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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
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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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