Trucking industry and economy

From: Lance
Date: 19 Feb 2001
Time: 23:05:46
Remote Name: 104.st-louis-81-82rs.mo.dial-access.att.net

Comments

The Trucking Industry.

Consolidators are making their move as the lead pack is moving ahead. Fed Ex, UPS, Swift, J.B.Hunt, Yellow, are consolidating with cash on hand, great credit lines, an abundance of sellers and a specific strategy. We are watching as New Truck Manufacturers have laid off one half of their employees. Banks reluctant to repo independents for fear they will be upside down in the loans if they try to sell when every used truck dealer in America is over stocked by 300 percent and sales are down by 45 percent. Fuel costs and over regulation, such as the OSHA rules, DOT rules, over taxation by states on fuel, too much road construction because of surpluses of state income taxes slowing traffic, hours rules, etc.

Sure we now have lower interest rates, but not in a bad risk Industry of trucking unless of course you are a consolidator with all the money in the World. The consolidators will keep raising prices once they have taken over and then when the price gets too high all the independents who did not get reposed will be back to work, except that with the new emission laws in places like CA, OR, WA, IL etc. they will have to convert engines to run low in sulfur at a premium and eventually have to purchase new trucks, which will be different in the engine compartment to comply. It will be difficult to buy a truck then and the old trucks will be scraped, where do we put them all? In Mojave Desert? Pahrump, NV near the Disney property? Tucson Desert near Mexico? Use them for Marines target practice? Ship them, melt them? But why there is too much steel and resources easier to get than to melt out impurities and besides cars, trucks, buses, ships, etc, will be made of different materials in the future, like the alloy you can crumple up and it goes back to its original configuration.

Without anymore rambling, what I am saying is that the new Independent will not have a significant niche in the future in trucking. Cargo may run by composite blimp chain together like Arial barges or railways running on air cushion at 200 plus mph. There is a shortage of truck drivers now, and it is getting worse, the consolidators do not pay well, the Independents are working for free after paying costs. Independent companies from 5-300 trucks are no longer viable and cannot compete with the GPS tracking, scheduling and maintenance software of tomorrow, which they are using today and now. The new animal is too efficient. Computers have simplified and stream lined things. I cannot say this change is totally good or bad. But I will tell you that we are redesigning our methods to include Real-time, GPS, FCS, methods. Why, to be cutting edge, because technology is cool and a brain challenge to design, and to finish what we started. No one has seen the benefits in our industry like we have and we are going forward faster than ever before. This is where the low tech Industry of mobile washing meets the high-tech world of Jack Dangermond, Bill Gates, Plenart Gerhart, Craig McCaw, and others.

We can play this game and we can win it, that is why I see exciting opportunity for high quality, low cost, on time, real time delivery of services as if it were an Intel chip coming off the assembly.

Unfortunately the Independent trucking Companies waited to too long to get in the loop, get caught with their pants down on the fuel prices and government regulations. Sure there are those who haul for the USPS or have long term contracts with agencies or companies that will still be here tomorrow. But even those companies who had contracts with JC Pennies, Sears, or Montgomery Wards are basically SOL. The game is over the inevitable is here and from here on out only the most superior of the species will survive. Even the new GPS 100,000 joy stick snow plow trucks with three types of de-ice chemicals for different speeds of truck, road surface, bridges, wind factors and outside air temp. You see if you are not high tech you are just gone. Military will be routinely bombing Saddam with pilot less aircraft, new weapons to test, etc. High tech means survival.

There is no room for second tear. Technology has decreased the need for people in many things. Efficiency has been increased ten fold in a few years. What is next? We are. On the edge. With the stock market wanting exponential growth in all sectors and increased profits per unit and less duration, the larger companies must grow or die.

Franchising is the best answer. Unfortunately, the smartest franchisers will need the smartest franchisees to grow, those who can adapt quick, learn quick, re-invest and leap from the derelicts, know to most of you as our competition. Washing of the future technology cannot be left to dump people or untrained labor. Fleetwash is doomed. Franchisors who have sold too many franchises to incompetent franchisees are also history. Why? Well we already see it. Service Master once announced that it was providing jobs through franchising to people who could not normally get jobs. This indicates a real problem with the new world, the new real time capabilities that are needed to compete and the questionability to compete against those that possess all those qualities without a blink.

In trucking it is over and the pendulum of government policy and fuel was the final blow. The Keep on Trucking theme is all gone unless, fuel prices lower tomorrow and taxation slows to a crawl and certain legislation is reversed. With Destributors being eliminated that means a double whammy for the economy. In theory all this should be good right? Yes in theory, but as we have learned, too much change too quick causes un-reversable sector rotation and downward spiral. Trucking and transportation is connected to way too much you see. Everything we have delivered comes by truck, train, aircraft. Fuel effects everything and right now, whereas monetary policy takes months to take affect and then it is too late. Even too much off a switch there can have adverse affects on something else. Since everything effects everything else and sometimes the equal and opposite reaction comes in multiple forms. If the energy of a fast moving sector is stopped the resources responsible for it are diverted to many other places often unequally. It is not chaos. It can all be factored, but not at the immediate instant of collision or even for a reasonable foreseeable future. Money flows by the perception of the buyer at the time the money is acquired, either to a want or desire or bank (the desire for security). Likewise entrepreneurs flow efforts to those areas where they believe there is a market, use it to trade derivatives, while creating the market to trade in, or where they believe they can get the fastest return on investment or even to a place of benevolent philanthropy. Where do consumers spend windfall tax returns? Do they save it, put the money back into the food chain? And then where does it go in the second transaction. Does it flow up to the top or back down to return again to the top. Remembering that money is simply and instrument of trade in theory it is much more. If welfare is given to the poor, then the corporations have it in the next transactions. For instance if a person on the street is given $100.00, he will buy alcohol, hamburgers, groceries, cigarettes, more alcohol and two hamburgers and more alcohol. That money although given tax free is taxed by states for sales tax and the remainder goes to the liquor chain consolidator, grocery store Corporation or Hamburger franchisee, who buy more beef, bread, Coca Cola syrup and franchise fees. The Beef grower is a corporate farm, the bread consolidated bread company is a corporation and so is the franchsior. It all goes back the same place. Even if the guy buys cheap beer it still goes to Budweiser a huge company. Either way you spend it goes up. It goes up to the corporations who build space ships, military craft, or make bread. Then it is paid to workers who buy bread, beer, cars, etc. Even the underground economy cycles money around buying stuff, which then ends up in the hands of the corporations who have the high tech stuff to be efficient enough in the market to win the market share, buy competitors or slaughter them. Walmart showed us this phenomena first. And guess what? Everything gets shipped and everything is about efficient logistics. For a society to prosper, you need good communication, transportation, education, safety of the people. All of this requires logistics to move stuff to the proper locations. Nothing in the world is such a crisis, it is only a logistical problem to be figured out. Energy, Fuel, Food, Water, etc. No problems only logistical challenges really. Communication can be run by computers, Educational logistics of who learns what, where can be done partly by computers, transportation infrastructure is being fixed now, but at what price during the rapid change. It is too fast for the solutions and government bureaucracy in its way.

Rather than condem a singular act of government, OPEC, manufacturers spread sheet, blame change. But understand that change is good. Change to fast redistributes power, wealth and life faster than anything. Learn to adapt or be the next species on the endangered list.

Move fast, move smart, move now.

The New Wash Guys motto for the real-time way to think, act and adapt.

Changes are occurring in all our market sectors, I hear it everyday from our team members, when they call in. We will be there, watch us grow.

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