Good day, everyone, and welcome to the May 2024 edition of Al’s Corner. Let’s start with the Spring Golf Tournament, this time held at The Links at Dardenne in O’Fallon, MO, on May 2nd. If you missed it, the turnout was one of our biggest ever. One hundred and twenty golfers played and had a very good time. As usual, Brad Reinhardt put together a large staff of merry volunteers and not only picked a very nice venue but put on a fantastic event, as he always does. It takes a ton of time and commitment from him and his loyal volunteers. Thanks, everyone! As for golf, some very low scores were turned in, and even a hole-in-one was made which beat my shot! Rumor has it the ball glanced off my closest-to marker and into the hole. So do I get partial credit for the Hole in One? I am sure this will not be the last time we go there. A long day, but fun times for sure.
International Business Night is a sell-out with 200 attendees. More next month on this May 9th event.
Transportation News—Another large Trucking and Transportation company has closed permanently. Ninety-two-year-old Arnold Transportation Services closed on May 1. They had 341 drivers and 402 power units when they closed. They mostly reported low rates being the root cause of the stoppage and had not made money for several years since the pandemic. My first remembrance of this company was when they were located out of Jacksonville, FL. I believe they started as Silver Eagle. They were a great company from what I remember, sad.
As shown above with Arnold, we are still in a “Shippers Market” that has lasted longer than the normal cycle. A Shipper Market is one that controls and dictates rates in the shipper’s favor, normally producing very low rates. A normal cycle is 2-3 years, then carriers and drivers leave the market to seek better compensation, which drives rates upward. There are also periods when it is a carrier market, but usually lasts 1-2 years. The carrier market is on the horizon, I believe.
More on the market trend—in the past, the threat of a carrier market used to worry shippers more than it does in this era. Like everything in life now, it seems, many people live for the day and do not plan. Some of the younger or newer transportation managers have never seen or experienced a market where they get said “no” to low rates. With many shippers, but not all, they are like “I will deal with the higher rates when it happens.” The truth is shippers and carriers need to work together. I also hear many carriers think big brokers are trying to destroy them by offering terrible rates. I agree with this somewhat. The truth is that shippers are continuously trying to push rates further down, and brokers are in between.
Here’s what bothers me—Several years ago, during a “carrier market,” transportation companies loaded up on overpriced tractors and trailers. Carriers were chasing big rates and profits and did not care how it was affecting the shippers. Shippers felt like they were getting screwed or now got screwed. Many new drivers also entered the market, again chasing huge paydays, not planning that a down market was coming. Then the economy slowed, free money handouts stopped, rates began to fall, and a bad era started for carriers. This now has caused many carriers’ big trouble. For the record, what I am hearing now is carriers need to get $2.40 per mile, all miles, to show a profit, perhaps even just to break even.
Looking at it in a more targeted way, say you have a full truckload that goes from St. Louis to NY around 1,000 miles it should work this way LOOKING AT IT BOTH WAYS. Something like: $3 per mile x 1,000 miles === $3,000 to NY $1.80 per mile x 1,000 miles = $1800 from NY to St. Louis. Total miles 2,000 x $2.40 == $4800. This, in my opinion, is not a wish list from carriers, I believe it is real due to the high costs of everything. Seasonal rates, storms, end of the month, or quarter downturns and spikes throughout the year. It does not also include that a carrier may be wanting to go home or something, which can reduce the rate. One big thing I left out is not all carriers are the same. Some provide way better service as their equipment is newer and such. You get what you pay for, that type of thing.
Lastly—prayers go out to my longtime friend, college roommate, and cousin Ken Opperman (Opp), who is in the battle of his life now. I love Ken, as many others do. Ken was big for many years in the Transportation Club of Memphis as past President and Treasurer, Golf Tournament Director, and Board Member of the LTNA National Club. A little-known fact was that Brad Reinhardt, the LTNA National President currently, was first introduced to the national club years ago by Ken. Brad became a VP with the club and then went on to run it. I believe I introduced Brad to the St. Louis club years ago too, so it runs in the family. Opp and I know greatness when we see it! I will keep you posted. If you do know Ken, please pray for him and call to cheer him up, he needs it.
I have several ideas that you will hear about soon that I hope will give him joy.
Have a great month,
AL Hursey