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Truckload Rates * USA - Not Yet Bottoming
Spot pricing at times below intermodal, analyst says, from “desperate” rate policies
St. Louis,MID,USA -The Journal of Commerce, by John D. Boyd -Sep 4, 2009: -- Freight rates in the truckload market, competing in many cases with rail-truck intermodal traffic, are steadily declining “without solid evidence of bottoming,” said transport stocks analyst John Larkin of Stifel Nicolaus... Larkin said his group had held meetings in the past week with executives of “various publicly traded and privately held truckload and intermodal providers,” and spot pricing for truckload freight “remains under pressure”... Some truckload rates have “come in below intermodal rates and below what many carriers believe to be truckload variable costs,” he told clients. “We believe this level of spot pricing is unsustainable for the smaller, less-capitalized carriers that seem to have adopted what we consider desperate pricing policies”... Larkin said some “non-sustainable trucking operations” that offer the low pricing are staying in business because they are getting help from creditors and equipment lessors, who hope those carriers can stay afloat until their equipment returns to book value... “Many industry players believe that this stance taken by many financiers only delays inevitable truck company failures, and won't reduce (and might increase) the size of losses ultimately realized by the lenders, lessors and finance arms of major truck manufacturers,” he said. “In the meantime, the lenient policies preserve too much capacity in the trucking marketplace”... (Photo from flighthelmet: picture trailers)
Labels: minimum freight rates
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