I don't know how or rather if I'm going to try to play the transports.
I can testify though thatat least the trucking biz is not that good, in fact it down right stinks at the time
And I really can't give a time frame for any recovery.
There is a trucking division of a manufacturing business that I follow. The manufacturing is mostly in the consumer products sector. A fairly non cyclical busoness that, under normal economic circumstances is recession proof for the most part.
Well, that is just more proof that thi9s is not a typical recession because business there is not good. Not good at all.
Albiet, most of the pull back they've been seeing has been due to pricing. In the past two years, a lot of manufactures have lost much of their pricing power.
Larger retailers(I suppose smaller ones also to a degree) such as Gillette, P&G, REVand so on, in the cosumer cosmetics secotr have been putting future jobs up for auction on the internet with an ever growing success rate.
Most of the jobs that are going to the low bidder are heading out to smaller plants that are essentially cutting their own throats by under pricing a job in hopes to get a foot in the door with these larger corps with an eye to gaining more work from them in the future.
In recent years the ball has gone into the vendor's from the supppliers court. And another big competitor of late has been China. While China has been taking tooling away from smaller US tool shops, lately they have been going after the production end of this industry. And gaining steam as they can product goods cheap wnough to make the shipping almost a non expense.
Now, to land this plane, it is hurting the transports on a more local or regional level due to the lack of shipments from smaller manufacturing cities and towns to filling plants and then off to the Wal-Marts, Kohl's and ect. of the country.
And the real killer for the trucking division that I started this post about is on the return trips of any deliveries back and forth.
In past years, return trips were running at a 90%+ rate of cargo. This was the gravy end of the trip as most the ffcost of the return trips were picked up by the initial deliver(IE, the vendors). Now with a run rate of only about 20-30%, the rest of the time the trucks are returning home with empty traliers- there is no profit to be made transporting air(empty trailers) and that has been impacting the bottom line.
I'm not sure how long this trend will contiinue but I continue to watch the manufacturing plants and wait for something to reverse. If no reversal that I suppose theyhad best reinvent themselves or become part of that road-kill stew I clumped JDSU in this morning. |
