How’s the economy really doing?

Looking somewhere that shows the truth

I once saw a t-shirt that said something like “if you enjoyed shopping today…thank a trucker”. At the time I thought of it as just a funny saying but as more time has passed and I have started to pay more attention to what the economy is doing I see some hidden information in what that shirt said.

Many people watch the stock markets, the broker’s movements, real estate trends but in all honesty the transportation industry gives a more accurate representation of what the economy is doing.

The simple fact is that every piece of anything you have bought or will buy at a store was at one point on a delivery truck or semi-trailer. They deliver it from manufacturers, from wholesalers, warehouses or from anywhere else these things come from to where you buy it.

You can’t see what’s on the trucks but you have seen them on the highway and in business districts. Many times the bigger companies use their own trucks and trailers, McDonald’s, Wal-Mart, Winco, Safeway, all using trailers plastered with ads for their own products. These ones belong to the company, so if the company is doing well you see more of their trucks, if not, then less trucks. The problem with that is that it’s subjective in that maybe it seems there are more or less but if they changes their schedules or delivery times it would also appear this way.

The ones that show the true view of the economy are the carriers that work just as carriers. You have probably seen these off an on but never really given it much thought as they drive past on the highway or in your neighborhoods.

Carriers like Conway, Estes, Oak Harbor, Gordon and even some more familiar names like FedEx or UPS all rent the space in their trailers as they haul good back and forth across the country and to and from ports where the freight travels overseas. What is in these trailers and how much of that trailer is full is a true tale to just how business it doing because it contains retail items, manufactured or raw products and necessities that aren’t delivered through a companies own trailers.

These domestic carriers are working in an industry that right now is 30-40% over capacity in space available. This means that there is 30-40% of these trailers that are empty or not being used along with the trucks that pull them and the drivers who drive them and the dock workers who load them. There is 30-40% too little freight for these carriers and that means they have 30-40% too much overhead in equipment and staff as an industry. This is why these carriers are having a hard time right now, and truth be told it is across the board for all levels of transportation and that means that 30-40% of this business is hurting the companies.

Large and profitable carriers are still available and still out there. Conway Freight is still performing well but after measures to ‘streamline’ their business practices and the use of space, tools and equipment. Roadway and Yellow have merged into/through YRC Wolrdwide and that means they have the equipment, locations and costs of two carriers but only enough business for one. Many believe this is leading to a slow death and their banks seem to agree. They have been granted a reprieve through their banks wanting some income as opposed to none if they just let them close down right now.

FedEx and UPS will weather the storm of slow retail and transportation needs and their diversity allows them to continue to profit in other ways, with small packages and in the cases of the FedEx/Kinkos centers through paper, printing and other services available.

Many people are aware of the movie and books based on ‘Twilight’ as it became a very consistent retail and merchandising vehicle. Many have seen the DVD in stores, whether Wal-mart, Target or some other retailer. Those displays, DVDs, books and all the associated merchandise all came via truck. That means that these trucks will continue to travel the highways and city streets even if freight levels are low because staying in business means still delivering these goods and these types of things are constantly being released, displayed and sold through.

So how does one see inside the trucks so to speak? Watch the stocks on these companies and look for news articles on closures, terminal expansions or downsizing, and look for the companies that are soaring or adding new components. In this market few will be expanding but look for the ones that remain steady and how steady they stay.

DHL pulled out of it’s domestic united states delivery services due to not seeing enough market share available and that was at the very start of these recent issues. They got lucky in that regard.

FedEx and UPS will not go away and I am sure their service is compromised very little but at the same time they have laid off people in the thousands and trimmed some shipping lanes and limited hours at various locations. Other companies prefer to call it streamlining as they close certain location and limit travel to areas that previously had little consistent action or a high cost to income potential.

Wages have been cut between 5 and 10 percent at most carriers through company mandate and other benefits such as 401k matching or health benefit have been compromised or downgraded. What this says is that these companies are trying to survive the financial storm, what the truth comes to is that it requires drastic measures and that means the whole circle of money coming in and going out is slowed just like the rest of our economy.

Take the wellness of the transportation industry with a grain of salt though because there is often transfer of accounts from one company to the next and from corporate owned to freight only changes so it’s never black and white-much like anything else.

Watch the stocks, watch the news and look around at your local areas. The truth is out there even though it might be really hard to tell what is truth, what is opinion and what is ‘streamlining’ it might be worth your time and money to do so.