Overdrive Extra

Max Heine

Prices: Down for truckload, up for diesel

| June 09, 2009

If you’re thinking of getting your own authority for truckload hauling, think again. Or have some excellent contracts locked up before you jump.

A June 8 conference call, hosted by Dahlman Rose & Co. with executives from five carriers (Cowan Systems, Fenway Partners, First Express and Roehl Transport), had little good news.

“There was universal agreement that we are experiencing one of the worst pricing marketing in truckload history,” says Dahlman’s summary of the conference. The pressure is expected to stay indefinitely. Shippers are pressing for “more favorable fuel surcharge applications, lower assessorial charges, and more favorable payment terms.” One large shipper tried to get Roehl to accept payment terms of 120 days instead of 30 days, said Roehl’s Andy Vanzant.

He also estimated 10,000 to 20,000 carriers on the verge of bankruptcy, and that $3 diesel could seal their fate.

There were reports of carriers moving their trade cycles from 36 months to 42 or 48 months. Also, shippers are increasingly using third-party brokers or carriers for their cheap capacity, according to the summary

DIESEL PRICES have been rising like the afternoon high temps here in the Heart of Dixie, where I’m based, and so are the diesel price forecasts from the U.S. Energy Information Administration’s monthly Outlook.

From today’s EIA report:Diesel fuel retail prices, which averaged $3.80 per gallon in 2008, are projected to average $2.40 per gallon in 2009, up 14 cents from the previous Outlook.  Diesel fuel retail prices are projected to average $2.67 per gallon in 2010, up 19 cents per gallon from the previous Outlook.”

Most recently, average prices jumped almost 15 cents, to $2.50. The past four weeks logged an advanced of 23.5 cents.

— Max Heine

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