By Cain Adams
Trinity Logistics Boise L1 Office / Longboard Logistics, LLC.
November Rain by Guns N’ Roses comes to mind when thinking of this month’s kickoff in onion freight. “So never mind the darkness, we still can find a way ‘Cause nothin’ last forever, even cold November rain.” Yes, the November rains have started and the onions are in storage. They are cozy yet this year there seems to be some uncertainty in the air.
This seems to be the warmest of Novembers. We shipped flats through Wyoming this first week of November at $1.00 to $2.00 less per bag than on reefers. Wyoming and Montana are reclaiming their reputations. The cold is here and those who depended on flats will have sticker shock when changing over to reefers.
Competition and pricing is going to be fierce the next few weeks and we must be diligent in our freight duties. There are enough trucks but will they run for the money we want them to? This season, we do not have 2-3% interest rates and carriers will be wanting payment faster due to lower margins. Will the customers feel the pinch for payments on freight while still managing their own overhead?
The larger sheds, with retail contracts, are busy. They have regular orders to the large box stores like Costco, Wal-Marts and similar. Smaller shippers will have to be tighter on costs and we all need to stand shoulder to shoulder with them as their produce is as good as gold and their hands as reliable as the rain. We hope you call them regularly and really make something of that call just the same. Relationships are more important during stressed times. This Niche market relies on each other like a patch quilt. Let us be sure to share in that mindset and create the value for one another.
Overall, we have been steady but it takes more calls to more customers to make that happen. The freight world has been turned upside down and a lot more freight companies are cold calling sheds and receivers. Why? Fuel, interest rates and uncertainty in 2023 and 2024. Can I paint a bleaker picture or at least better than a stick figure?
Fuel put the hurt on carriers this year. It’s not just a commodity – it’s the lifeblood of our trade. Carriers keep hoping the next load will make up for the lower priced load they just pulled. Less freight is out there than last year so it is a game of watching costs and pushing up the freight any chance they can. Maersk, the second-largest ocean carrier, cut 10,000 jobs because of market uncertainty. It’s not only carriers who are hurting and going out of business but brokers too. And it makes sense as to why. Covid is behind us and the government is trying to slow down rising inflation.
Two simmering conflicts hold the world’s breath. The eyes of nations are keenly fixed on the power struggles happening in the Middle East. Iran exports about 30% of the world oil supply. This is strategically significant and a mere whisper of unrest seems to shoot shockwaves through the markets. America just lifted sanctions on Venezuela just in case Iran becomes a target and wells are set ablaze. Keep a watch on oil production and futures for oil (Diesel). Fuel is such a game changer and has become a powerful political tool.
According to Truckinfo.net, While the closure of the Jeff Bezos-backed Convoy has grabbed news headlines, the former digital freight broker is not alone. Using data from the Federal Motor Carriers Association (FMCSA), TruckInfo.net found that more than 1,500 freight brokers have closed shop in 2023.
Brokers who thought they could borrow money from the banks at 2% are now reevaluating their business models. If they are supported by VC money, or factoring all their loads, then borrowing at 8% is doing them no favors. It is deep pockets time and those who had cash reserves will fare the best. Shippers, Freight Brokers, and Produce Brokers should evaluate who they are working with and be sure each is stable through the season. We expect another 1,500 freight brokers to go out of business over the next year. Freight is going back to pre-covid levels. This means the entire supply chain will too. Stay alive till 25 is the term used. Remember it and do what you must for your own business.
Uncertainty in the freight market is not the only place to be watching. Keep your eyes on commercial office space and the vacancy rates happening in your customer’s territory. Commercial Edge reported San Fransico at a 24.2% vacancy rate while Austin hit 21.2% through September of 2023. Yet, due to intense lab construction, Boston led the nation in building out new space. Covid, as you know, changed the landscape of where we work. Now, the new norm is “I will work where I want to work.”
CNBC just surveyed 1,000 company leaders. Nearly 30% say their company will threaten to fire employees who do not comply with in-office requirements. In other words, “come to the office and work 5 days a week or else.” I know right? Come to work? I never thought I would see a company afraid to fire an employee. In the meantime, watch your customers locations for shrink or growth. This is looking forward a bit but it can help understand where the demand will come from. AI is probably something else to get used to when thinking about disrupters. We can look at that soon.
Take away. There are red lights and green lights. But there is also that yellow light. Use caution over the next 6 months. Really get off the bench over the next 6 months and on the court in your business. Consider hiring a business coach to help refine your strategies. “Continuous improvement is non-negotiable if we aim to thrive amidst steadfast competition.” I read that somewhere. We all need to improve and those who do will be valued in the industry. If we do not improve, we may be a casualty. This is a time to streamline, moving beyond survival to significant achievement. Get to it.
I’m so glad you stopped by and gave this article a read. I’m all ears for your thoughts, insights, or even a friendly hello! Feel free to drop me a line at firstname.lastname@example.org, or if you’re up for a chat, give me a ring at 208-908-6012. Your feedback is not just welcome, it’s wanted. Cheers
Cain Adams -Trinity Logistics Boise L1 Office / Longboard Logistics, LLC.