Past President - Transportation Club of St. Louis
Transportation Club of St. Louis
Transportation Rates are a Journey of Trends
It is November 2018 and another “Al’s Corner” note begins right now! As time and life seems to be speeding along my monthly letter trudges on like the slow, swelling Mississippi River. With that in mind put your swimming suits on for the last time (mine is a lime green speedo, yuck you say) with me and enjoy the current.
Fall Golf Outing---On October 5th around 80 players and volunteers journeyed back to Quail Creek Golf Course south of St. Louis. The course was in good shape and as usual Kevin from Quail and his staff did their normal great job. Brad Reinhardt and his merry band of volunteers covered the course and provided some entertaining moments coupled with tasty beverages and such. As always, this event had some crazy moments that only happen there. I will leave it at that. I do wish my long-lost friend Michelle Thomas would play in it again, she was anyways great to hang around with (my shout out to the past!). This year we had a golf ball canon that would hurl the ball 300 yards. The winning scores were impressive too. Thanks again everyone for your support, see you in the Spring
This month’s topic is about Transportation Freight rates---Our fabulous Webmaster James Labit is always suggesting that I write about Transportation related topics (not sure if anyone else wants me to do it) so like the song by White Snake –HERE I GO AGAIN.
Since I have been in this business for 25 years I have seen many ups and downs. Some have been epic and caused both shippers and the trucking and transportation sides big time issues. Quick example--around 10 years ago the market rates being paid to truckers suddenly went up somewhere around 10%-20%. Thus, I was in trouble with the lanes I had quoted on in January and were now not working in the middle of March. Trends can change that quickly. Now the history, as I have experienced it, is that most of the time the trends have been in the shipper’s favor, or commonly called a “Shippers Market.” It should be that way too most of the time because it is their freight everyone is moving. A Shippers Market meant the shippers could dictate the rates based on the favorable market conditions, and just jump to the cheapest carriers at will.
Lots of factors would cause this to be this way. Mostly when freight rates were high carriers would add more trucks and drivers trying to make more money, thus, in the end, causing the rates to fall. Truckers were their own worst enemy. The reason I say this is/was an over-supply of trucks meant lower shipping cost and trucking rates. So, in many ways this cycle would go that way, rates go up drivers and equipment would flood the market, then as the rates dropped slowly the carriers would reduce their amount of available equipment. The flip side was rates would go up when available equipment would tighten it (more loads than available trucks). This was called a “Carriers Market.” This affected to varies degrees Rail Shipping, Ocean, and LTL. Example: if over-the-road trucking was expensive then shippers would try to use rail more. I think in the future I will write about the history of LTL and Rail shipping that hopefully will not be another snooze fest for my few readers!!!!
So, starting in September 0f 2017 shipping rates being paid to the carriers went up dramatically. The main reasons this time was because a Government Trucking Regulation went into effect. The government was now enforcing e-log or driver usage, and activity tracking devices in the trucks. Before truckers used hand written logs that did not track closely how long a driver was working, only driving. This really shrunk capacity by reducing how much a driver could drive and even more importantly, how much money a drive was making now since that he was, or she was driving less. Plus, the economy took a nice jump, low driver pay, and we had hurricane issues in Houston.
All the above, plus older drivers retiring and not being replaced by younger people, reduced capacity or available trucks thus driving the rates up big time. A year-long cycle of increased trucking rates being paid began being somewhere between 20-30% more. During this time shippers, particularly ones that never worried much about driver waiting time of inconvenience, were having the most trouble getting loads moved. The drivers were now on the clock even when they were sitting and not driving. Driver waiting time really needs to improve. Overall driver pays became more of driver usage, than rate per mile.
This past month rates have dropped slightly but I am not sure if the lower prices are here to stay. The only things that have changed this year very much is the economy seems to have slowed some and the hurricanes, in Florida and the Carolina’s were not a big as the Houston one was. The hurricanes were smaller only in how many people were in its path. The Florida hurricane was the fiercest ever to hit with 150 MPH wind gusts.
Driver pay is up slightly too.
Perhaps the upcoming mean-spirited elections have slowed the economy down a bit, but we will see.
I will keep you posted on rates with little updates over the next few months. Have a great one,
AL Hursey, Giltner St. Louis