By Todd Spencer
OOIDA Executive Vice-President
Economic uncertainty is still the order of the day here in the U.S. and globally, but there are signs that better days may not be that far away.
Housing is getting better. While new housing starts are off by 75 percent or so since January 2006, the glut is gradually being absorbed and in some places snapped up by investors for as little as 30 percent of appraised value of a year ago. The first-time homebuyer incentives in the stimulus bill, plus 30-year financing of 5 percent or below, will speed the process. Housing means shipments of lumber and related building materials, carpeting, appliances, etc.
The automotive sector has been hit hard by the downturn in the economy. Sales are roughly half of what they were only a few years ago. Sales of new cars will rise from their current levels. Additional incentives for warranty, etc. will start bringing buyers back.
Analysts say inventories of most goods are nearly depleted. New orders will trigger production and transportation. Two-thirds of our economy is driven by consumer spending.
And there are a few signs that consumer spending is starting to rebound. Many consumers will get a boost from income tax refunds and smaller payroll deductions that were part of the stimulus. Analysts credit the $600 stimulus checks in 2008 for an increase in truck traffic in June of last year. But getting to the improving economy is still a challenge.
Here is what we are hearing and maybe you are seeing. Some of the big truckload carriers are moving to shorter lengths of haul. This makes drivers happier because of more predictable home time. Longer hauls may represent a better deal for owner-operators and small fleets, but only if you can manage costs, pre-arrange return loads and minimize deadhead.
The really short runs are undoubtedly still being moved too cheap when they go through a broker. I was reminded of this earlier when a member sent in a bill of lading that indicated he was paid $300 for a load that went about 200 miles. The big broker that arranged the load collected $1,522. Pretty pathetic, huh, but it’s happening far more often than it should.
Anyone who owns a truck and pays insurance and all the other costs knows that if you can’t gross $500 or more a day, you won’t survive. Brokers know it, too. And right now the big ones know that the rates they are offering will put truckers out of business. Their hefty profits today are all that matters. And when you aren’t around to call anymore, they will find another.
But you don’t have to play their game. Any big broker that has information on your business and keeps that information via computer likely also knows what you will run for. The load might pay $20 a mile, but if you’ll move it for a $1.20 that’s all you will be offered. They keep track of shippers, too, to make certain individual truckers never have the opportunity to develop a direct relationship with the shipper.
The big broker should never be the first call you make. Small brokers should treat you better and work harder to develop a mutually profitable relationship.
But always thoroughly check out the broker. Use the credit reporting agencies. Check for authority and even call the bonding company to find out if claims are pending on the bond. Look for smaller shippers to work with. They are likely to pay good rates to get their goods moved and are not opposed to working with individual truckers.
As the economy rebounds, more partials or LTLs are likely to be moving at better rates when you put them together. Look for opportunities everywhere. LL