A report released Wednesday by Susquehanna Financial Group would be music to the ears of truck drivers: Rates may have a “melt-up.”
The report by analyst Bascome Majors expressed enough confidence in a coming upturn in trucking economics that it raised its ratings from neutral to positive for four companies: C.H. Robinson (NASDAQ: CHRW), Echo Global Logistics (NASDAQ: ECHO), Landstar (NASDAQ: LSTR) and Werner (NASDAQ: WERN).
“Truckload’s supply-side overhang on asset-based pricing and margins looks like the primary problem, as underlying volume grew (Susquehanna’s italics) through 4Q and spot pricing showed more than seasonal m/m tightening despite falling y/y for 16 straight months,” the report said.
Majors noted that both the economy and truckload volumes are on the rise, while supply is expected to shrink 1% this coming year compared to a 4% increase in both 2018 and 2019. “Seasonal-plus patterns (are) returning to volatile real-time rates.”
The end result? “We see the risk of a ‘melt-up’ in spot rates in 2020 as far greater than a meltdown,” the report said.
With that, Susquehanna sees both stock price multiples and share prices following, resulting in the four companies that had a neutral rating being boosted to the positive category. But at the same time, Susquehanna left its positive rating on Schneider (NASDAQ: SNDR) and Knight-Swift (NYSE: KNX).
The report spells out all the carnage that has led to consistently poor quarterly results for the trucking sector: contract rates in November down 3.5% y/y based on TruckloadRate.com data after declines the two prior months of 3.7% and 2.5%, respectively, and spot rates that have declined for 16 straight months.
But the Susquehanna report is more positive on the direction of those rates, projecting that the decline will “moderate.” Majors looked at “evidence of tightening rates to close out 2019, better than the usual seasonal improvement … and just a few points behind the ELD-inflated upside trend of December 2017.”
“We expect dry van spot rate declines to moderate from high single digits to low- to mid-single digits in early 2020 before inflecting favorably with a month or two of rate increases during spring bid season,” the report said. “In short, a supply-side shock (weather or consistent capacity reductions) has a real potential to drive a ‘melt-up’ this year.”
Majors’ report cites the well-known numbers on how much capacity has increased. Federal Motor Carrier Safety Administration data shows that the Class 8 tractor count has grown for 13 consecutive months. The data is up for both big and smaller fleets.
But it’s coming to an end, the report said. “Most carriers expect a slow bleed of this extra capacity as we move through 1H20 aided by depressed rates, increasing insurance costs and new regulations that are expected to limit supply,” the report said. Among those regulations are the Drug & Alcohol Clearinghouse, AB5 (though it’s on the shelf for now) and hair-follicle testing. The report cites various numbers showing that capacity is already starting to slide, including the enormous drop in new Class 8 orders, down 45% y/y in the fourth quarter through November. “As rates have cooled, net orders and backlogs have followed,” the report said.
The economics behind the upgrade in the C.H. Robinson and Echo Global ratings are fueled by what Majors sees as a moderation in the decline in spot rates while contract rates remain lower. “Contract rates have continued to outpace the spot market for the 16th straight month,” with contract rates down 3.8% y/y while spot rates are down 13.3% during the same period, the report said.
But the report adds that “our recent conversations with shippers and carriers point toward a tightening spot market, aided by capacity-rationalizing events,” and then repeats the same factors as in truckload: clearinghouse, high insurance costs and hair-follicle testing. That sets up a situation for brokers in which spot rate declines in the first part of 2020 slow their pace and could turn positive “while contract rates continue their y/y declines and continue to track subseasonal as we move closer to 2020 bid season,” the report said.
Susquehanna’s report was not bullish on intermodal, though it did not make any cuts in the rating for Hub Group (NASDAQ: HUBG), which held at positive, or for J.B. Hunt (NASDAQ: JBHT), which held at neutral. However, Susquehanna’s earnings estimate for Hunt was reduced 4% “on downside margin messaging for both intermodal and brokerage/ICS.” Hub Group had its estimate increased 12% on the results of recent cost-savings operations.
Although the long-term outlook is positive, most of the changes Susquehanna made in earnings forecasts were in the red. For example, for the fourth quarter of 2019, Knight-Swift’s earnings per share forecast was reduced 18%, Werner’s was cut 16% and Schneider took a 10% haircut. But the forecast was flat for Landstar and down just 4% for Robinson. (Knight-Swift already has projected lower earnings for the quarter.)
And even with talk of a rates melt-up, it was mostly red in the forecast changes in EPS for all of 2020, though far less than the 4Q 2019 projections. Werner was down 7%, Knight-Swift was down 11%, Hunt was cut 4% and Echo was down 3%. Hub Group saw a 12% increase.
Susquehanna is bearish enough that it said it is still below Wall Street consensus on most big companies. It’s 9% less for Echo, 9% for Werner, 5% for both Knight-Swift and Robinson and 4% for Hunt. But Majors noted, “We expect street estimates to drift downward as we move closer to company earnings.”
Noble1
Earnings & Taxes affect wealth the most and weighs on our “mood” .
However , there is an opportune moment for everything . This leads us to “Social Mood” !
If a person or group of persons feels good and you attempt to approach them with negativity , they’ll shun you .
Currently in the trucking industry social mood is leaning on the negative side but not by all ,yet . However, on the consumer side(general labourers) they don’t currently share your negative sentiment, yet . They are spending loosely and increasing their debt levels . They feel good . They’re extending the stock market to unsustainable insane valuations based on their mood . This we deem to be irrational exuberance . Due to the market increasing in value they feel even better and wealthier . Their homes increase in value . Their 401k increases in value , they feel wealthier , and thus will borrow and spend more especially when credit is lax .
Currently we can see that credit demand has gone through the roof and debt levels surpassed the level it was at in 2007 , it’s currently at all time highs . When this bubble bursts it’s going to sting real bad .
Wait when their irrational exuberance shifts . Once their mood starts to shift from positive to negative , it will be the opportune time to approach them . Right now they couldn’t careless about Taxes & debt . They’re floating on a mirage of wealth due to low interest rates , lax credit ,and rising market valuations , LOL !
If you were to shut down now , you would be popping their “happy emotional bubble” . You don’t want to do that . They’ll hate you and blame you for taking their candy away !
Example : When gas prices hit the sky , they(consumers/general labourers) feel that pinch as well . If you shutdown during such a moment , they won’t generally tend to be as upset with you , they’ll be more receptive and likely to support you due to a common disturbance/hardship .
You need that opportune moment to strike in order to gain maximum support . Now is the “time” to start planning and lining up your “ducks” for that opportune moment . Currently you have enough negative sentiment among truck drivers based on an environmental turbulence due to high capacity vs lower demand , low rates & wages , increasing insurance premiums, nuclear verdicts, and increasing regulations which all weigh negatively on mood on most .
In my humble opinion ……….
P.S , Soon I’m going to change my moniker , this one has served it’s purpose .
Noble1
We must be extremely vigilant in what we write/post here . Every one of our comments are registered and read . You can have a look at “What The Truck” on freightwaves and listen to “Laurel & Hardy” aka blue & red sweaters mocking our comments , in good humour of course …….
However, what I can say in regards to Organized Labour Unions is that they are puppets with strings . You should have noticed this by now .
Find and approach the Puppet Master that pulls the strings of the “puppet(s)” you need to fulfill YOUR agenda . I haven’t seen a “Puppet Master” yet who couldn’t be influenced through their avarice . The “instrument” which will captivate “Puppet Master’s” is MONEY . LOTS OF IT ! If you can fulfill that vice of theirs through your “plan”, they’ll eat out of the palm of your hand . Look behind the “curtain” , for what you see in front is nothing but an illusion .
Going on “strike” or shutting down by remaining at your house rather than protesting on the street is meaningless . You need to attract attention , cause a disturbance through nonviolent resistance . Your protest needs characteristics of drama . Think of it as a play in front of an audience . It’s all about taking action , not sitting on your butt or going on a vacation . You need to “demonstrate” your disapproval in an attempt to influence public opinion and or government . However, it should be performed in a civilized manner .
I personally wouldn’t participate in that sort of a protest unless it was organized and coordinated with military like precision and intelligence . Too many risks involved . Enough blood has been spilt on this planet . It can be avoided , but not through the typical primitive methods of protesting .
Crowd behavior can deviate from peaceful to chaotic within the wink of an eye and become a riot. You need to prevent such potential occurrences .Plus prevent by anticipating strike breakers , infiltration, violence , and mischief etc.
Furthermore , when you’re speaking about engendering a National truck driver shut down you need to realize that it’ll impact a lot of people negatively . You don’t want them to retaliate against you and cause a riot . You want to include them and gain even more power in your movement . Consumers/labourers are all getting fleeced through low wages and high taxes . There isn’t one that isn’t affected by this injustice .
Taxes negatively affects “everyone” . If you manage to open their ears in regards to something that affects them , you’ll draw their attention . Once they say : “yeah that’s true” , you got them on your side .
In Canada they pay income taxes and consumer taxes among others . However, just those two taxes are ripping off Canadians beyond belief . They’re taxed when they earn and taxed again when they spend ! They label consumer taxes , GST(Goods and Services Tax) & HST(Harmonized Sales Tax) & PST(Provincial Sales Tax), in Quebec they label it GST & QST(Quebec Sales Tax) .
They’re literally paying 40% to 50% on average , and beyond of their earnings in taxes ! This is insane ! There are more people in that Country since the eighties paying more taxes than ever before and the quality of government services are decreasing . In Canada they have Medicare . In some public hospitals patients die waiting in emergency rooms to be seen by a doctor due to waiting too long . They’re pushing citizens towards private health clinics thich they need to pay for through their pocket or insurance coverage , while still paying for public Medicare ! . They pay tremendously for inadequate government services !
These are examples of what needs to be spoken about out loud . Now you’re reaching all age categories , The young , middle aged , senior citizens , and parents with children ! High costs with mediocre services , while being taxed on average between 12% & 15% on consumables except for the Northwest Territories at 5% GST no PST ! Then there’s the income tax bracket shenanigan .
If we base ourselves on what is occurring now based on the amount of taxes that we generally pay compared to the 1980’s , what is the amount going to be in the next 10, 20, or 30 years ??? In low to middle classes it used to take only one earner in the family to support a family . Now it takes two !
Inflation transitions into goods costing more .Higher priced goods transitions into higher taxes paid on those goods . Wages aren’t following nor keeping up percentagewise . The low and middle class are getting fleeced beyond belief !
Taxes need to be reduced exceptionally for the low & middle class . Government needs to restructure themselves . However we won’t get into that . The point is to find something that affects all too attract them to your cause . You aim to strike two opponents with one stone , corporations & government with the slogan : HIGHER WAGES & LOWER TAXES .
Alberta pays zero in provincial sales tax(PST) However , they still pay property tax just like most do who own properties .
In Europe it’s VAT(Value Added Tax) & excises . The US no VAT but excises Tax yes
Where does this Goods & Services Tax originate from in Canada ?
The GST replaced a hidden 13.5% manufacturers sales tax (MST)
So in order to “favor” manufacturing exporting corporations and render them more competitive , government removed their tax and passed it on to citizens . WOW ! Another corporate incentive at the expense of lower classed citizens .
I believe that we can all agree that the amount of taxes that we pay is outrageous !
In my humble opinion ………..
.
Noble1
Here’s your melt up !
HIGHER WAGES & LESS IN TAXES , HIGHER WAGES & LESS IN TAXES , HIGHER WAGES & LESS IN TAXES !
CHANT IT !
Or unite , create an Alliance , and increase your wages and pay less in taxes , LOL !
Noble1
You’re going to love this !
Quote:
What is the Teamsters for a Democratic Union?
GOOGLE IT ! But, here is a part of it !
“The origins of the TDU
By the time of the emergence of the TDU in the mid-1970s, the AFL-CIO union officialdom had been nationalist, pro-capitalist, and anticommunist for several decades. This meant that the union leaders explicitly supported the corporations’ “right” to a profit. Under the strong economic growth that prevailed from the 1940s through the early 1970s, this perspective, treacherous to workers as it was, did not exclude improving living standards among truckers, shipping workers, and other sections of the working class. However, simultaneous with the birth of the TDU and similar reform groups, the stage was being set for the degeneration of the unions and, ultimately, their transformation into instruments of the corporations and the government.
In the 1970s the processes that became known as globalization were heightening the interdependence of workers all over the world in the very production and distribution of goods and services, undermining the viability of all nationally based workers’ organizations. The lack of mass working-class organizations with an international, anti-capitalist perspective—that is, the historical weakness of socialism at the time—paved the way for a ruling class counteroffensive that, in the United States, first took the form of the deregulation of key sectors of the economy, including trucking and shipping.
Advances in computer and telecommunication technology had opened up new possibilities in transportation logistics, which could in turn be used for the disaggregation of factory production into far-ranging supply chains—for example, in the auto industry. [2] But America’s capitalists saw in these new efficiencies not an opportunity for improving living standards, but for great new streams of profit.
In the 1970s successive presidential administrations, beginning with Nixon and culminating under Carter with the implementation of the Motor Carrier Act (MCA) of 1980, targeted regulations and controls over trucking overseen by the Interstate Commerce Commission (ICC), and the National Master Freight Agreement (NMFA) governing wages and conditions of Teamsters drivers. The central aim was to drive down wages. This was a highly conscious assault overseen by both the Republican and Democratic parties, and spearheaded by the liberal Democratic Senator Edward “Ted” Kennedy of Massachusetts.
End quote .
Further down in the article
Quote :
“Truckers and delivery drivers today haul more and are paid less than in the 1970s. Their crucial importance to the economy, which would grind to a halt without them, is rewarded with constantly increasing exploitation.”
End quote !
NOW THAT , MY DEAR TRUCK DRIVER COMRADES IS A MUTUAL COMMON HARDSHIP SHARED BY ALL TRUCK DRIVERS !!!!!
REQUOTE !
“Truckers and delivery drivers today haul more and are paid less than in the 1970s. Their crucial importance to the economy, which would grind to a halt without them, is rewarded with constantly increasing exploitation”
LOWER PAY FOR MORE WORK !
IT SHOULD BE THE OPPOSITE ! TRUCK DRIVER EMPLOYEES ON PAYROLL SHOULD BE EARNING MINIMUM WELL INTO THE $40’S PER HOUR FOR HALF THE WORK ! THAT MEANS $1,600 GROSS FOR 40 HOURS ON DUTY ! THEN TIME AND A HALF FOR ANY TIME ABOVE 40 HOURS ON DUTY ! FOR ALL HOURS ON DUTY THAT MOST OF YOU ARE WORKING , YOU SHOULD BE GROSSING BETWEEN $2,800 & $3,400 GROSS PER WEEK FOR IN BETWEEN 60 & 70 HOURS ON DUTY !
OWNER OPERATORS ARE GETTING FLEECED BIG TIME AS WELL ! THEY SHOULD BE EARNING MINIMUM DOUBLE !
Soon you’re going to be replaced with the autonomous machine ! If you’re going to advocate striking/shutting down then make it worth your while and go out with a bang ! GET YOUR FAIR SHARE BEFORE THEY BOOT YOU WITH AUTONOMOUS TRUCKS AT YOUR EXPENSE !
NOW WHO IN THEIR RIGHT MIND WOULDN’T WANT TO EARN AT LEAST DOUBLE WHAT THEY’RE CURRENTLY EARNING ???
AND WHILE YOU’RE AT IT , SINCE YOU’LL BE EARNING MORE , LOBBY GOVERMENT TO INCREASE THE TAX BRACKET ! YOU EARN MORE & PAY LESS IN TAXES ! THIS WILL DISSUADE MISCLASSIFICATION ! ENOUGH WITH THE CORPORATE TAX ADVANTAGES vs A LACK OF WORKER TAX ADVANTAGES ! LABOURERS ARE THE ONES CONTRIBUTING THE MOST TO AN ECONOMY ! LABOURERS ARE HUGE CONSUMERS ! THEY PAY THE MOST IN TAXES ! ENOUGH WITH THE FLEECING OF LABOURERS AT BOTH ENDS !
THE MIDDLE AND LOWER CLASS OUTNUMBER THE HIGH CLASS ! BOTH OF THESE LOWER CLASSES CONSUME MORE THAN THE HIGH CLASS ! HOWEVER, IT’S THE HIGH CLASS THAT GET ALL THE TAX ADVANTAGES WHILE EARNING THE MOST ! ENOUGH !!!
IF THE GOVERMENT SAYS NO FOR BETTER WORKING CLASS TAX ADVANTAGES , THEN CALL FOR A NATIONAL STRIKE AND LET THE HIGH CLASS RUN THEIR FACTORIES AND WORK LIKE SLAVES THEMSELVES WHILE LABOURERS CUT OFF THE GOVERNMENT FROM SLAVE TAX ! THE LOWER CLASSES ARE BEING STARVED ANYWAYS ! IT WON’T HURT TO STARVE A BIT MORE FOR A GOOD REASON IN AN ATTEMPT TO GAIN MORE !
OR come in my direction and UNITE & ORGANIZE AN ALLIANCE ! Something has to give . YOU choose !
It’s the year 2020 , 2020 doesn’t have to be in hindsight , LOL ! Good vison is 20/20 sight . Can YOU see clearly ?
In my humble opinion …… LOL !
Noble1
Oops , omitted to add ,
Quote:
‘Architects of deregulation: Ted Kennedy, left, with Carter
America’s truckers and parcel workers were under political attack. But the TDU, which by 1979 had drawn together several other Teamster reform groups—including a health and safety-focused organization called PROD, or the Professional Drivers Council, which had been founded with the backing of consumer rights activist Ralph Nader in 1971 —insisted on separating politics from workplace struggles. Its actual aim was to politically disarm workers.”
“Monopoly capitalism does not rest on competition and free private initiative but on centralized command,” Trotsky explained in 1940. “The capitalist cliques at the head of mighty trusts, syndicates, banking consortiums, etcetera, view economic life from the very same heights as does state power; and they require at every step the collaboration of the latter… By transforming the trade unions into organs of the state, fascism invents nothing new; it merely draws to their ultimate conclusion the tendencies inherent in imperialism.”
Trotsky concluded this article, which was found on his desk after his murder by a Stalinist assassin, by insisting that genuinely democratic and independent trade unions could “be assured only by a completely revolutionary leadership.”
In an analysis that requires no updating, Trotsky predicted that in the epoch of imperialist decay the unions would either serve as the instruments of class exploitation, or as the organs of working-class revolution. There could be no middle ground.
The evolution of the Teamsters proves Trotsky’s point in the negative. It long ago ceased to represent workers. It is an organization that seeks to represent the major corporations and the state, and that survives at their mercy.
end quote .
And further down , Quote:
“The development of a such a struggle would rapidly transform into a direct political struggle against the government, which is not a neutral body, let alone an instrument the working class can rely on to defend its democratic rights. The courts, the police and other state institution, along with both the Democrats and Republicans, are tools of the corporate and financial oligarchy that rules America.
That is why the development of a powerful industrial counteroffensive of the working class must be combined with a political struggle for workers to take power in their own hands, break the dictatorial grip of the banks and big business over economic and political life, and carry out the socialist transformation of society, including the transformation of the giant logistics companies into public enterprises, collectively owned and democratically controlled by the working class.”
End quote.
Noble1
This is DEEP !
Are you sure you’re ready to face this sort of stuff ??? It’s one heck of a battle to undertake !
The “corruption” that is squeezing the middle & lower class into deceived pawns is huge . The truth ain’t pretty !
I personally would much rather create an Alliance and play(outsmart) them like they’ve played us , rather than face them head on and revolt in their face .
I’d be extremely vigilant concerning the socialism propaganda . I don’t believe it to be genuine . I believe it’s part of another agenda to deceive the masses . New World Order , one government , one currency etc etc ??? Hmmm I’m not quite sold on that hocus pocus to be ethical . However , wherever they go and fight they instill their regime/system , central banks etc . That “New World Order” has been put in motion long ago . Inevitably I firmly believe we will shift from the capitalist era to the socialist era . However, I don’t believe it will be genuine in its beginnings . Then again , what do I know ?
In my humble opinion ……….
Noble1
Major Change coming to the Teamsters Organized Labour Union !
Very interesting article . Google it !
Quotes from parts of the article :
“The Teamster Revolt Against the Hoffa Era”
“After years of givebacks and autocratic leadership under James Hoffa Jr, the power of the Teamsters has withered. But rank-and-file activists are mobilizing against contract concessions, taking over local unions, and building a coalition to transform the union.”
“Organizing at the Bottom to Win at the Top
Now, the Teamster rank and file is taking aim at the International Union with the goal of transforming the leadership of the 1.4-million-member Teamsters Union”
“At the TDU Convention in November, activists voted to endorse the O’Brien–Zuckerman Teamsters United slate and to join a coalition campaign to replace the Hoffa administration with new International Union leadership.”
“The incumbent Teamster general president, James Hoffa, will almost surely not seek reelection. Old-guard Teamster officials are wrestling over who will assume his mantle, including Hoffa slate members Ken Hall and Kevin Moore, both associated with concessionary contracts; Rome Aloise, a Bay Area Teamster power broker who is coming off a two-year suspension from office for corruption; and Terry Hancock, a Hoffa ally who took over the Chicago Joint Council after another Hoffa power broker was indicted for taking employer payoffs.”
“From Economic Crisis to Organizing Comeback
No one could have seen this coming. Flash back ten years. The economic crisis that followed the housing bubble was wreaking havoc in the Teamsters.
Overwhelmed by debt at the very moment that credit and business dried up, the union’s largest freight employer, YRCW, avoided bankruptcy by slashing workers’ wages and pensions.
The Teamsters’ largest pension fund, Central States, lost billions in the Wall Street crash. Union pension fund officials teamed with employers to back a plan to cut the earned pensions of four hundred thousand Teamsters and retirees.
The Hoffa administration responded to the crisis by going along with every employer austerity initiative, from concessions to pension cuts to speedups.”
End quotes.
YOU SEE ! They’re “ORGANIZING AT THE BOTTOM TO WIN AT THE TOP” !!!
Truck Drivers should learn from this & do the same ! UNITE & ORGANIZE FROM THE BOTTOM & YOU’LL CONTROL THE TOP !
In my humble opinion ………..
Keith
Sorry about your misfortune Mike, you are not by yourself. I hope your new job treats you well. In my comment I was a victim of distracted texting. I meant to say that saftey tool has been taken away
Keith
All these government agencies are always screaming saftey this, safety that, safety, safety, saftey, and blame the driver when things go wrong, when they should be blaming themselves. The Motor Carrier Act of 1980 was a “bullet to the head” of the trucking industry. The ICC was created as a saftey tool to keep highways safe, equipment roadworthy and people fairly paid. That tool has away.
Mike
Spot on Keith, time to turn the deregulation off, and go back to the system that actually worked, and paid a real wage for the work involved. I just parked my truck, I cannot afford to operate out here and even keep my equipment up to snuff. Found a job, start next week.
Andrew Schmidt
The real problem with over capacity is all the foreigners coming here and getting their CDL. There’s a bmv up in Milwaukee, wisconsin that’s got a connection with an Indian driving school instructor (who doesn’t even own any trucks) and they pay $7500-$10000 to just be handed a CDL. It’s complete bull and I guarantee if you put a stop to these damn foreigners, not only would the rates go up but there would be a lot less crashes due to those inexperienced, non English speaking/reading morons.
Mike
I have to agree, they come from all over the world, obtain their operating authority, buy some trucks and head back home to run the operations from there. 1099 the drivers, blah blah blah… No skin in the game, think they pay taxes? Hell, most can’t even speak English! BS
Noble1
Andrew I beg to differ .
Those foreigners that you speak and complain about weren’t such an excess capacity problem within the midst of the cyclical peak while rates were increasing !
How come ?
But , now that the cycle reversed from boom to bust ,the foreigners are to blame for excess capacity and low rates ???
Too funny , LOL !
In my humble opinion …………