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Rising fuel costs could push some truckload carriers into bankruptcy: analyst
CNN Money ^ | February 25, 2008

Posted on 02/25/2008 1:40:32 PM PST by yorkie

Truckload carriers are increasingly turning to factoring companies to help ease cash flow difficulties brought on by higher fuel prices, and some firms could be headed for bankruptcy, an analyst said.

'One trucking service provider noted that roughly 30 to 40 carriers currently do business with factoring companies, which is a significant increase,' Wachovia (NYSE:WB) Capital Markets analyst Justin Yagerman wrote in a note to clients Friday.

Diesel rose 12 cents per gallon to $3.40 as of a week ago, up 91 cents from a year ago, according to the Department of Energy.

'We currently expect high diesel prices coupled with tractor licensing and prepayments (for items such as insurance policies and tolls) to be a catalyst for truck capacity to exit the market' in the first half of the year, Yagerman said.

(Excerpt) Read more at money.cnn.com ...


TOPICS: News/Current Events
KEYWORDS:

1 posted on 02/25/2008 1:40:35 PM PST by yorkie
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To: yorkie

So the Dems new taxes on fuel should really get these guys’ attention.


2 posted on 02/25/2008 1:42:27 PM PST by <1/1,000,000th%
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To: yorkie
Factoring means that the companies that hire the truckers to transport their merchandise aren’t paying their freight charges. A bad omen.

As an aside, our freight transportation system is almost 100% petroleum dependent. This is a recipe for disaster, but the congressional mealy mouths don’t seem to recognize the problem.

3 posted on 02/25/2008 2:07:20 PM PST by trane250
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To: yorkie

That’s OK, it’s a good thing all the Mexican trucking companies will do it for less...


4 posted on 02/25/2008 2:14:14 PM PST by cinives (On some planets what I do is considered normal.)
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To: yorkie

What is “factoring” in this context?


5 posted on 02/25/2008 2:14:32 PM PST by patton (cuiquam in sua arte credendum)
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To: yorkie

3.55 / gal National average as of today per DOE

http://tonto.eia.doe.gov/oog/info/wohdp/diesel.asp


6 posted on 02/25/2008 2:15:06 PM PST by Hazcat (We won an immigration BATTLE, the WAR is not over. Be ever vigilant.)
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To: trane250

It may mean that truckers can’t afford to wait 30 days for payment so they sell it to a factor. Diesel prices aren’t the only problem. Trucking has seen a big drop in shipments. Typically trucking is one of the first industries that knows when a recession has ended. Shipments increase. We’re not there yet. Quite a few companies are closing terminals to try to stay in business. Some are just closing their doors.


7 posted on 02/25/2008 2:16:04 PM PST by meatloaf
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To: patton

You send them your pending receivables they send you cash minus a percentage (2-10 %).


8 posted on 02/25/2008 2:16:25 PM PST by Hazcat (We won an immigration BATTLE, the WAR is not over. Be ever vigilant.)
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To: trane250

Factoring means that the trucking companies are selling their accounts receivables at a discount to factoring companies for immediate cash.


9 posted on 02/25/2008 2:16:38 PM PST by FReepaholic (Me no bottom man. Me top man.)
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To: Hazcat

Oh my, trucking companies are taking out payday loans?

That is not a good thing.


10 posted on 02/25/2008 2:19:38 PM PST by patton (cuiquam in sua arte credendum)
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To: yorkie

Which means I’ll be on the unemployment line soon if fuel prices continue to rise. I work in logistics, and we handle many of the top trucking carriers.


11 posted on 02/25/2008 2:21:52 PM PST by Extremely Extreme Extremist
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To: patton

Tell me about it.

I am a freight broker and it (freight) is damn near at a stand still.


12 posted on 02/25/2008 2:21:53 PM PST by Hazcat (We won an immigration BATTLE, the WAR is not over. Be ever vigilant.)
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To: yorkie

Methinks if the Teamsters really wanted to put their actions where their big mouths are, they’d organize a nationwide strike for a week and shutdown every single truck in the country to force drilling in the Gulf, off Florida, in the Caribbean, and in ANWR.

Will it ever happen? Nope. Will the Teamsters endorse a Republican candidate if he promises to do the above things? Nope. Are the Teamsters a Mafia connected wing of the Democrat party? Yep.


13 posted on 02/25/2008 2:26:34 PM PST by Tailback
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To: patton

Selling their receivables. If desperate, some will upon e-call sell immediately to get desperately needed revenue now to pay the bills.


14 posted on 02/25/2008 2:39:53 PM PST by rockinqsranch (Dems, Libs, Socialists...call 'em what you will...They ALL have fairies livin' in their trees.)
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To: trane250
the congressional mealy mouths don’t seem to recognize the problem.

The Little People drive all them trucks around. What's that got to do with our congressional masters?

You know, all that stuff that shows up in stores gets there by way of the Restocking Fairies.

Wonder how many people in Washington ever worked a back dock?

15 posted on 02/25/2008 2:41:41 PM PST by an amused spectator (AGW: If you drag a hundred dollar bill through a research lab, you never know what you'll find)
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To: Hazcat

It’ll be interesting this year. Freight traditionally is slow annually until it picks up in late March, but for certain by April. This year is looking ugly.


16 posted on 02/25/2008 2:43:06 PM PST by rockinqsranch (Dems, Libs, Socialists...call 'em what you will...They ALL have fairies livin' in their trees.)
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To: Hazcat

30 percent surcharge. Get used to it.


17 posted on 02/25/2008 2:44:58 PM PST by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: yorkie
If you have it a Trucker delivered it.
18 posted on 02/25/2008 2:46:17 PM PST by bikerman (_ _ . /_ _ _ /_ . . / / . . . . / . / . _ . . / . _ _ . / / . . _ / . . . //)
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To: Eric in the Ozarks

Major Ft. Worth trucking company, in business for over 40 years, shut down at the first of the year. Trucks were repo’d or sold at auction. Left a 70 year old owner with nothing other than debts and bankruptcy. Not bad management, just caught between rising fuel and employee costs and companies which would not pay a fee to cover the costs.


19 posted on 02/25/2008 2:54:20 PM PST by rstrahan
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To: rstrahan

I bid my resid monthly and get rates on a monthly basis. The last thing I want is to bust my trucker. He’s my ambassador, which is why I don’t mind keeping rates current and the driver paid on time.


20 posted on 02/25/2008 3:01:31 PM PST by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: cinives

That’s OK, it’s a good thing all the Mexican trucking companies will do it for less...

So true! Wonder who’s next?


21 posted on 02/25/2008 3:02:46 PM PST by Isabelle
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To: yorkie
The crisis is fuel, period. What POS politician will take this on? He/It who does, wins.

Watch as this economy and the incredible shrinking green back (or whatever color it is) comes to a screeching halt, as the government bows to environmentalists, and we continue to be the oil producers bitches.

Kiss your 401k goodbye....AGAIN!

This country, and its politicians, are in the bag for foreign leaders. Shaking HEAD.

22 posted on 02/25/2008 3:08:47 PM PST by gathersnomoss (General George Patton had it right.)
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To: trane250

So, how do you propose we ship freight across the country? Please help me to understand.


23 posted on 02/25/2008 3:10:01 PM PST by gathersnomoss (General George Patton had it right.)
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To: an amused spectator

The trucks aren’t vanishing and the drivers aren’t going to work as cashiers if they can help it. Not one speck of freight won’t get delivered at the then-prevailing rates — it’ll just be better-capitalized trucking companies that do it after the bankruptcies and repossessions.

As always, infrastructure industry workouts lead to higher rates, as it is the weak hands (like the telecoms and airlines that went in during 2001 and 2002) which have to fold while the strong hands can simply sit their fleets when buyers demand negative-gross-margin rates.


24 posted on 02/25/2008 3:16:17 PM PST by only1percent
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To: yorkie

I hate the Arabs.


25 posted on 02/25/2008 3:26:29 PM PST by montag813
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To: only1percent
Okay, we just did the National Date Festival and Riverside County Fair , here in Indio, CA. Ten days of mediocre boredom... I pity the food booths. SOme had their percentages up, but thats because they had to jack up those food prices considerably.

That that breakfast burrito that last year was 5.50 a pop. THis week it was 7 bucks. Pop? THe large went from 3 buck to 3.75-4 bucks. We are talking movie theater prices here...

Everywhere things are up... Gas hits us hard. But imagine a carnival that has to run those diesel generators..

ITS going to be an ugly year.

26 posted on 02/25/2008 3:41:43 PM PST by abigkahuna (Step on up folks and see the "Strange Thing" only a thin dollar, babies free)
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To: All

And Virginia in thier newfound democrat wisdom just passed a new 2% tax increase on fuel come April. Raac is coming in @ 3.40 plus and rising on diesel. Labor services will now be taxed come April as well.

With the current prices in fuel, city business licenses have doubled causing another 1 cent increase in tax liability per gallon.

I feel for the consumers. It is causing everything to go up.

Housing sales down. Home prices down. Fuel prices up. Where is inflation really at? Couple the cost of transport including delivery entities increasing fees and new/increased hidden taxes on fuel and we got problems ahead folks. big problems.


27 posted on 02/25/2008 3:48:44 PM PST by commonguymd (Now What. No real conservative in the race.)
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To: gathersnomoss
So, how do you propose we ship freight across the country? Please help me to understand.

As far as fuel goes, a train can haul a ton of freight 3 times farther per gallon than a truck can. That's is why the railroads are making a comeback.


28 posted on 02/25/2008 3:52:39 PM PST by bjs1779
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To: 1rudeboy

Ping

There are a whole bunch of decent trucks sitting on dealers/bank repo lots, realllly cheeeep. You game?


29 posted on 02/25/2008 4:07:22 PM PST by investigateworld ( Abortion stops a beating heart.)
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To: abigkahuna
That that breakfast burrito that last year was 5.50 a pop. THis week it was 7 bucks. Pop? THe large went from 3 buck to 3.75-4 bucks. We are talking movie theater prices here...

Food is going to a problem I think. And not just the price of it. We have record low stockpiles of grain since statistics have been kept. The American farmer is in no mood to limit exports in order that we do not go hungry. As you say, it could get ugly.

30 posted on 02/25/2008 4:09:16 PM PST by bjs1779
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To: bjs1779

You’re free to buy as much grain as you like and then you could sell it or give it to whom ever you wanted. Of course, you would lose you ass if you did it on a large scale, much like farmers who sell their crop for other than the best available price.


31 posted on 02/25/2008 4:14:35 PM PST by Mr. Lucky
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To: Mr. Lucky
You’re free to buy as much grain as you like and then you could sell it or give it to whom ever you wanted. Of course, you would lose you ass if you did it on a large scale, much like farmers who sell their crop for other than the best available price.

You sound like a person that would've never believed in 100 dollars for a barrel of oil either and the pain it causes.

http://www.freerepublic.com/focus/f-news/1975646/posts

32 posted on 02/25/2008 4:35:59 PM PST by bjs1779
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To: trane250
As an aside, our freight transportation system is almost 100% petroleum dependent. This is a recipe for disaster, but the congressional mealy mouths don’t seem to recognize the problem.

What are we going to do, bring back coal fired stern wheelers on the rivers and great lakes and coal fired locomotives on the rails? (I think the later would be kind of cool. Dirty, but cool. :) I'm old enough to remember the last of the heavy oil fired steam locomotives. Much more impressive than the diseil electrics of today. I lived about 1/4 block from the Burlington main line. Those old engines really made the house shake. Very comforting in it's own way. I miss 'em, but I also miss the trains in general. When we moved from that little house, we moved to one where the Rock Island main line was where other peoples' alleys were, but by them I think the steamers were gone. Now the Rock Island Line is gone too, and now it's route is a concrete biking and walking trail that runs behind my mother's house.

33 posted on 02/25/2008 4:41:18 PM PST by El Gato ("The Second Amendment is the RESET button of the United States Constitution." -- Doug McKay)
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To: yorkie
So why isn’t a gasoline tax cut in the works? Government is the real profiteer off the price of gas/oil. Maybe government wants big trucking like they wanted big agriculture. One would think that a conservative candidate who still sits in the Senate would see a gas tax cut as something people would VOTE for him.
34 posted on 02/25/2008 4:46:02 PM PST by Just mythoughts (Isa.3:4 And I will give children to be their princes, and babes shall rule over them.)
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To: Just mythoughts
So why isn’t a gasoline tax cut in the works? Government is the real profiteer off the price of gas/oil. Maybe government wants big trucking like they wanted big agriculture. One would think that a conservative candidate who still sits in the Senate would see a gas tax cut as something people would VOTE for him.

The government is really no different from the mafia. Well, they are in one way I guess.... They can't be indicted for racketeering.

35 posted on 02/25/2008 5:01:56 PM PST by bjs1779
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To: El Gato

Rock Island Line - are you talking trains?

I’ll bet it’s the one that ran behind my grandparents house in Iowa.


36 posted on 02/25/2008 5:05:18 PM PST by yorkie
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To: only1percent
Analysis of rail freight shows two strong hands equal higher rates. I’ve been buying freight in railcars since ‘81 and can tell you that base rates are being jacked out of sight and no negotiation is possible; its pure take it or leave it.
37 posted on 02/25/2008 5:32:38 PM PST by Eric in the Ozarks (ENERGY CRISIS made in Washington D. C.)
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To: bjs1779

Well, you’re also free to buy as much $100 oil as you want and distribute however you please. The trouble with re-distributionists is that they’re always willing to re-distribute someone else’s money.


38 posted on 02/25/2008 6:49:06 PM PST by Mr. Lucky
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To: yorkie; gathersnomoss; bjs1779; El Gato
Bring back the GG1's!
39 posted on 02/26/2008 11:46:26 AM PST by trane250
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