Govt. shutdown ripples out — though not toward military freight

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… And the government shutdown rolls on, now well into its, what, fourth week is it? There’s a reason so many in the press are emphatic on calling it what it is, though, a partial shutdown. Not to discount to reality of impacts, particularly on federal employees who are working (or not) without pay, it’s true politicians on either side of the aisle (not to mention truckers talking about shutdowns of a different sort; more on that later) want you and everyone else to hear shutdown as an alarm bell, full stop. Foregrounding the partial reality of it all is a way of at least attempting to make clear the middle-lane reality.

It all was made clear to me again early this week when I reached out to a couple contacts with touch points on military freight. The Department of Defense has remained funded through all of it, but in the past, more-brief shutdowns I did seem to remember having at least some effect on non-essential freight — postponement of military household moves or perhaps general freight, it may have been. I reached out to Landstar and a couple other companies known to have some military-freight business — we don’t comment on our government business — and Bennett Motor Express-leased owner-op Jerry Boyd, among others who’ve run military loads in the recent past.

Owner-operator Jerry BoydOwner-operator Jerry Boyd

Though he’d not carried a military load since early December, Boyd was still seeing them on Bennett’s board, he says, in the same frequency he’d seen before at this time of the year, generally slow for such freight in his experience with non-sensitive military freight. “This time of year, a lot of times the military isn’t doing a lot of training,” he says. “You start seeing it pick up in spring of the year when the guard units are going in for training and everything.”

Another pair of owner-ops who specialize in large part in expedited, sensitive arms, ammunition and explosives (AA&E) noted it’d been business as usual for them, too.

Fellow Overdrive Senior Editor James Jaillet, in the interest of confirming that, made contact with Public Affairs Officer Dave Dunn with media operations in USTRANSCOM, who noted, “Due to DOD being fully funded there has not been any impact to loads being hauled by truck.”

That’s the good news as the shutdown drags on — anybody feeling its effects at all when it comes to freight or other areas of the business? Hundreds of thousands of federal workers tightening belts while they work without pay will leave a definite dent in the consumer-driven economy we have at this point. Not sure it’s enough to affect the flow of truckloads, though. Thoughts?

Owner-operator Boyd delivered more of the bad news, of a fashion: “I was hoping the scales would start closing.” Fat chance of that happening.

He also said something that struck me as a little out of step from how 2018 ultimately ended for many of the independents I’ve heard from of late. While it was a pretty good year on average, considered historically, on the spot market the average-rate increases many owner-operators were able to take advantage of in the run-up to and following the ELD mandate’s December 2017 compliance date began to stabilize and fall back from early-mid-year highs.

Here’s how Boyd, though, in his leased open-deck operation was looking back on the year just concluded: “Last year was the best year I ever had,” he said, perhaps giving voice to ATBS’ Todd Amen’s “best of times” for owner-ops’ invocation at GATS, reading the demand indicators at the time. Part of how Boyd explains his own contention is clear evidence of the upsides of tight capacity, with fewer trucks competing for more loads by and large, that we heard so much about in the early part of the year (the “high and headed higher” quote in the headline of that linked June story is pretty funny, in retrospect — see below): “Everywhere you went,” Boyd said, “you could get a load of freight – I’ve never seen it like that, just unload and reload, maybe deadhead 100 miles, but that’s not much of a deadhead, not for us. We do that all the time.”

End-of-year monthly tickers from DAT Trendlines might well tell the tale of just why Boyd’s year sounded better than the years of some of those spot-market-focused independents I mentioned. When looking at rate averages, consider that contract rates often follow what happens in the spot market, and notice the imbalance between the two and where they crossed in 2018 early (for vans) or mid-year (flats and reefers).

Van spot rates were above contract rates for only a single month last year, the shortest time of any of these other segments. For the remainder of the year, excepting the brief May-June rise, they could be considered as a drag on upcoming contract negotiations with shippers paying close attention to the spot market.Van spot rates were above contract rates for only a single month last year, the shortest time of any of these other segments. For the remainder of the year, excepting the brief May-June rise, they could be considered as a drag on upcoming contract negotiations with shippers paying close attention to the spot market. Flatbed rates’ spot rise and fall seemed to closely mirror the same in the contract freight market, however falling harder (spot) from the June peak than did rates in the contract market where owner-op Boyd operates. For both spot and contract rates, flatbed happens to be the only segment that closed in December 2018 higher than the same month the previous year, spending the entirety of the year more or less up.Flatbed rates’ spot rise and fall seemed to closely mirror the same in the contract freight market, however falling harder (spot) from the June peak than did rates in the contract market where owner-op Boyd operates. For both spot and contract rates, flatbed happens to be the only segment that closed in December 2018 higher than the same month the previous year, spending the entirety of the year more or less up. Reefer spot rates, meanwhile, on average spent more time and with bigger differentials above the contract average rate than all the other segments. Similarly to flatbed, however, the point at which the tickers cross, between June and July, was followed by a slightly steeper decline for spot rates, and with certainly more volatility, than that of the contract average rate.Reefer spot rates, meanwhile, on average spent more time and with bigger differentials above the contract average rate than all the other segments. Similarly to flatbed, however, the point at which the tickers cross, between June and July, was followed by a slightly steeper decline for spot rates, and with certainly more volatility, than that of the contract average rate.

All of which is to say: If you’re negotiating an annual direct contract in the coming months, if things keep on like they have been, don’t be surprised if you’re pressured to drop some on the rate by a shipper who’s paying attention. Some brokers have reported such in other venues lately.

Otherwise, leased and independent owner-ops in the audience — how’d the year end up for you? Best you ever had? Worst? Right there in the middle lane? …

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