Trucking veteran weighs in on rough economic times

| Tuesday, January 13, 2009

Paul Schwanke loves trucking; it’s all he knows.

However, the OOIDA member from Acton, CA, told Land Line Magazine on Monday, Jan. 12, he may be forced to give up the profession he loves after more than 32 years in the trucking business if economic conditions don’t improve soon.

Schwanke was recently featured on a segment on “Good Morning America” on Saturday, Jan. 10, about how the trucking industry is taking an economic beating during this recession.

Until mid-2008, Schwanke said his business was doing well. He was running eight trucks, freight demands were high, and he was making a healthy profit, which had allowed him to buy more trucks to expand his growing trucking operation.

Then, when fuel prices hit record highs of nearly $5 per gallon this past summer and freight rates started to plummet because of the worsening economy, Schwanke said he sold two of his trucks because he had a “feeling things were about to get worse” – and he was right.

“I have been in this industry for 32 years, and this is the worst I’ve ever seen it out here,” Schwanke said. “And right now, I don’t see any signs that anything is going to improve any time soon.”

Schwanke said he’s tired of the lowballing of freight rates that’s occurring in the industry. He said it’s nothing new, and he understands the mind-set that a little money is better than no money at all, but those truckers aren’t going to be able to stay in the game much longer by underbidding their costs.

“I know what I need to make on a load and to turn a profit. Sometimes after I quote a rate I know is fair, a shipper will call me back and ask if I am willing to lower my rate even more because someone has said they will haul it for a lot less,” he said. “But what I can’t figure out is how they can do it for that amount and still stay in business.”

He said two of the manufacturing companies he hauled for in California have since left the state because they couldn’t “afford to do business in this state anymore.”

“I probably lost at least $10,000 or more in income by not having their merchandise to move around,” Schwanke said. “One company completely folded, while the other is doing quite well in Buffalo, New York.”

He blames the soaring costs for permits as another reason his business is suffering. Schwanke said when fuel prices went through the roof, so did the price for permits. But now that fuel prices have subsided some, permit costs have not gone down to reflect this decrease.

Truck parking is another reason Schwanke said his costs are through the roof. He used to park his trucks on his property in rural Acton, but was forced to rent a fenced yard to park his trucks after Los Angeles code enforcement officers cited him for parking at his residence.

“So with things the way they are I can either pay to park my trucks somewhere else or I can make my house payment,” he said. “This state is so ridiculous. They put a tax or levy on you for everything and don’t care if they tax you right out of business.”

Truck repair costs are another reason Schwanke said his costs are rising. On Monday, he said he had a truck in the shop getting a new fuel pump rebuilt and a head gasket changed because of a leak. He said the price tag for the repair work is more than $5,000.

“Prices for everything keep going up, but people want to keep banging you for everything,” he said.

Schwanke said his business is also suffering because he used to haul a significant amount of equipment for the numerous movie studios located in California. However, he said that business has even dried up for him and countless other truckers who depended on the studios. Filmmakers are making their movies outside of the state because of significant tax incentives they are being offered by states such as Michigan, Illinois and Georgia.

“Not only are the truckers losing out on vital income they once had by hauling movie equipment, but our own governor hasn’t done anything to keep revenues in his own state,” he said.

Even though Schwanke said he’s hopeful the economy will turn around sooner than expected, he’s keeping a close eye on his bottom line.

“This is the roughest I’ve ever seen it in trucking,” he said.

Fellow OOIDA member Bill Benton of Littlerock, CA, was also featured on the “Good Morning America” segment. Benton has been struggling to make ends meet in this tough economy and is working just a few days a month right now.

 

– By Clarissa Kell-Holland, staff writer
clarissa_kell-holland@landlinemag.com

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