Posted on 01/23/2013 11:24:27 AM PST by blam
Truckers Knew We Were In A Once-In-A-Generation Recession Before Anyone Else
Rob Wile
January 18, 2013, 11:29 AM
Youtube
If you ever wondered what industry is the American' economy's most accurate bellwether, here's some pretty good evidence that it might be trucking.
In the just-released minutes of the Federal Open Market Committee's December 11, 2007 meeting, then-St. Louis Fed Governor William Poole recounted what he was hearing from his nonfinancial business contacts about orders and sales.
Most reported softening activity, but nothing dire.
But not Poole's trucker.
From the December 2007 transcript:
UPS is expecting a peak season that is milder than in the previous years; my contact believes that the economy is not going into a negative but is clearly slowing down. The company is leasing eleven fewer aircraft this year. To meet the peak, they always lease extra planes for shipping. They are probably holding about steady on capital outlays.
My contact at FedEx says that the outlook is very soft, not much buildup toward the holiday peak.
The retailers that they talked to are anticipating a softer season, not an absolute decline, but slow growth. International business remains very strong. This company is reducing capital expenditures by 10 percent from its previous expectation.
My contact in a major company in the trucking industry says that we are in a recession, the worst he has seen in twenty to forty years. The company is reducing its fleet size by 10 percent, is cutting capital spending quite substantially, and has no good news.
This all the more incredible given the NBER later determined December 2007 was the month when the Great Recession began.
(Excerpt) Read more at businessinsider.com ...
Who is lying?
Give those truckers ‘Obama’ phones and EBT cards!
But, like many I like to listen to peoples investment key indicators and theories.
I met a guy @ the better half's employer's luncheon.
Said gent noted his key for in and out of the market(s) were the (I'll assume going forward orders) orders and revenues of the various truck manufacturers at the time and he always seemed to be out before a downturn. I'd need to really study this pet theory, but like many they are food for thought...
It’s not a bad idea to keep an eye on cardboard production and box manufacturing.
You can watch the Big Tanker stocks....too. TNP, DHT, TK, GASS, VLCCF.....etc.
It makes perfect sense that truckers would know first, since they are the part of logistics which is closest to end consumers. Container shipping works on a 9-12 month lead time from factory orders to shipments, but a trucker going from a WalMart distribution center to a store would know what the economy is doing in that town on a daily basis, based on how full the truck is that day.
Old trick....and it works.
Blam,
I deal with small to medium size trucking companies everyday. They all are trying to find drives and they all are adding trucks to their fleets. At $150K a pop(for a tractor), they do not do this without some forethought. The biggest problem they all tell me about is the inability to find qualified CDL drivers that can pass a drug test and therefore able to insure them. Starting pay for most of these companies is $45K/year.
In addition to my own personal experience, I have heard both McClain and Central Oregon Trucking commercials on the radio advertising for drivers and offering a signing bonus.
We are coming out of the recession. Housing starts and permits are steadily increasing. Existing home sales are steadily growing and inventories are 4 months or less. Unemployment is slowly going down.
We may not like Obama or his policies but I can assure you that all of the above statements are fact and point to an improving economy not the opposite.
Thanks for the link. He’s right on.
There’s a sign not far from my house advertising for CDL tanker truck drivers.
Obama would say, look at all the money we are saving with less road crews to repair the damage by the trucks.
Rail car activity is also a tell tale sign. As an FYI UPS puts a ton of their ground packages on rail.
My brother is a trucker. He’s shared many of these concerns.
He’s gone from having a fleet of a dozen trucks and 20 employees to only himself, his wife, and his son.
Too bad too, he was a good employer and took care of his people. Guess it’s up to the president to do that now
I remember truck orders going down before the recession.
Eventually pent up demand will pull the economy out of the doldrums. People can’t defer everything for ever. Strange recession this has been. The employed, the threatened and the jobless and the takers. The two bookends, employed and the takers, just seem to have carried on.
How many shifts is Navistar working now?
In addition to my own personal experience, I have heard both McClain and Central Oregon Trucking commercials on the radio advertising for drivers and offering a signing bonus.
We are coming out of the recession. Housing starts and permits are steadily increasing. Existing home sales are steadily growing and inventories are 4 months or less. Unemployment is slowly going down.
We may not like Obama or his policies but I can assure you that all of the above statements are fact and point to an improving economy not the opposite.
I disagree with this industry analysis. I own and operate a transportation consulting firm as well as operate my own fleet. Yes, qualified drivers are in demand, but not because of the amount of available tonnage. The tonnage that is moving is not worth hauling, as it is barely covering expenses. My P&L makes this a fact.
Sure, we are continually bombarded by the $45k / first year with sign on bonus ads. Do a quick google search and find out about the performance and intents of the companies that are doing this advertising. PAM, Swift, Landstar, Prime and others all have the same racket. These sign on drivers rarely make $20k and quit before qualifying for their "bonus" - it's a numbers game, churn and burn.
I have reduced my fleet by 50% as well as seen a lot of my clients undertake actions that reduces their capacity. I'm within 2 miles of the largest trucking companies in the U.S., and the industry is in turmoil because of reduced demand.
You are correct. Guess what is happening to rail volume? Same as OTR LTL volumes!!!
The trucking companies I deal with are mostly flatbed heavy haulers of lumber, plywood and other commodities out in the Pacific Northwest. They typically are not reefer(refridgerated) haulers. Their business has been increasing for the last three years. At first they brought back equipment that had been mothballed. Now they are buying new equipment.
As I stated in my previous post, the biggest problem is trying to hire qualified drivers. Being a long haul trucker is a very difficult job. My dad was an owner operator tanker driver. Long hours and phyiscally exhausting and sometimes days away from home and family. Flatbeds are even harder because you may be required to tarp the load, especially in the winter. That means climbing up on the flatbed and the product on the trailer and straping down a 50 x 20 full tarp. Sometimes drivers fall off and get hurt.
You need to have a clean driving record to get insurance coverage. The more dangerous commodity you are hauling the higher the insurance and pay. My dad hauled everything from rocket propellant, acids, blue indigo dye, palmolive dish soap to liquified sugar. He frequented places like Hooker and Dow Chemical, WR Grace and an air base in Alabama, where they built missiles. Of course he died of cancer.
By the time trucking stats start heading south it is too late.
Cardboard orders, used for all sorts of packaging, leads trucking by maybe a quarter or so.
I worked for a trailer manufacturer for about 15 years many years ago. It was no secret that the trucking industry was the first to tank and the last to recover in a recession.
I went through several of them. We would go from 6 months to 12 months backlog of orders to zero orders (all cancelled) in a few weeks when the recession started. When the economy recovered, people would want trailers immediately since they waited to buy a new one until the old one completely failed and could not be patched up one more time. If they couldn’t get it immediately, they would go elsewhere. When every manufacturer got busy again, no one could order something immediately from anywhere. Eventually, the backlog would start growing again when people learned to anticipate replacements for their fleet.
I am sorry to hear that Robert. I can assure you the lumber and housing business is picking up substaintially. We see starts exceeding 1 million next year and climbing back to 1.4 million over the next few years. I do not deal with many of the nationwide companies you mentioned other than Swift. Again that is only for flatbeds.
However, all of the flatbed carriers that we deal with have seen an increase in business over the last couple years. My company ships about 900 trucks a month throughout the United States and Canada. Our business is increasing.
Maybe you should consider getting into flatbed shipments.
The transport stocks are always the leading indicators.
In 15 years my prediction is that most long haul truck drivers will be redundant. Computer driven vehicles are coming along that fast.
Companies will be buying the trucks, they won’t be paying the drivers.
Never.
The housing bubble is being reinflated with the involvement of Fannie / Freddie and them dumping nearly $80b per month in liquidity into MBS's. This is the same illusion that will not garner different results. I have involvement in HHG's as well, and the HHG fleet (corporate and COD relocations) is down to nothing right now. This is the real indicator of the housing market.
Friend of ours is a railroad conductor. He said about what the trucking article said ... keep an eye on shipping because a slowdown will hit the railroad before anyone else.
railroad numbers are going to be distorted by the huge amount of oil that is being shipped by railroad these days.
Did you see 60 Minutes a couple weeks ago. They had a segment regarding robots taking over for so many of the tasks that humans currently perform. Many of these were the low skill labor jobs that are now being done in factories in China and India. They showed how a robot purchased for about $26k could learn a task and do that task 24/7 for 3 years(no coffee or potty breaks or sick days). It worked out to about $3/hour. This would be as cheap a current Chinese labor. The savings would be it could be manufactured right here in the USA.
Another part of the segment showed a robotic semi truck driver ,like you suggested in your post. It would be GPS guided and could follow electronic tracking built into the roadway.
They also showed a warehouse in Mass where robots fullfilled the orders coming in over the internet/sales office. The robots would travel around a warehouse the size of two football fields, and bring the items to the person that would then check the order, apply the shipping label and off it went to the shipping dept. The human would never actually leave their spot, the robot brought the items to them. It followed a tracking system built into the floor of the warehouse.
Some sectors of the economy are strong; others are weak.
In Houston it is obvious that drilling is going great guns all over the world. Everybody sees the unstable MENA as unreliable. The world MUST have oil and gas.
However, we are also seeing a surge in violent crime. There have been two attempted armored car robberies near me in the last year. I think the unemployable are getting restless and think they are entitled.
Despite being led by idiots who think they can tax, regulate, and spend the country to prosperity, entrepreneurs are finding ways to survive and grow. For example, I was at an industry dinner where we were briefed on ObamaCare. EVERY biz owner there spoke about their plan to lay off workers, go to part timers, and get below the limits of the new rules. They will quickly adapt and evade.
As for the future, I am convinced by the incredibly prescient Kyle Bass, i.e., “War and DEFAULT are coming”.
I used to think there was hope. The massive vote fraud of the last election proved that I was too optimistic.
Plus nobody seems to be thinking about all the programming jobs that would develop from this, or the jobs to maintain these machines.
This is bad news for the unskilled workers in many of these foreign Asian countries. It is good news generally for the US, Canada and Mexico. With NAFTA we will have cheap robotic labor and plenty of cheap natural resources between our three countries. If a robot can by manufactured that can learn an assembly job and perform it cheaper than the lowest human labor in the world there is no reason to build factories over in Asia anymore. There is a cost to ship raw materials from North America to Asia and then ship the products back here.
The only things I could see continuing to be made in China are items and materials that the EPA would not allowed to be produced in this country. For example, some of the lithium battery components are highly toxic. A manufacturer would not want to risk the lawsuits to manufacture those in the US.
An earlier thread on trucking and other areas as economic indicators. The FedEx Indicator (3/23/2012)
http://www.freerepublic.com/focus/f-bloggers/2863093/posts
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.