Episode 10 - The Frightening Future of Freight

We had some fun with this Halloween-themed episode!

For Trucking Stuff Aaron and Michael discuss the ongoing uncertainty in the trucking industry and freight markets before shifting to a few fun trucking-inspired ghost stories.

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Michael Clements
Welcome to Trucking for Millennials. Where we engage with the future of freight happening now. My name is Michael [inaudible 00:00:12]

Speaker 2
So what's going on in the industry? Why are we hearing this word bloodbath when it comes to trucking?

Speaker 3
So more than 3000 truck drivers have lost their jobs as quite a few trucking companies go bankrupt. So in the first half of 2019 alone, we've seen more than 600 trucking companies go under. And that's more than triple of the amount of bankruptcies we've seen in 2018, in the first half of 2018.

Speaker 4
We used to be able to make money, now with all this government crap and black box and everything it's hard to tell to make money.

Michael Clements
Where do you think the transportation industry is going in the next 10 years?

Speaker 6
Nobody knows. Well, we know we going to be here and still doing our job, but what is it going to be? I've been driving 13 years and I can see a drastic change from the time I started driving to now, so I'm kind of nervous to be honest. Never thought about it, 10 years from now.

Speaker 7
It's hard to say, a computer might be taking over.

Speaker 8
My buddy has a doctorate for being an optometrist, still lives at home with his parents, and is not using his degree. Instead, he skins fish for a living for minimum wage. And he's sitting there with all this student debt, has a doctorate, can put it to use, but he chooses not to.

Speaker 9
[inaudible 00:01:29]

Speaker 10
Tariffs and trade tensions have disrupted normal shipping flows and led to backups at ports and warehouses. August is typically when freight traffic ramps up as retailers import goods for holiday shopping. However, contract trucking rates are expected to fall through the rest of the year. Possibly a sign of a broader slowdown.

Aaron Dunn
Trucking for Millennials: The Frightening Future of Freight.

Michael Clements
Ha Ha Ha Ha Ha Ha

Aaron Dunn

That's a good creepy laugh. That was pretty good. That wasn't bad at all. I might have to hear that again.

Michael Clements
Ha ha ha ha ha ha

Aaron Dunn

So happy Halloween. This episode comes out the week of Halloween, so it's going to be in a few days. It's the week before in real time, but we wanted to have a little bit of fun with the holiday. But the fun is also counterbalanced with the serious fright of the future of freight. You just heard some segments and you know pretty much a narrative that's been being told throughout the entire year of the trucking bloodbath. People losing their jobs, truck drivers getting laid off companies going under and a lot of uncertainty in the market. So we wanted to have a brief conversation about that. And then we're going to switch into some ghost stories.

Michael Clements
I like the ghost stories.

Aaron Dunn

Ghost stories from truck drivers, which is going to be, we'll see how scary they are. But let's talk trucking stuff first. Michael, what do you think about, I mean it's October, believe it or not, it's the end of October, 2019 is almost coming to a close and we've, consistently heard these, it's a lot of bad news out there and uncertainty and that's kind of the theme for Halloween. But also it seems like the theme for freight this entire year. What are your thoughts on that? Is it for good reason or do you think it's just these pesky kids?

Michael Clements
Well, I pulled out my, my magic, my magic ball and I've looked at the future. Okay, and so I'm here to tell you whether it's trick or treat today. So the freight future itself for 2020 does not look too bad. For the remainder of this year, not looking that great. I think it really just depends on what type of trucking you're in and what sector, and also where you're located at. All these factors play into it obviously, but going into next year, I think we're going to be looking at more of a treat for trucking companies that are able to get through this year, but for the remainder this year, it may just be a bunch of tricks.

So what we're looking at is throughout the remainder of this year, obviously weather is going to be a factor in the Northeast and in other areas. And so what you're going to see is you're going to see the rates start to go down in the South. Going into the fall, you're going to have a lot more trucks coming down and speaking a lot more trucks, something else. We have had a lot more trucks hit the road this year. Truck orders were way up in 2018 and in 2019 truck orders have been way down. That is going to affect the markets next year directly. Traditionally, whenever trucking truck sales have been up, it creates a downward year the following year. And that is exactly what happened after the great year that everyone had in 2018, but also what it does is it creates slower orders throughout the next year. Now this year, truck orders necessarily haven't been as far down, but you have to look at the deliveries. You have a lot of companies right now that are taking deliveries of those orders that they may have even placed it late last year.

And so as these orders start to taper off and things, what you're going to do is you're going to see less trucks on the road, but something else that's also a factor in this is the tariffs, and those things have really, they really kicked in after September 1st and what we've seen is the market slowing down a lot. The markets were really, really heavy going in before September, right there between July and going in between July and September. But that's because we were trying to allocate a lot of materials and do a lot of things to get ahead of the tariffs that were going to be kicking in on both ends between the United States and China. So as we have both of those countries still squaring off and still in the middle of a trade battle, this is going to affect rates and going to affect the markets ,even into 2020, so although it does sound like there could be treats on the other side, there still could be some tricks there.

Aaron Dunn
Yeah, I think that's a great way to put it. One thing I was reading on an article was how the tariffs influenced so much of the shipping volumes throughout the country. So whereas like we're getting into peak retail season with the holidays coming up, Thanksgiving, Christmas, that stuff, so a lot of orders are going to be happening and freight is going to be moving across the country. Well, a lot of that freight moved across the country prior to the tariffs kicking in because they wanted to guard, they wanted to hedge a little bit and say, "well let's just go ahead and move this stuff" cause we know we're going to move it eventually. So it just kind of moved the peak, it kind of stretched it out. So it's not peaking at the end of the year, it's just kind of more leveling often and flattening out. So that's just another thing that's happened that it, it might not be to doom and gloom. From my perspective, it's just a change in when things happen. It's a change in the timeline essentially.

Michael Clements
You know and learning, I followed the oil and gas markets for years and there's a lot of different factors that come into the price of oil and the price of gas. But it's really interesting in transportation because really a lot of your numbers, like new truck orders are running way below the replacement demand. And so you're not, they're not replacing a lot of the trucks that are leaving the road right now. But also truck orders have been negative on a year over year end basis for 10 straight months. So that means that truck orders are not, they're not replacing a lot of the trucks that are leaving. And I don't know what that has more to do with, I don't know if fleets are just getting older and they're allowing their trucks to get older. If you have a lot of smaller trucking companies that are having to make their trucks last longer, or if it's just trucks are just more expensive and so you're trying to figure out other ways to utilize the equipment that you already have and make the money. Cause I mean an investment of $150,000 in a brand new semi truck- that's a heck of an investment.

And so as companies are weighing their odds and "what are we going to do?" And as people are saying, we don't know if the markets are going to get better in 2020 or if what's going to happen there for trucking. I think it's also causing some people not to want to go out and replace trucks that may be traditionally, if they, if we were looking at a broader market right now, maybe we would. But economists are still hot on the economy in America, and I think if you get too wrapped up in the political conversation and hearing what's going on with impeachments and everything in Washington D.C. it really clouds the economy, but the economy really hasn't been hurting. I think the media tries to hurt the economy, but we as a whole, America I don't think is doing as bad as the news really portrays it to be. And I think as long as the economy can keep up with what it's doing, there's still the opportunity in 2020 for a very good year, but the remainder of 2019 we could still see some, probably whatever you got right now is probably what it's going to be for the rest of the year.

Aaron Dunn
Excellent. Well you want to switch into a little of these? Is it time to get spooky?

Michael Clements
Let's get spooky, man.

Aaron Dunn
Ghouls and goblins and things. We found this article, it's from Thought Catalog. It's 20 scary stories from truckers and here's one called, "An Invisible Person Starting Shaking the Truck".

"My brother was a truck driver in the nineties early 2000s. He just told me this story a few months ago. He was driving through Pennsylvania on the way back to New Jersey. He pulled over to the side of the road behind two other trailers. In the early morning, he heard someone bang on his right door. He quickly jumps up from the sleeping compartment and grabs his bat. As he looks out the window, there's no one there, but now there's a bang on the left side. Freaked out. He looks out that window and there's nothing but silence now, nothing. He's trying to figure out what the F is going on. Seconds later, banging on both doors simultaneously. He said the banging was so loud and heavy, the truck was shaking. Both curtains open, he can see there's no one out there. He quickly jumps in the driver's seat and starts the truck. He sees the other two trucks ahead of him do the same. He said he felt as if they all had experienced the same thing.

Michael Clements
Dude, be careful in those sleepers. What's going on out there?

Aaron Dunn
Oh jeepers creepers.

Michael Clements
I need to find out what's happening. Where was that at so I can remember not to sleep at that place?

Aaron Dunn
New Jersey, New Jersey period. Just don't sleep there.

Michael Clements
I'm staying out of Jersey.

All right, so the next story we have is called "Found a Dollar", and this is from off a Reddit post. So it says Kent, Texas is another one. There's an old Chevron station, I think it is. Seems like FedEx drivers like stopping in there in droves. I'm guessing it's a popular drop and hook point for them or something. But I stopped one day and I need to take a pee. I don't know why I didn't stop in Van Horn, so I pull off and I roll up to the empty lot across the street. Kent is an abandoned town. I walk up to the bush line and notice a makeshift fire pit. The wood is somewhat burned, but not all the way. The weird thing is that there's an unscathed dollar bill stuck in the wood. For a second, I was like, "Ooh, piece of candy", but then this sudden feeling of "nope", came over me, so I left it alone and peed in the bush.

As I'm walking back, I look over at it and get a real negative feeling. I look to the ground in front of me and bam, there's a rattlesnake looking right at me. I stopped dead in my tracks and walked carefully around it, and it keeps staring at me. I ran as fast as I could back to my truck, feeling like somebody was behind me. I kicked up a lot of dust getting out of there and have never stopped in Kent since. Kent, Texas.

Aaron Dunn
Little spooky.

Michael Clements
Little spooky. I'm not going after the dollar bill in the wood in the fire pit.

Aaron Dunn
Yeah, that sounds more like a snake story than it is ghost story though-scary anyway.

Michael Clements
I guess he thought, see he thought someone was trying to get him to hesitate is what it sounded like.

Aaron Dunn
Spooky stuff.

Michael Clements
That is spooky stuff. I looked up where Kent is and I'm not going to be traveling to there anytime soon.

Aaron Dunn
Where is it?

Michael Clements
It's like where I-20 and I-10 meet out in West Texas. It's a long way from here.

Aaron Dunn
Yeah. So it'd be quiet and all. Yeah. If you see a piece of candy out there, you're going to be kind of excited.

Michael Clements
Trick or treat!

Aaron Dunn
Alright, well anything else that we got today?

Michael Clements
No, I think they just, we, we've got an exciting end of the year coming up. You know, we have Thanksgiving and the holidays coming around the corner and so just as you're preparing for those, continue to push your years forward, and finish the year strong and the trucking industry. It's been a lot of fun getting our show off the ground in the last couple of months, and we got some really good things happening at PDQ right now. So just a really neat time to be in the industry, I think is even with slow downs and things, there's still opportunity there for those that are looking forward, especially for smaller businesses and smaller trucking companies that are out there. I think the opportunity is still there, so I just want to encourage everybody finish the year strong as we continue this fourth quarter.

Aaron Dunn
That's great. Yeah, we really appreciate the consistent listenership. It's growing, the show's growing.

We're getting some good feedback as well, so encourage you to leave a review on iTunes if you can. We really appreciate that. Even if it's not five star, if it's four star, we'll take it, and let us know what you think and what you'd like us to cover and we'll see you next week.

Katie
Hello, this is Katie from PDQ America. I wanted to invite you to join our newsletter, "The Transmitter". If you'd like to receive the latest trucking news, industry insights, and other valuable information every week, visit go.PDQ america.com/podcast.