Skip to comments.Rising fuel costs could push some truckload carriers into bankruptcy: analyst
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 ...
So the Dems new taxes on fuel should really get these guys’ attention.
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.
That’s OK, it’s a good thing all the Mexican trucking companies will do it for less...
What is “factoring” in this context?
3.55 / gal National average as of today per DOE
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.
You send them your pending receivables they send you cash minus a percentage (2-10 %).
Factoring means that the trucking companies are selling their accounts receivables at a discount to factoring companies for immediate cash.
Oh my, trucking companies are taking out payday loans?
That is not a good thing.
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.
Tell me about it.
I am a freight broker and it (freight) is damn near at a stand still.
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.
Selling their receivables. If desperate, some will upon e-call sell immediately to get desperately needed revenue now to pay the bills.
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?
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.
30 percent surcharge. Get used to it.
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.
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.
Thats OK, its a good thing all the Mexican trucking companies will do it for less...
So true! Wonder who’s next?
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.
So, how do you propose we ship freight across the country? Please help me to understand.
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.
I hate the Arabs.
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.
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.
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.
There are a whole bunch of decent trucks sitting on dealers/bank repo lots, realllly cheeeep. You game?
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.
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.
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.
The government is really no different from the mafia. Well, they are in one way I guess.... They can't be indicted for racketeering.
Rock Island Line - are you talking trains?
I’ll bet it’s the one that ran behind my grandparents house in Iowa.
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.