Friday, August 8, 2008

Where's the soup-to-nuts freight?

The popular phrase “knowledge is power” rings true right now for many owner-operators struggling to make ends meet.

We all know that giant shippers like automakers are cutting production because GM’s staggering losses dependably make the front page. That information is in your face. But what about that “other” freight – the computer stands, copy paper, tennis shoes, widgets made by companies whose bottom lines aren’t worthy of major news? An old trucking friend from New Jersey used to call this “soup to nuts freight” and what is happening to it is the kind of news that you need to know to keep your business paying the bills. So where do you find out what’s up?

In these days, when nearly everything we do is monitored, you can bet that somebody somewhere is watching that freight. The best place to find it is that old “information highway,” online. If you are not computer savvy, it’s time to get comfy with using the Internet and making Google your friend.

Much of trucking’s bread is buttered by smaller but successful retail businesses. When one of these files for bankruptcy, most people think “shoot, that was my favorite place to go” or “oh no, my sister works there.” Truckers and those of us who work in the industry – including trucking journalists – react in a different way. We temper that news with calculated load loss.

For example, Mervyn’s, the California department store chain, is the latest in a series of retailers to enter bankruptcy. They’ll be open for a while, but their future is shaky. That wasn’t big news to most, but if you are hauling retail goods to Mervyn’s it is.

The upshot is nobody is going to spoonfeed you the state of the freight. You are on your own when it comes to assessing the health of your shippers. It’s not hard. Not only can you observe them when you pick up or deliver, but you can hit the Internet and punch in a few key words. It didn’t take me three minutes to find that Pep Boys auto parts are closing 31 stores. Foot Locker is closing 140 more stores. Linens ’n Things, which filed Chapter 11 in May, recently announced it will close 120 stores. Pier 1 imports will close 25 more stores; the company closed 79 in 2007. Google up “businesses closing” and you find stuff like Rite Aid drugstore chain is closing 28 stores, Sprint Nextel Corp is closing 125 stores. Movie Gallery, a video rental chain, is closing 400 stores.

Have restaurant supplies been your bag? You need to be watching restaurant closings. My favorite place, Lone Star Steakhouse, recently announced 27 closures. This week, I found that national restaurant chains Bennigan’s and Steak & Ale have closed their doors and filed for Chapter 7 bankruptcy protection, closing more than 300 locations and laying off thousands of employees. It is one of the U.S.’s largest restaurant bankruptcy filings, so it did make the Wall Street Journal. The Journal reports that the chains will liquidate and are not likely to reopen.

One area that sees loads of goods trucked in and out every day is our country’s shopping centers. I did a quick search for shopping center closures and ouch, there’s Bloomberg News reporting the average vacancy rate at neighborhood and community malls rose to 8.2 percent, up from 7.3 percent in 2007 and the highest level since 1995. And at regional and super-regional malls, vacancies increased more than 6 percent. It’s doesn’t take much of a Google search to find that Disney Stores are scaling back, closing 98; PacSun – that’s Pacific Sunwear of California – is closing 154 stores, and Ann Taylor, luxury clothing, is closing 117 stores. Wilson’s Leather is closing 100 mall stores and Friedman’s Jewelry is liquidating and will close 120. Zales, the famous diamond store, will close 105 full-size and mall kiosks. Sharper Image is closing 90 stores. Dell Computer will close 140 stores, including some mall kiosks. Bloomberg quotes one economist as saying retail space is being “abandoned” at the highest level in 28 years.

Missing those construction loads? If you’re a flatbedder and have made a living hauling construction supplies for the past years, you’re no doubt jonesing for the good old days. But you still need to rely on new customers for a while. Home Depot closed five stores in May. I recently found that 84 Lumber, based in PA, will close 12 stores. And if you hauled the stuff that furnished new homes and buildings, that’s not recovering quickly either. Ethan Allen home furnishings are closing 12 retail centers. I just learned Levitz is filing for bankruptcy.

OK, so now the third quarter news is happening and not all of the info that affects your business will end up on the evening news.

Use the Internet to watch your customers’ health and keep your truck moving freight that pays.

What's next? Chewing gum?

Those wacky lawmakers in Illinois are at it again. Truckers are all too familiar with the high jinks of the Illinois General Assembly. Logging repeated veto-proof margins to kill split speeds, only to fail to override gubernatorial vetoes, is just one example.

Then there was the Illinois state lawmaker whom a Land Line staffer interviewed in recent years. She didn’t know the difference between a limited-access interstate highway and a U.S. highway with cross streets and traffic signals.

But a bill currently in the Illinois House Rules Committee raises Illinois “idiocracy” to a new level. And when I say idiocracy I’m not talking about the 2006 motion picture with Luke Wilson. I’m talking about the combination of idiotic behavior and bureaucracy.

Introduced by Rep. Ken Dunkin, D-Chicago, HB4520 seeks to make it illegal for pedestrians to talk on cell phones or use other wireless devices while crossing streets. Land Line Magazine State Legislative Editor Keith Goble filed a report on the bill that has “just the facts, ma’am.”

Going beyond just the facts, I’m wondering what’s next on the legislative agenda in the Land of Lincoln.

Outlawing gum chewing while walking, perhaps? I understand some folks have trouble with that. Don’t we need to protect them from themselves?

With all of the serious concerns facing the people of Illinois, what in the wide, wide world of sports are any lawmakers doing wasting their time and taxpayers’ money to file such idiotic legislation?

Thursday, August 7, 2008

Is freight really picking up?

The American Trucking Association’s chief economist, Bob Costello, made headlines early this month when he reported tonnage shipped by truck in the U.S. rose for the second consecutive month. Costello announced that ATA’s “seasonally adjusted tonnage index” rose 1.2 percent in June. And while Costello was clearly cautious, suggesting that the nation’s overall economy might not yet be on the road to recovery, his comments were received by index watchers as news to cheer about.

The mainstream media seized it immediately, crowing that “total goods” moved by truck – and nearly 70 percent is moved by truck – was up for two months in a row. You can’t blame them, good economic news is scarce. But let’s remember one thing before we get too excited. Costello did not say “total goods.” This index measures the weight of freight hauled by ATA members. It’s based, as it always has been, on ATA’s membership surveys. It does not, and cannot, reflect all loads moved by for-hire or private fleets.

As far as the tonnage, I think the increased tonnage cited by the ATA is likely reflective of their members now grabbing any kind of available freight – including heavier freight they normally would not haul. This makes more sense than an actual increase in the number/quantity/volume of truckload shipments.

Let me point out, too, that mainstream doesn’t pay attention to distinctions like the fact that ATA members are only the nation’s larger motor carriers and private fleets and far from representative of all trucking.

The big picture is that most of the nation’s goods are not carried by these megacarriers. In fact, 86 percent of the freight moved by truck is moved by small-business truckers with six or less trucks. And the freight these trucks haul is everything from soup to nuts. They haul shrubs and flowers, lumber, produce, groceries, retail goods, automotive parts, electronic products, you name it.

ATA does have a membership for smaller carriers. They consider smaller carriers those that gross less than $11 million. According to ATA’s Web site, the lowest membership dues level is for truckers grossing $2 million or less.

Most owner-operators gross an average of about $135,000, based on OOIDA’s surveys.

And for this segment, there’s simply no indication that freight is up. Check out the Journal of Commerce and read about the reduced inflow of container traffic into our ports. The decreases are significant. And these containers are almost exclusively hauled by owner-operators.

It will certainly get better, but right now the soup-to-nuts freight is down overall and the competition to move it is fierce.

Tuesday, August 5, 2008

Why is simple so hard?

Lucky is the person who has never had two or more people tell him or her how to do something. Jesus said you can’t serve two masters without loving one or hating the other. Supposedly, the Chinese pictogram for trouble literally means two women under one roof.

In any event, the more people involved in making a decision, the more muddled the solution becomes. This may explain some, if not all, of the decisions made at all levels of government, in the military and in other public institutions.

And if you think corporations are smarter than government, either you haven’t ever dealt with a big business or you shouldn’t try to become a contestant on “Are You Smarter Than a Fifth-Grader.”

A recent YouTube video called “Redesigning the Stop Sign” gives a painfully satirical peek at how simple ideas turn into monsters – and often, monstrous failures.

Painful because everyone has seen great ideas die amid endless rethinking and fiddling.

Painful because nearly all of us have used questionable arguments or stats to advance our position or undermine someone else’s.

Painful because all of us have at some point sat silent instead of saying, “People, what are we doing here? This is stupid!”

I could launch into a long screed about applying this to other aspects of our lives, but y’all have already made that leap.

Fortunately for truckers everywhere, OOIDA and its members don’t stand gaping in awe as some manure spreader chugs by. They step up and say, “That stinks!”

Check out these recent blogs, here and here.

Keep sniffing!