When does rate-cutting morph into throat-cutting?That may be a reasonable question for trucking executives to ponder as they start 2010. That is, if they aren't too busy beating each other up over pricing to think through the consequences of their actions.
As a grinding freight recession ended its third year, the rate environment for truckload and, in particular, less-than-truckload services, continued to weaken. Pricing trends in both categories deteriorated considerably in the third quarter from the first half of 2009, according to data culled from company reports and compiled by investment banker JPMorgan Chase. Even railroad pricing on commodities for which the rails compete with truckload carriers has been hurt by the weakness in truckload rates, according to the firm. Only ground and express parcel services showed a sequential pricing improvement through the first three quarters of 2009, according to the JPMorgan data.
Industry veterans have rarely seen anything like it. Michael Regan, CEO of TranzAct Technologies Inc., an Elmhurst, Ill.-based consultancy that over the years has negotiated and purchased billions of dollars of LTL capacity for shipper clients, says he's seen discounts of as much as 90 percent below retail, or tariff, rates.
The pain is being felt across the carrier spectrum. For example, two of the healthiest LTL carriers, Old Dominion Freight Line Inc. and Con-way Inc., posted sub-par revenue and net income results in the third quarter of 2009, with the top executives at both companies attributing their respective performances to declines in tonnage and aggressive pricing competition. Full Story....
No comments:
Post a Comment