I could personally manufacture DEF to ISO 22241 specifications and pass a certification process (The biggest initial expense on a small scale operation). Possibly even manufacture out of a single trailer at a competitive price, not even considering the possibility of adding an even higher margined level of integration. Getting supply and or pricing security on a required purchase in quantity on an over priced product is sound business. Especially when it is relatively easy and low risk. Integrate, especially in business segments that likely enjoy higher returns on investment than normally seen in trucking. Freight rates have likely peaked in trucking and are likely to start a multiyear slide as capacity increases and demand stagnates. Integration has worked for other trucking companies such as Gordon Trucking (Later acquired by Heartland Express) owning a Freightliner dealership (Later divested by Heartland, possibly over contract requirements regarding fleet purchases of new Freightliners). There are more examples, I’m sure. More to come, but I’m under the gun to pick up a load!
Not sure I agree with the multi year slide, but this also depends on the mode. LTL and FTL are going to suck, especially if you're with a small carrier or doing work relying on spot rates. We are still seeing price increases in hazmat/tank. Drive safe.
Good to hear on tanker and HAZMAT rates. I’m signed on to a carrier that has over 10,700 contractors. Our electronic load board reached a peak of about 125,000 loads last year and is now in the low to mid 70,000 loads even though we are in the seasonally strong 2nd quarter. As the auto and truck manufacturers shut down production as I write this for retooling for the next model year, I expect these numbers to drop even more in the next week or two. Historically, trucking has enjoyed two exceptional years of profitability out of an full economic cycle as capacity recovers from the previous recession and eventually reaches demand, reducing upward pressure on rates. Obviously, Covid threw a wrench into things. China’s Covid lockdown policy is slowing down global trade and may be, in at least part, to punish the West for sanctions on China’s trading partner, Russia. China has been sending mixed signals recently regarding their Covid policy going forward. Other transportation related leading indicators I follow is DAT services spot versus contract rates, loads per truck, and the Dry Baltic Freight Index for maritime. Spot freight rates are declining and strongly tend to lead contract rates as shippers attempt to renegotiate rates to reflect current market pricing or contracts expire. Loads per truck comparisons for dry van and flatbed are significantly weaker than last year, for the most part. While the Dry Baltic Freight Index is higher than its January low of this year, it is significantly lower than last year at this time. However, backlogged orders are still substantial and some pent up consumer demand remains, in my opinion. Several economic growth engines are now under stress. Rising interest rates are starting to have an adverse effect on resale and new housing demand, effecting many related industries and multiple streams of tax revenue for local and state governments. Another significant economic engine is home refinance, where consumers either refinance or take out a 2nd mortgage, often in the form of a line of credit, and use the proceeds to buy more consumer goods. Rising interest rates and stagnating real estate prices put a damper on that. Another economic growth engine is related to consumer technology purchases, which is seeing increased global competition while being vulnerable to recent declines US consumer sentiment. Up next is the important auto and truck industry and all of those businesses in that supply chain. Rising interest rates, vehicle prices, insurance rates, and rising fuel prices are adversely affecting consumer demand for high margined, relatively poor fuel economy SUVs, which reached a recent, all-time market share of 80% in the US. US manufacturing industry headwinds include a strong US dollar because of increasing relative interest rates between the US and her competitors and weakening business sentiment over Biden administration leadership and policy. The only sectors that are still showing solid strength are energy on favorable pricing due to supply constraints and healthcare due to, in effect, subsidized demand. Trucking in normally a low margin industry because of the ease of entry into it. Further, Many many shippers self haul or have a controlling interest in a trucking company where they generally keep the most favorable lanes while offering up their other lanes for bid to outside transportation companies. Specialized transportation because of type of equipment or expertise can be an exception to typical low industry margins, however. More to follow on how large companies maintain their pricing power using entities such as ISO, other trade organizations, Lobbying for favorable legislation, and the courts to increase the cost of entry of potential competitors into “Their” markets. I will also discuss several vertical integration strategies to effectively counter anti-competitive practices that unfairly increase our costs. Finally, I will post in Bugenhagen’s Bonhoeffer thread on foundational theory behind advancing one’s interest, either as an individual or as an entity in a competitive world, including the use of propaganda, the positive and effective integration of Socialist ideals in a Capitalistic economic system, and cover worthwhile, achievable objectives when dealing with adverse entity.
Once again, this is specific to LTL/FTL. Or dry van, as it were. The barriers of entry into hazmat and tanker are much, much higher. As a result, margin is significantly higher too, and price less volatile.
Yes, we haul HAZMAT, including liquid HAZMAT in totes and power only tanker loads requiring a tanker endorsement. Tends to pay well, but some of that stuff is truly hazardous, limiting the interest in those loads by some drivers, including myself.
I completely understand. Our drivers are required to wear full PPE when loading/unloading. But they get paid well to do it. If they're lucky, the customer does the loading and unloading and they wait in the driver room - air conditioned and watching TV My point is, however, that our rates are much more sticky than other modes.
I don't think the HAZMAT haulers are invulnerable to the economy, however. Have you seen recent price action in chemical related stocks? They may be due for a bounce, but healthy, it does not look.