| In order to answer this question we must first look | | | | It is the simple law of supply and demand. If capacity |
| at the reasons for our current situation in the | | | | is taken out of the marketplace faster than demand |
| marketplace. It is estimated that the current capacity | | | | falls then the pricing and financial stability would begin |
| issues(less freight with more equipment) started | | | | to come back. But for now demand is still less than |
| sometime around the middle of 2006. No one was | | | | the capacity in the marketplace. Many trucking |
| too concerned at this at the time as there have | | | | professionals believe that when the economy does |
| been steady fluctuations felt throughout the year | | | | begin to recover that the capacity that has been |
| and traditionally things seemed to almost come in | | | | forced out of the marketplace will lead to increased |
| somewhat predictable cycles. Some assumed that | | | | demand by the shippers thus allowing carriers to |
| the market place was just simply correcting itself | | | | capitalize. One common thing you hear from |
| after 4 years of higher rates and pricing from the | | | | professionals in the trucking industry is that those |
| carriers. However, the slump continued to worsen | | | | who survive will be in a better position than ever |
| and by the 3rd quarter of 2008 freight demand | | | | before. |
| seemed to begin to dissipate at an even higher rate | | | | No one can say with any real certainty when the |
| and some of the largest trucking companies began to | | | | economy will rebound, whether it is in late 2009 or |
| struggle financially. Many professionals that had been | | | | deep into 2010 is anyone's guess at this point. Most |
| in the industry for a large part of their lifetime said | | | | indicators point to a recovery over the next year. |
| what they were witnessing was the worst freight | | | | With that said, shippers should be looking now at |
| downturn that they had ever seen. | | | | their carrier portfolios and make sure it consists of |
| It is clear now that what has led to these issues | | | | solid financially strong carriers (small or large fleets) |
| both on the manufacturing side and trucking side is | | | | who are not simply going to leave them in search of |
| the current U.S. economic crisis. The worst industries | | | | greener pastures when the conditions change. |
| hit have been the housing and the automobile | | | | Shippers should start to consider locking in pricing for |
| industry. Their inventory levels have remained high | | | | the next year and beyond if possible. Most |
| and shippers and manufacturers are simply not seeing | | | | importantly building relevant relationships and having |
| these levels shrink at the volumes they were | | | | an open dialogue about the current and upcoming |
| accustomed to. Freight carriers have seen the | | | | market conditions will carry the most weight. There |
| volume of freight drop significantly due to this weak | | | | can really be no such thing as a "partnership" because |
| economy and the lack of building and manufacturing. | | | | when it comes down to it you are still the customer |
| As we begin the 3rd quarter of 2009 it is looking less | | | | and the carrier is still the vendor invoicing you. |
| likely like this trend will suddenly correct itself and | | | | However a relevant relationship that is truly |
| some are now saying we will most likely see a more | | | | consultative and beneficial to both parties will |
| noticeable upward trend in 2010. | | | | ultimately win out. |