Wednesday, January 9, 2008

2008 Trucking Expectations

How are you going to adjust for the market economy? Here are excerpts from an article in Traffic World reviewing the past year and making predictions for 2008:

Trucking's Groundhog Year

At the beginning of 2007, with six months of downward spiraling freight demand already under their belts, trucking industry executives were confident tighter capacity and rate stability would be waiting at mid-year.

Now, shippers are girding for new rounds of strong contract negotiations with the weight of market power seemingly firmly on their side while carriers hope they've cut back operations well enough in some areas while remaining strong enough in others to take advantage of a recovery both in demand and in pricing power.

After getting burned on their expectations for 2007, many involved in trucking freight are decidedly conservative in their predictions for the coming year.

"The economic conditions look questionable for 2008," said Robert Russo, president of Port Jersey Logistics, a Central New Jersey-based 3PL. "We're planning for no growth. We'll attack the market as aggressively as we can."

That sentiment resonates at large and small trucking companies based on downward trends in the credit markets, housing, the automobile industry and too many empty trailers at the freight yards.

The outlook is just as bleak from the companies that provide the freight. A November survey by Bank of America Securities showed 58 percent of shippers believe the economy will continue to get weaker. "That's double the percentage of respondents who shared this view just three months ago," according to the survey.

Only 33 percent of shippers consider the economy stable, with 9 percent seeing any kind of strengthening.

One of the biggest dampers to economic expansion in 2007 was the late-season surge in diesel fuel prices, which sparked new worries about inflation in the general economy and had some shippers looking more closely at trading down in modes to cut the impact of transportation costs.

The drive in oil prices to nearly $100 a barrel pushed diesel fuel to a record $3.44 a gallon the week of Nov. 28. For truckers, that sparked higher concern operating costs would continue to weigh on profits well into the new year after 2007's particularly dismal third quarter.

"We think fuel will go to $150 a barrel," said Robert Walters, president of Anaheim, Calif.-based Freight Management. His company manages the transportation departments for large shippers…

I’ll site more of this article later. It looks like 2008 will be a status quo year. Carriers most likely will not get any significant rate increases.

For Freight Brokers that means we have to really be on top of our game with tighter margins while making sure the shipments we are given arrive on time.

Moving forward,

Jeff Roach

No comments: