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Trucking Industry Woes

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    Maybe Dockadams can shed some light on this. I read this morning that American trucking giant, Celadon has declared bankruptcy leaving some 3,200 of their drivers stranded on the road as their fuel cards have been cancelled. And Celadon is not alone. According to the MSN article above, 640 trucking companies have declared bankruptcy in the first half of 2019. ACT Research says trucking volumes have declined for 11 straight months.

    I was of the opinion that the trucking industry was doing well because so many people are reverting to buying on the internet. As a result of this, the USA is facing a massive truck driver shortage.

    Internet sales companies like Wayfair, Amazon, and others rely on the trucking industry. Even Walmart and Target are big on internet sales. UPS, Fedex, Amazon Prime and the post office trucks are in my neighborhood every day delivering packages.

    But maybe that's part of the problem. As Business Insider points out, truckers say Amazon's new logistics empire is being underpinned by low, 'ridiculous' rates — and some are refusing to work with them. Is Amazon setting the standard on drivers' wages? I note that Amazon as a whole doesn't pay taxes. But how would low wages drive a big company like Celadon into bankruptcy?

    I can understand how low wages can be a disincentive to become a truck driver, but how can we have so many trucking companies declaring bankruptcy if wages are not the problem and fuel prices don't seem to be much of a problem to me either.

    Just wondering.

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    Schmidt Wrote:

    Maybe Dockadams can shed some light on this. I read this morning that American trucking giant, Celadon has declared bankruptcy leaving some 3,200 of their drivers stranded on the road as their fuel cards have been cancelled. And Celadon is not alone. According to the MSN article above, 640 trucking companies have declared bankruptcy in the first half of 2019. ACT Research says trucking volumes have declined for 11 straight months.

    I was of the opinion that the trucking industry was doing well because so many people are reverting to buying on the internet. As a result of this, the USA is facing a massive truck driver shortage.

    Internet sales companies like Wayfair, Amazon, and others rely on the trucking industry. Even Walmart and Target are big on internet sales. UPS, Fedex, Amazon Prime and the post office trucks are in my neighborhood every day delivering packages.

    But maybe that's part of the problem. As Business Insider points out, truckers say Amazon's new logistics empire is being underpinned by low, 'ridiculous' rates — and some are refusing to work with them. Is Amazon setting the standard on drivers' wages? I note that Amazon as a whole doesn't pay taxes. But how would low wages drive a big company like Celadon into bankruptcy?

    I can understand how low wages can be a disincentive to become a truck driver, but how can we have so many trucking companies declaring bankruptcy if wages are not the problem and fuel prices don't seem to be much of a problem to me either.

    Just wondering.

    It is unsurprising. This is a prime example of the wielding of, if not monopoly power, market power. Capitalism speaks to nothing about this. It is acceptable. The end result, allegedly, is lower prices to purchasers. Of course this type of power exists throughout the system from Mao-Mart and Target through Big Pharma and the F.I.R.E. sector. Competition is not to be tolerated.
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    Nearly immediately after the events of 9/11, there was a slowdown in transportation because of uncertainty. Uncertainty about what was to come, questions arose about will there be more attacks on US soil? What about the oil industry? Prices on diesel fuel and gasoline spiked tremendously in the days and weeks following the attacks. Market uncertainty played a huge role in commodities and transportation industries.

    It seemed as if the whole nation was stunned. I was a cargo expediter for two companies in Milwaukee, leased to both at the same time, both of which were suddenly slowed, I spent many hours glued to my Blackberry and my cell phone waiting for calls to transport goods. It was as dead as it could be. Nothing was happening.

    In the following month and months after this time in history, I had hauled some DOD items from one location to another and the pay for hauling these items was fantastic for about 6 to 8 months. Then the bottom dropped out again. I can tell people I have first hand knowledge to tell people that the transportation industry is highly unpredictable. Trans. company owners, dispatchers and their drivers never know what to expect from day to day.

    Nearly a year after 9/11, things were improving somewhat, but my bottom line wasn't doing much better. I did several expedited loads to places east, Pennsylvania, Ohio, New York, and Virginia. Settlement checks were given at approximately two weeks after a run was made. I was shocked to find that my payments for some of these runs was very low. For people who don't know how trucking companies pay their owner operators, we work on a percentage basis, that is at the time I worked, I received around 45% of the total transportation costs charged. The trans. company kept 55% of that total. If the rate charge was $1.50 per mile, and the trip one way was 800 miles, the trans. company would bill the shipper $1,200.00, and I would receive 45% of that, normally. But these were not normal times, several of the runs I made were lowballed by the trans. companies I was leased to, and ended up with only about a 30% cut of the total billed. Out of my cut, I paid on a 1$M insurance policy-liability and cargo insurance, fuel costs, maintenance, tolls, meals, and all the good stuff a driver needs on trips. It was difficult to remain solvent.

    The days of cutthroating were here. If a shipper needed a load transported, they'd call trans. Co. #1, and if the shipper thought that was too expensive, they'd call other companies and try to obtain a cheaper rate. Nine time out of ten, trans. companies would cut rate others, just to get their business. Today, corporations like Amazon, Walmart, and other that offer free shipping are helping undercut the trucking and transportation industry. Which is why many have gone bankrupt in the past 10 years. Some just can't operate a fleet and work for next to nothing.

    I had a brief chat with the operations manager about the lowballing and my settlement checks voicing my dissatisfaction with such and he told me some money was better than no money at all - sitting idle. I let him know that it would be more beneficial to me not to even operate under those pretenses.

    Has anyone noticed why the US postal service in recent years has been having difficulties keeping it's head above water? In recent years, the postal service has been forced to raise it's rates several times.

    fool.com/investing/2018/11/08/amazon-is...

    Companies like Celedon probably pay their drivers a percentage too.

    bing.com/search?q=average+truck+driver+...

    "Truck drivers that are paid per mile see varying wages depending on their experience, the region they work in and the company they are employed with. A majority of trucking companies pay between $0.28 and $0.40 cents per mile according to the U.S Bureau of Labor Statistics. A few companies do pay up to $0.45 cents per mile."

    The link below shows the average cost per mile of what trucking companies can charge for freight transportation.

    tcicapital.com/tci-insights/current-fre...

    There are two types of trucking which might be highly profitable these days. One is expedited freight, this is when a receiver of a shipment absolutely has to have the shipment from a vendor or manufacturer on an immediate basis, and are willing to pay extra if the shipment can be received within a matter of hours or within a day.

    The other is LTL carriers. The LTL carrier usually has a warehouse where many shipments are received and at that time, the shipments are gathered together in one place, and loaded later on a trailer which will make several stops along a route. The benefit of the LTL carrier is being able to charge the shippers of such goods individually, thereby maximizing the loads leaving their warehouse facility and maximizing their profits. Each shipper is charged while the LTL trucking company cleans up on profits. LTL vs FTL, or full truck load, FTL is usually a truck load of one or two products or items of the same with no stops in between, is much less profitable for a trans. co.

    en.wikipedia.org/wiki/Less_than_trucklo...

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    Dockadams -- You referenced the ups and downs in the trucking industry as well as others. The natural gas industry is one of them...

    New York Times: Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits

    It would seem we have a glut of natural gas now as a result of past massive investments in shale gas, but not enough demand for the huge glut of gas production brought on by the drilling.

    "Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada."

    All companies big and small are affected, and many are facing bankruptcy because the revenues from sales of natural gas are not enough to repay the massive loans they took out to get into the shale gas game. Natural gas prices are about 25 percent lower than their peak in 2008. The math doesn't work...

    But hey, I'll bet the CEO's who invested big in shale gas reaped big bonuses in their financial portfolios at the time.

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    We all know that too much of one commodity or another is not good, yes, the petroleum industry is a lucrative enterprise, and as I understand it, it literally costs millions and millions to even start a drilling operation. I've never understood that while investing so heavily, how long would it take to turn it into a profitable entity. I'm not sure, but I believe that the oil corporations do receive government subsidies to help offset the costs of setting up a drilling or surface mining operation.

    I once read a piece where our government pays or paid power generation plants and there was a trade affair with those. If a plant polluted in one area, they could buy clean energy credits from another to keep polluting. (carbon emissions trading)

    I'll tell you what I know about natural gas prices, when we moved back to this state (2005), our winter heating gas bill was running at about $155 to $175 a month between 2005 thru 2012, now as of late, our gas heating bill is way down, last month's gas bill was around $65, go figure, the price of natural gas has gone way down. We have done more too, to conserve, we have almost all LED bulbs in our fixtures, have weather-stripped doors and windows, and turn off all non essential electronics at night (televisions-computer-modem-dvd player, etc..)

    My perspective is if there is a glut of energy products, one would think that these savings would be passed onto us, the consumers. Some might have been, unless energy companies are doing a shell game or a Ponzi scheme on us. Which wouldn't surprise me at all.

    "Under Carbon trading, a country or a polluter having more emissions of carbon is able to purchase the right to emit more and the country or entity having fewer emissions sells the right to emit carbon to other countries or entities"

    en.wikipedia.org/wiki/Carbon_emission_t...

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    Schmidt Wrote:

    Dockadams -- You referenced the ups and downs in the trucking industry as well as others. The natural gas industry is one of them...

    New York Times: Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits

    It would seem we have a glut of natural gas now as a result of past massive investments in shale gas, but not enough demand for the huge glut of gas production brought on by the drilling.

    "Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada."

    All companies big and small are affected, and many are facing bankruptcy because the revenues from sales of natural gas are not enough to repay the massive loans they took out to get into the shale gas game. Natural gas prices are about 25 percent lower than their peak in 2008. The math doesn't work...

    But hey, I'll bet the CEO's who invested big in shale gas reaped big bonuses in their financial portfolios at the time.

    Trump's tariffs and threats of tariffs isn't helping the trucking industry either. If he would just stop tweeting and STFU and allow markets and industries do their own thing within government regulations, everything might be just fine. He's always sticking his dirty fingers in someone's pie/s.