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M DRIVE 12 • OCTOBER 2022 PERSPECTIVE THETRUCKER.COM DRIVE October brings fall celebrations, reminders to let God’s light shine be here to celebrate occasions like these? Life is very fragile, and we need to understand that what we do here on earth in our lifetime is how we’re going to spend eternity. Our tombstone will give the dates of our birth and death — but will show nothing about how THE DIFFERENCE we lived our lives or how we treated people. THE DIFFERENCE If we want the “treat” of a heavenly reward, then we need to treat others as we want to d of are e in JOIN OUR DRIVING TEAM JOIN OUR DRIVING TEAM At Penske, success behind the wheel is kind of in our DNA. Our professional truck drivers are the best in the business. be treated. Let God’s glow reflect in our lives — just like that candle does in the jack-o’- lanterns we carve for decorations. God took all the yucky stuff out of us and replaced it with that special glow, so we shine with his glory. Let’s not put that candle. Instead, keep it burning so it touches everyone we meet. If your candle dims, then Satan has pulled a “trick” on you, extinguishing your light. If Satan takes hold of you, you need to put him out of your life — and live so as to reflect the glory of God. Living a life filled with the glow of God is the most important thing you can do on this earth. You are the only one who can determine which way you are heading for in the afterlife. That tombstone only gives dates — but you give the rest of the world the information about what you did from birth to death. Halloween is just a holiday — one of many — but it’s also a reminder that life has a beginning and an end. Only you can fill in the space between your birth and death dates. Let’s all try to show the glory of God and let our candle glow through for all to see. Yes, sometimes it’s hard, but the more we try the better we’ll get at doing it. My wish is for all of you to have a great time this month — and enjoy the aroma of pump- DRIVE THE DIFFERENCE CHAPLAIN’S CORNER REV. MARILOU COINS THE DIFFERENCE The seasons are coming around faster now. We have entered fall, and soon winter will be upon us. October is the month for going to the pumpkin patch for school kids, and for folks to make those awesome pumpkin pies. As a kid, I always wanted to watch my grandma as she cooked the pumpkin, added those special spices and rolled out the dough for those pies. It was a special time of year for me growing up. I’m sure many of you have some of the same fond memories of childhood during the month of October. Of course, we all look forward to Halloween and its festivities. As a trucker I often would enjoy going to different areas of the country just to see what each area is like and how they prepared for fall events. Country folks put out bales of hay, topped off with all sorts of decorations. Of course, they always have a jack-o’-lantern as part of the decorations. City folks put up Halloween lights and orange and black streamers with scarecrows Call now: 855-CDL-PENSKE and skeletons. Witches and goblins are always Apply online at driver.penske.jobs popular for porch decorations. And, of course, Penske is an Equal Opportunity Employer. candy is always a special treat for the youngsters that come to your door. “Trick or treat!” can be heard as giggling children approach Call your door now: to ask for 855-CDL-PENSKE their treats. MORE THAN YOU REALIZE ® But did you ever think, that along with kin pies and Halloween. Apply all these wonderful online things, at there driver.penske.jobs is also the fact that at some point in time we will not Jesus. 8 At Penske, success behind the wheel is kind of in our DNA. Our professional truck drivers are the best in the business. If you want to work at an industry-leading company and move freight for some of the world’s biggest brands, we want you to join our team of safe, professional drivers. If you want to work at an industry-leading company and move freight for some of the world’s biggest brands, we want you to join our team of safe, professional drivers. JOIN OUR DRIVING TEAM At Call Penske, now: success 855-CDL-PENSKE behind the wheel is kind of in our DNA. Our professional truck drivers are Apply online at driver.penske.jobs the best in the business. Penske is an Equal Opportunity Employer. If you want to work at an industry-leading company and move freight for some of the world’s biggest brands, we want you to join our team of safe, professional drivers. MORE THAN YOU REALIZE ® Penske is an Equal Opportunity Employer. RHYTHM cont. from Page 9 pace behind the lyrics. On occasion, however, Nicholls strayed from the ways of American country music and inserted a brass section into Best of the roads and all gears forward in to have a mild Mediterranean climate). He begs his tunes. The brass, out of MORE place to American THAN YOU his “mates” REALIZE to “truck ® me dead to Townsville,” listeners, helped set a tone for some of Nicholls’ where the climate is warmer and more suited songs, particularly those with upbeat and positive lyrics. To an American listener, it’s hard to conceive to Harry’s tastes. Geography has always played an important of the north being cooler than the south, but role in country music, and it’s evident in truck- that’s the way it is in the southern hemisphere. Call now: 855-CDL-PENSKE ing songs. After all, Hank Snow set the stage After the long discography of trucking songs with “I’ve Been Everywhere,” and most American trucking songs online also have at a sense driver.penske.jobs of place to of the remainder of his career performing on a Nicholls turned out in the 1970s, he spent most Apply enhance the story behind the lyrics. roadshow heard on 90 radio stations throughout Australia. In the late ’90s, Massive Records Penske Nicholls is an recognized Equal Opportunity the importance Employer. of geography, and his lyrics include many references to re-released many of Nicholls’ trucking songs the highways, cities and landmarks of Australia. on albums such as “Aussie Truckin’” and “Interstate Truckin’.” Those releases brought renewed Whether it’s Western Australia, the Northern Territories or the informal “Outback,” Nicholls attention to Nicholls’ body of work. sang of drivers covering terrain across most of In 2002, he retired from the music business the Australian continent. To an American listener, however, Nicholls’ geographic references Music Broadcaster’s Hall of Fame. He died and was inducted into the Australian Country in can be confusing. In his 1975 hit single “Truck Me Dead,” Nicholls sings of the last moments of Harry, a truck driver from Townsville, an oceanside city in Australia’s “Sunshine State” of Queensland. Unfortunately for Harry, the character was on his deathbed in southern Australia, and he knew he’d never find his way northward before he died. He laments being laid to rest in what he considers to be the “cold” area of the continent (even though southern Australia is considered MORE THAN YOU 2012 at REALIZE the age of 93. ® Until next time, when those old trucking songs get stale, spread your wings and see what performers in other countries have to offer. You’ll find a lot you’re already familiar with, but there’s plenty that will be new to the ear. 8
THETRUCKER.COM BUSINESS OCTOBER 2022 • 13 Predicting the future SUCCESS FOR THE REST OF 2022 MAY DEPEND ON SPOT VS. CONTRACT RATES CLIFF ABBO<strong>TT</strong> | SPECIAL CORRESPONDENT Carriers that depend on spot freight rates for their business are in for a rough go in the coming months. On the other hand, carriers that depend on contract rates for their business are likely to earn near-record revenues for 2022 and will have an easier time riding out the coming recession. Those two statements seem to be the consensus among the firms that track and analyze the data from various resources. It’s a reasonable prediction, because spot rates are more volatile than contract rates. Spot rates can change overnight, while contract rates depend on — well, as the name suggests, negotiating a new contract. In summary, whatever spot rates do, contract rates will most likely follow, but months later. At the time of this writing, we’re at a point in the trucking cycle where spot rates have been falling steadily for months. According to DAT Freight and Analytics, dry van spot rates on their board fell 4.2% in August from July levels, while flatbed rates fell 7.4% and refrigerated rates fell 3.3%. Perhaps a more telling statistic is the “load-to-truck” ratios reported by DAT. When truckers have more loads to choose from, rates tend to rise as competition for trucks intensifies. The opposite is occurring now. Load-totruck ratio for dry van fell 7.9% in August, the refrigerated ratio fell 2.2% and the flatbed load-to-truck ratio fell 35.2%. With less competition to find trucks to move product, spot rates continued to fall. Things were a little rosier on the contract side. Freight volumes grew by 6.6% in August, according to data released by Cass Information Systems. Compared with August 2021, freight volumes grew by 3.6%. The Cass data includes information from different modes of transportation, including rail, ship, barge, air, pipeline, trucking and others. While freight volumes grew by 3.6% compared with August 2021, the amount of money spent on shipping grew by 20.4% as rates climbed faster. At ACT Research’s Seminar 67, held Aug. 23-25 in Columbus, Indiana, ACT Vice President and Senior Analyst Tim Denoyer spoke about the trucking industry outlook. “We’re coming into a rough patch, but we’re coming from the best ever, and 2022 will end up as probably the third or fourth best year for carrier profits,” Denoyer said in a presentation. He cautioned that the data was taken from quarterly reports of publicly held trucking companies and may not represent trucking companies as a whole. In a September 12 press release, ACT President and Senior Analyst Kenny Vieth iStock Photo Load-to-truck ratio for dry van fell 7.9% in August, the refrigerated ratio fell 2.2% and the flatbed load-to-truck ratio fell 35.2%. With less competition to find trucks to move product, spot rates continued to fall. echoed the news for large carriers. “Carrier profits and profitability were at record levels in 2021, and contract freight rates are still expected to rise by high single digits this year,” Vieth explained. That’s all part of the trucking industry cycle. In late 2020 and into 2021, spot rates were rapidly rising, prompting many owneroperators to purchase trucks and apply for their own authority to take advantage of the boom. Now the cycle has turned downward, and some of those drivers are surrendering their authority and leasing on — or hiring on — to carriers that have freight at contract rates. Like all cycles, the cycle of rising contract rates must end, and that day is coming. The coming year 2023 may prove to be difficult, with a recession predicted for the first half of the year. Denoyer predicts the recession will be a mild one for trucking and that the economy will recover in 2024 and 2025. In his Seminar 67 presentation, Denoyer addressed some of the factors that are impacting freight supply. One, he explained, is that consumer spending is moving back towards services rather than purchase of goods. That makes sense, with inflation running at a 40-year high. After paying bills, buying groceries and filling up the gas tanks of their vehicles, there simply isn’t enough cash left over for a spending spree. Retailers need to maintain an inventory of products to keep shelves stocked, and here’s where the cycle repeats. When people stop buying due to inflation, retailers order fewer products to replace their inventories. At a manufacturing level, inventories of parts and of completed product are also higher. Fewer reorders means fewer shipments for trucking. Another factor involves overseas shipping. The long lines of ships waiting to get unloaded at West Coast ports have shortened considerably. Some ships diverted to East Coast ports, and there are some wait times there, but the worst is over. Trucking has benefited from the railroad industry’s inability to move those containers coming into the ports. The railroads needed more chassis to stack the containers on, and those weren’t being built fast enough to supply the demand. The biggest reason was record steel prices that held up production. Those days have passed. Steel is cheaper and chassis are being built again, meaning railroads can move more containers, leaving less for trucking. Interest rates play a part, too. To combat inflation, the Federal Reserve has already increased prime interest rates by 75 basis points, or 3/4 of a percent, twice this year. At a meeting scheduled for Sept. 21, the Fed is expected to enact another increase, possibly of a full percentage point. Those increased interest rates reverberate throughout financial markets. For consumers, it means interest on mortgages, car loans and credit cards will continue to rise, adding to the cost of purchases that are already increasing in price. When the prices go up, along with the cost of borrowing money to make purchases, trucking sees less freight. Perhaps the only good economic news is that fuel prices have come down — but they’re still much higher than they were a year ago. Many smaller carriers are feeling the pinch. There is still money to be made in trucking, but it’s becoming more difficult to maintain a level of profitability. It won’t be getting any easier in the coming months. 8
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