I am fortunate enough to have friends with a wide variety of jobs. One of them drives trucks for a living- doing long distance OTR driving for a major shipper. I asked her about how she was doing. She filled my ear with all sorts of interesting- and chilling- facts.
My friend Moira gave me permission to quote from her blog. So, here is what she has to say about the (Inter)State of the Union:
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As a leading economic indicator, Housing is what all the economists look at. Is the housing market up? Is it down? How are new home sales doing? I recall hearing on NPR the other day, that when the numbers came out, the economy seemed to be doing much better than was expected... based on the fact that new home sales are down. Why? The news anchor said that the speculation was that it might be those home equity loans putting more spendable income into the market.
But I have a different indicator of how the economy is really doing. Transportation. Specifically, Trucking.
I am a truck driver. My husband and I drive team for the trucking firm US Xpress.
No matter what a consumer buys... whether it's your car, your gas, your groceries, your furniture... or the lumber that went into building your home... 98% of everything sold in the United States spends some part of it's life (whether as a finished product or as raw materials) on a truck.
So, wouldn't you think that how the trucking industry is doing, how much is being shipped, how many miles are being logged, would be a truer economic indicator than house sales? People can stay in an older home, they can continue to rent rather than sinking money into a new home... but you still have to eat, still have to have gas to buy from the corner station to fuel your car, etc.
So, how is the trucking industry doing? How many miles are being logged by drivers, the ones who deliver all that freight?
I decided to look up some numbers online. Our company, US Xpress, stated that their earnings for the Second Quarter of this year, were up by 39.2%. Creating revenues of $389.5 million, compared to just $279.9 million for the first quarter of this year. JB Hunt and Swift Transportation, all industry leaders (Swift being the largest truckload carrier in the United States) said similar. Wow, that sounds really good doesn't it?
I'm not sure what that online "Investor's Report" is going to show for the Third Quarter of 2006. But I do know this... The miles aren't there.
We drivers at US Xpress have something called a "Driver's Info Line." This automated message is periodically updated with all kinds of news from the company that they want us drivers to know. The newest information states (and I am transcribing part of the message this week):
(Interviewer) Welcome back to the US Xpress Driver's Info Line News Update. Hi, I'm Greg Thompson, thanks for joining us again. Today we're going to talk to Jeff Warterberg, our Chief Operating Officer here at US Xpress and what we want to talk to Jeff about is the end of the 3rd quarter and going into the 4th quarter. And Jeff, what can you tell us about how the 3rd quarter is ending and talk to us a little bit about what our drivers have done.
(Jeff) Well, we're finally starting to see the freight that we anticipated perhaps earlier in the quarter starting to come to fruition now. Here we are in late September, most of our market are in pretty good shape. We're experiencing a little bit of a slow-down in the Texas market. That is not unique to US Xpress or any other trucking company for that matter right now, because, near as we can tell, everyone is a little bit soft in Texas. But the west coast is coming back nice and strong, as it usually does this time of the year and we're doing quite well in the eastern half of the country. So, we're hopeful that peak will be something that lasts from now until mid-December and our drivers and contractors are going to be in good position if they make themselves available to haul a lot of freight between now and that mid-December time frame. And that's really, you-know, first and foremost in our minds right now. (My comment: west coast shipping increases this time of year is primarily due to imports coming into the ports for the Christmas retail season. Not all of it, but a significant portion of it.)
(Interviewer) Well, let's talk a little bit about that. You talked about putting yourself in the best position to succeed and if you are a driver, this has got to be the best time of year because the opportunities are there. Can you talk about that a little bit?
(Jeff) Yeah, they pretty much are there right now. And, in fact, as the peak retail season gets underway, in several markets around the country, we're gonna need the help of our drivers and contractors because there's gonna be a plethora of freight that we're gonna need their help to pick up... So, just so everyone's aware, we're gonna be asking folks to pick up maybe one or two extra loads and drag'em back to terminals or drop yard facilities before they get dispatched on their regular runs, in order to get more freight into our system. With that more freight in our system, of course, that means more potential miles for our drivers and our contractors throughout the 4th quarter of 2006.
(Interviewer) Well, you've talked before in previous info-lines the focus of everyone here in Chattanooga and all our other facilities about making sure that our fleets are moving, that the wheels on the trucks are going. Can you talk about that a little bit?
(Jeff) You know, we started breaking down our company several years ago, Greg, and we've split the company into divisions and then from those divisions we split them into fleets. All of that stuff was designed get down to the individual truck level. So that we could pay attention to each truck and each driver in our fleet and make sure that they're getting the appropriate amount of miles to satisfy not only the driver's income needs but also the company's. So, in so doing, we've really stressed that accountability down to the driver and the fleet manager level to make sure that those trucks are getting utilitized the way they need to be utilized. Obviously, they're not inexpensive items, and they're assests on our books, and we demand a return on assests. And if we've got trucks that aren't moving in the appropriate fashion, we've got to do something about it. By breaking the company down into smaller pieces, we've been able to force that accountability down and I can sit in my office today and pull up any fleet and any truck in any fleet and ask questions about why it's not getting the appropriate amount of miles and that's how you make improvements and that's how you get the company to perform at a higher level, and that's what we're doing.
The interview goes on to talk about how great drivers thought the company was during the annual "Driver Appreciation Week" with activities at various terminal locations across the United States, and how he, as an administrator, can call up information on any truck and ask questions about why the truck isn't getting the miles it should, along with how drivers can use one of the preset macros on our SatComm (satellite linked communication keyboard) to send a message straight to the admin, and bypass our fleet manager (dispatcher).
I find it interesting.... they gloss over, and only briefly touch on lack of miles. "Well, we're finally starting to see the freight that we anticipated perhaps earlier in the quarter starting to come to fruition now. Here we are in late September, most of our market are in pretty good shape."
I speak as a driver... miles in the last three months have just not been there. Let me give you two examples, both involving weekends, and both involving the Medway OH terminal.
Two months ago, my husband and I picked up a load of freight on Friday in Alabama. It didn't deliver until Monday morning just outside of Detroit. Now, as team drivers, we are expected to average about 800 miles a day. An easy day is 500 miles, a hard day is over 1000 miles. (If we are really pressed, we can and have, driven 1300 miles in 23 hours in a truck that is goverened and cannot do above 65mph unless it's on a downhill slope.) This load was about 700 miles for the entire run. We stated to our Fleet Manager that we didn't want to sit on the load all weekend, making only 700 miles for Friday, Saturday, and Sunday (the delivery was early enough Monday morning we could make more miles Monday after delivery & another load pick up). We were told take the load to Medway OH, which is right outside of Dayton, drop it, and get another load and keep moving. There was plenty of team freight at Medway. However, to be able to drop a load, we must have a drop authorization number, or the terminal will not accept the drop, and we're stuck with it. We were told we'd get the number when we got to Medway.
Well, we got to Medway, and were refused a drop number. Why? No freight. Of course, we are now dealing with the weekend people... not our regular FM. So, we sat all weekend, for no miles (and we aren't paid for sitting, only for miles we drive) and delivered Monday. I asked our regular dispatcher on Monday, what was the matter, why did we have to sit when he'd said there was plenty of freight? (The reason we were given to have to sit by the weekend dispatcher was there wasn't any loads to give us.) He responded that 14 loads had been cancelled on Friday, and there hadn't been any loads to give us to keep us rolling. We spoke to a lot of other drivers sitting around the terminal that weekend... there were several other teams just sitting around (and teams are always loaded first, they can take the freight that a solo driver, because of hours-of-service limitations just can't pull). One husband and wife team had already quit, gone home, gotten a call begging them to come back, came back, and were still sitting around... They were about to quit again because they weren't getting enough miles to pay their bills. I spoke with probably 20 different solo drivers. Some had been sitting there for 4 days or more because of no loads.
Two weeks ago, we were dispatched on Friday to pick up a load in Madison WI. Again, it was going to just south of Dayton and again we were told to take it to Medway and drop it. Again, we got there and were told we had to sit on it, because they wouldn't give us a drop number, because there were no loads. When we got empty Monday morning, we had to wait several hours and the first new load they tried to give us was just over 600 miles and had two days to delivery. Remember, a team is expected to average 800 miles a day. We, of course, threw a fit... this load would have resulted in us making 1100 miles in six days.
Finally, after waiting for over 8 hours for a new load dispatch, we were sent 272 miles to relay a load from a solo driver who was out of legal driving hours and would not be able to deliver his load ontime.
We are being sent more and more 200 or more miles to pick up loads. We are having to deliver at 8am one morning and then pick up at 4am the next morning. Loosing us a whole day driving.
We are expected to average 5000 or more miles a week. A good week for a team is 6000 miles. A very busy week for a team is close to 7000 miles. We have not broken the 4000 mile week in over three months. We have had weeks that we didn't break 3000 miles only doing 2800 (solo drivers can easily do 2500 and a good week is considered around the 3000 mile mark for a solo).
Every driver for US Xpress, team or solo, that I have talked to in the last two months, has said the same thing. The only drivers who are busy are local drivers (making pick up and deliveries in the major metropolitan areas) or dedicated drivers (those who make pick up and deliveries at the same locations each week). I have talked to drivers in truck stops who say the same thing. Drivers for other companies. Independants. All say miles are down. Loads are being cancelled. I spoke to one independant out in Utah, who said that he took a load out there, and couldn't find one back that was paying enough for him to be able to afford the fuel costs. He said if his broker didn't come up with something that day (he'd been sitting at that truck stop for three days) that he was heading home to Texas... fuel his truck on his own dime and go home and sit.
There is a huge turnover in drivers right now (not that there isn't usually in this industry but this is more-so than usual) because the companies are promising more than they can deliver. Pay is good.... but getting a pay raise per mile at another company isn't going to cut it if they don't have the miles for you to drive.
Our income has dropped. Many owner operators that I've talked to think it's the rise in fuel prices. Companies are either not shipping as far (finding closer alternatives) or are combining loads to keep shipping costs down. I think that the trucking companies hope that the very recent drop in fuel prices, and the peak retail season (Christmas shipping) will lead to an increase in shipping and drop in shipping rates in the 4th quarter, which will maybe prompt those companies who didn't ship last quarter to go ahead and release the freight.
I say the economy isn't doing as well as the economists try to lead us to believe. I speak as a truck driver. And while some areas of the trucking industry haven't been affected... the majority has been. No one's laying off drivers... but they don't have to. The drivers are quitting in disgust, applying at other companies in the hopes of finding one that will pay better and have better miles. If the company pays better, you can afford to run fewer miles and still take home the same paycheck. But since when does anyone want to take home less money? Or even the same? Everyone wants to make more... Or get better benefits (especially with the Christmas season coming). The companies out there are promising the moon, drivers fall for it, quit where they are, start over at a new truck line... and find out too late that the actuality doesn't hold up to the promise. (Why are recruiters the same no matter where you go?)
Our income is down. And we NEVER turn down a load. We may gripe because of lack of miles, or too long a delivery window meaning we're going to be sitting around... but we never turn down a load that will keep us rolling. Keep us earning. And our income is down about 20%. And every driver I talk to says the same thing.
So what's really going on with the economy? In the last quarter, shipping, both raw materials, and finished goods, were down. Will the 4th quarter turn that around? Will the hoped for rise in spending for the Christmas retail season turn around the slump? Will the drop in fuel costs help? My prediction... some, but not enough.
I'll keep you updated how freight goes....
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My sister, who owns a small meat market, also reports a major slump in sales. And my own meter, the jammed parking lot, is a very telling indicator of how things are really going. The Mexican restaurant next to my sister's store is usually jam-packed, with overflow going into the Harvest Foods parking lot next door. The Japanese restaurant anchoring the other end of the strip mall is also jammed, with their overflow going into the bank's parking lot.
Not now. There were more spaces than cars in both lots, and the same was true in other normally jam-packed venues like Outback and Carrino's. I called the Red Lobster to find out how long the wait was. It was the "Dead" Lobster. "Oh, please come in- there's no wait at all- and bring your friends!" the person on the other end of the phone told me.
That is scary. Disposable income is drying up. People aren't Buying Stuff, and Buying Stuff is what keeps this economy afloat.
My friend Mo is idling in a freight yard somewhere in Oklahoma, waiting for a pickup of something... anything. So are many of her colleagues. The State of the Nation is critical.