Slow start to 2015?

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loaders

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Feb 26, 2008
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I'm curious to find out from other members of this site, if they are finding business off to a slow start for this year? Not sure if there are still some "Holiday hangovers" around, but with our Canadian dollar bouncing around in the mid to high 80's, I thought the export traffic to the US might be starting to take off. Maybe I should check last years numbers for this time period to see if it was similar. Again, just curious to see what the others out there are experiencing.
 
It's normally very slow the 1st week of January. Actually, January is usually not a great month. The only reason why there was so many calls for service last January was because the weather was screwing everything up and nobody had capacity anywhere. That said, it seems we were struggling a little bit over the past couple of days to cover freight in certain areas but not others.

It's damn cold here in the GTA, but there isn't much on the ground at least. So other than envisioning some problems with fuel gel-up, things should be moving smoother.

Now if you're Alberta-centric, I'd probably start worrying. With the price of oil, there is going to be a lot of spending cut off, and a lot of layoffs especially in Fort Mac.

And even though the dollar is working in Canada's favor for exporters, one has to remember all of the factories that were shut down with production shifts to the US over the past few years, the fact that a lot of automotive shifted to Mexico (making the US-CAD exchange less important), and also the fact that a lot of the export we lost was in forestry, which other than on building products won't be coming back. So any 'ramp-up' in export freight will be gradual, because in so many cases the capacity isn't even there.
 
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Very true, theman. A check of last years numbers for the first few days of January 2014, showed a higher sales volume. That could very well have been the result of an increase in calls from customers looking for service from any truck that could start! I agree that we will see a decrease in any oil industry related freight bound for the West. $50.00/barrel crude doesn't make the tar sands oil extraction methods financially viable. Which brings me to my next question, with diesel fuel costs (in the US) down by approx. 24% over last year at this time, has anyone re-visited their fuel surcharges? If so, has it been a voluntary reduction on your part, or have you experienced any pressure from shippers? Obviously, for those who use a published surcharge schedule, the surcharge % has come down based on the price of fuel, but for others like myself who base their surcharges on what the transportation marketplace is offering, have you changed anything? Seems my curiosity increases on slow days!
 
From a 3PL perspective, there are pros and cons in the current market:
December business saw 31% increase vs. 2013, January first several shipping days shows a 136% increase vs. 2014. I'm not sure if I'm dreaming or losing it (feels like a little of both some days).
Con: FSC has declined so fast that long term agreements with some customers means that we are out a fair percentage on invoice, while on many lanes we are not seeing reductions in payables (yet). Of course anyone who knows anything about economics knows supply and demand are one of the largest factors that dictate price, FSC is a small part of the input.
Con: People will burn out, wasn't December - March always a little soft allowing people to breathe a little. Kinda getting tired of driving in when it's dark and driving home when it's dark!!

Happy Wednesday!
Mike
 
Regarding FSC, most of what I do is contracted and the customers have set fuel indexes, for the most part based on RPM adjustments that coincide with the cost of fuel. I only had one problem with FSC last year with one customer that was paying FSC on trans-border freight based on Canadian prices. We were taking such a beating versus what we quoted that we had to discontinue service with the customer. Funny thing is, I know they're struggling all the time.

I find in aggregate that what we pay out to the carriers has something to do with fuel prices. While we don't break out a fuel surcharge on brokerage payouts, the trend is there and effectively we are adjusting according to these.

I believe that with Alberta you'll find this won't affect just oil-related freight. If people aren't doing as well, they won't have the money to spend. There will be an effect on freight moving there as a whole.
 
Another factor why you probably don't see much of a reduction in rates to the carrier at least on US lanes is that if the rate is in Canadian funds, the majority of fuel cost is purchased in the US with US funds, and with the dollar, even with the fuel costing less at the pump per say, the cost for the US dollars is very high to buy that fuel. That and capacity is tight... looking at ourselves as a carrier we just cant fill trucks to meet demand, I can see things getting tighter and tighter this year still for availably capacity...maybe we will get rates up to profitable operating levels this year! :)
 
GSTRUCKS said:
Another factor why you probably don't see much of a reduction in rates to the carrier at least on US lanes is that if the rate is in Canadian funds, the majority of fuel cost is purchased in the US with US funds, and with the dollar, even with the fuel costing less at the pump per say, the cost for the US dollars is very high to buy that fuel. That and capacity is tight... looking at ourselves as a carrier we just cant fill trucks to meet demand, I can see things getting tighter and tighter this year still for availably capacity...maybe we will get rates up to profitable operating levels this year! :)
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I certainly hope that you are VERY profitable. Profit is why owners risk so much, it's about time everyone makes a fair profit, by fair I mean servicing customers together and everyone making their fair share along the way, working on issues together, not cutting invoices (brokers), demanding unreasonable accessorials (carriers) or penalising for 15 minutes late delivery on a 1 skid shipment (consignees). That reminds me, I need to find that thread on accessorials....

Keep well,
Mike
 
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MikeJr said:
I certainly hope that you are VERY profitable. Profit is why owners risk so much, it's about time everyone makes a fair profit, by fair I mean servicing customers together and everyone making their fair share along the way, working on issues together, not cutting invoices (brokers), demanding unreasonable accessorials (carriers) or penalising for 15 minutes late delivery on a 1 skid shipment (consignees). That reminds me, I need to find that thread on accessorials....

Keep well,
Mike
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Sure wish everyone thought like you Mike Jr. I'm getting tired of having to explain to customers that we cannot cut our rates because fuel prices are going down. First of all, alot of them seem to think that fuel has gone down at the same rate as gas... and then, like you mentioned, we are paying our expenses in U.S. dollars. Some brokers are being a little cheap also. One of them even suggested that we wouldn't last long if we didn't lower our rates... I asked why he thought that we should not be allowed to maybe make a little money for a change explaining that we had been doing the same load for years through different brokers and that we were getting less money now then 10 years ago... never got the load or an answer. Probably better that way ;)
 
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2015 seems to be off to a decent start, but we are also hearing the "rates need to go down" because of "fuel prices going down" and the "exchange rate is better".

Some customers are great and understand that those are not the only things that say what price we need to pay to get a truck for certain loads, especially when a specific area is flooded with freight but has few trucks to haul them all.

Just have to keep chasing new customers because you never know when a good relationship goes sour over $50-$100 on a couple of lanes.
 
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