fundamental shift in the law of supply and demand, and demand has shifted toward carriers,” and away from shipping customers, said Steve Williams, president of North Little Rock-based flatbed carrier Maverick Transportation Inc. He is also the new chairman of the Arlington, Va.-based American Trucking Associations.

Ever since the trucking industry was deregulated in the 1980s, shippers have had the upper hand because so many new companies flooded the market. That all changed at the end of 2003, Williams said.

The economy picked up, and the trucking firms that were still standing after the last economic downturn stepped in to grab all the new business from retailers and manufacturers.

That seems to be the trick in trucking. Be able to survive the bad times because the good times could be around the corner. Either by saving for a rainy day or by being able to cut expenses lower than anyone else around you.

I’ve always believed that any market will in most cases take care of itself. After deregulation many people say (like Michael Belzer, the author of Sweatshops on Wheels, whom I disagree with) that’s what’s wrong with the industry is we’ve worked ourselves to be the lowest bidder and have destroyed ourselves.

I believe stupid business people will eventually go out of business. But, until then they drag the rest of us down to their level. Same way I believe that dangerous and illegal drivers will eventually get caught or wreck. Unfortunately that also drags us down by making us all look bad, not to mention the lives lost.

The less government intervention (including the ‘good’ kind) the better. Allow the market to take care of itself. The government can’t control fuel prices or rates and shouldn’t try and control fuel surcharges without controlling everything else.

The Federal Motor Carrier Safety Administration is hammering out new rules, creating more uncertainty for the industry.

The fear is that the rules could restrict driving time even more, which would require companies to hire more drivers, not an easy task given the present shortage. “The driver issue is the key reason why most carriers are unable to grow their fleet, why many shippers find it difficult to find an adequate number of trucks,” Meister said. The average driver turnover rate in the truckload industry is about 119 percent. Taken together, it means the trucking industry is in for some changes, but rising demand for shipping means that most companies will be able to afford it.

Everyone knows the new rules aren’t going to allow drivers more time on the road. Then why wait. Put whatever incentives you have now to attract drivers now instead of waiting for the government to change the rules that everyone knows are going to change for the worse.

Let’s wait till they decide on the rules, pretend like it’s a big surprise and blame the government for all our problems. The persons or the companies that plan now will be able to take advantage of the rates that are going on now and at least in the short term no one sees getting any lower and they will be the successful truckers tomorrow.