Trucking runs in our blood. If it runs in yours, you should join us in #BleedingBlue.

Apply Now

Economic Report From the Trenches and Without an Economics Degree

From the desk of Kyle Kottke… (P.S. you can click on the graphs below to make them bigger and easier to read)

Heck, the reality is that I barely have a degree of any kind and these times will go down as a chapter in a book I will never sell!  The market for the past three years has been interesting and the market for the past 45 days has been wild.  At the home front for Kottke Trucking, four of our top six customers have a major reliance on the food service (restaurants) side of the world.

Craig Fuller did a nice job in his articles at FreightWaves outlining the market along with the spike and drop.  The real story isn’t what is going on now, but rather what is going on now plus how we entered this time of the economic cycle.  What do I mean?

Source – FreighWaves SONAR

Chris Henry of Transportation Profitability Program wrote a great article on March 6th outlining margins in trucking.  Being that refrigerated markets are the closest to my heart, it was worth noting that the average profit margin for a trucking company in the past 36 months was 3.821%.  His read is from main street trucking, where he has the data of 238 companies, including ours.  It got worse quickly, as he shared that the rolling 12 month ending February 2020 was .002% or $.002 of every dollar of revenue.

Source: Chris Henry’s LinkedIn

Also coming out on May 1st was data from FTR Trucking Update (subscription required, and I highly recommend it) and in it Avery Vise talks about what he is expecting for the year ahead with volumes and rates.  He is projecting rates in all of transportation to be down 7.8% in 2020 and specifically in refrigerated was 3.3%.  So, if you compare his forecast to Chris Henry’s rolling 12-month results ending in February, the average trucking company will now be losing 3% on all revenue received (103 OR).

Source – FTR

Because my job is to report bleak pictures, this doesn’t include the runaway health and liability insurance markets that have most trucking companies taking double digit increases.  Some in the liability space is much more than double digits and some approaching 20-30% increases.

In the world of uncertainly, the government will give many companies short term support and some banks will add to that.  The reality is, even with all of this, something must give.

I told a good friend this past week, it is like everyone is giving all truckers a long runway, but some will never get off the ground.  Some will just not turn the corner.  Those with deep reliance on the spot market will be first, but the reality is, there could be deep changes in the marketplace.  The uncertainty of today and the deep declines in some spot markets have made the changes come faster than one would think.

Until next time, keep on keeping on!

Speak Your Mind


(800) 248-2623 (320) 833-5385

Kottke Trucking, Inc.