Trucking Economics, Trucking Economies

I often wonder at the inefficiencies of the industry. I understand there are different markets in freight though. There's the spot market and contract market. I'm assuming most of the stuff I do is contract. I've done large deadheads as well and all sorts of high paying weird loads. I'm guessing that if it's anything like contracting, you make concessions if a customer is handing you millions of dollars in revenue.

For my own economic sanity, I too echo what PackRat does. Especially with the food, it ties into my workout routine and healthy living. I usually only get bottled water and milk at truck stops because of the volume of it I go through. I have very little room for milk and go through a half gallon a day easily. It's a great source of protein vs low calories and carbs. I'll usually buy a couple cases of water when I do my big shopping but it's not uncommon for me to be out 3 weeks.

I have a tethering app that let's me use my unlimited phone data. (Shhhhh. ) so 5g at no added cost. No TV, never watch it, all my stuff is in storage so no rent, etc. I keep Mt overhead as low as possible.

Anybody find perfectly good stuff in a dumpster? Usually, I put my trash in a container in the fuel lane, but every once in a while I use a big dumpster. I’ve found entire cases of bananas and packaged salads, all still good. One Ozarka bottling DC has pallets with big cardboard boxes on them. If there is a broken case of water bottles, they put them out for the drivers. Last time I was there, I must have gotten 100 bottles.

I’ve heard it estimated that 30% of food produced in the USA goes to waste. If that’s even close to being true, it’s very sad.

There's a saying on Wall Street, "You can't save your way to prosperity." That's true. You might keep yourself from going broke, but you'll never thrive and prosper unless you can increase your earnings. There are caps to what you can make as an employee, and being an employee takes up most of your time. So you have to find other ways to make money.

Anne was spot on with side hustles. Find ways to make money that take very little of your time. Long-term buy-and-hold investing is one of the best ways to do that, which includes stocks, bonds, crypto, and real estate. It takes very little time, and your money works for you, even when you're asleep.

Poor people stay poor because they have a "scarcity" mentality, which means they think money is scarce, so they try to save all they can. There's nothing wrong with trying to save money, but it's only one half of the equation. You must make more money if you intend to grow your wealth to a meaningful level.

Trucking Economy - As a company driver, there's much information we're not privy to, especially what loads pay. E.g. our company drivers get paid $20/hr detention pay, our O/O's get $60/hr. Maybe our company is charging the customer $100/hr.

I also once had a long deadhead (Minneapolis to Grove City, OH), where I picked up a load going to Miami. That's about 765 deadhead miles. Since you didn't say how long your loaded miles were, I'm going to use my load as an example of how the company might be making the money on a long deadhead.

Deadhead miles - 765

Loaded miles - 1155

Total miles - 1920

Fuel cost - $1,152 (1920 miles/7.5mpg x $4.50/gal)

Driver pay - $1,094 (1.920 miles x $.57/mile)

Total cost to company - $2,246

Load pays - ? But, on an 1,155 mile load, maybe it pays $3,000-$5,000).

Trucker Economies - Bottom line, spend less than you make and don't waste money on stuff you don't need. I believe trucking is much like being in the military in this respect; some drivers will get paid on Friday and be broke on Monday, while others are flush with cash while looking like they don't have a pot to...well, you know. :)

I hope this helps.

Hi BK.

Good topic. Although I haven't been driving for a long time, I have traveled over the road my entire life chasing outdoor weekend activities. Next to housing expenses and maybe healthcare costs, food is probably the single most significant expense in most households. When I travel, I bring most of my food and other supplies. Food is a basic necessity. GOTTA have it. So, I travel with most of my food and beverages. First and foremost, I pack for my health. I pack my daily recommended servings of fruits & vegetables (to help me get my minimum daily fiber and micronutrients). Enough protein (for me at least 160 - 210 g/day) and carbs (rice, bread, oatmeal, etc., 1100 calories/day) for the 5 - 6 days I expect to be on the road, and water (for me 2300 ml/day or about 80 ounces). I'm a small guy, so those numbers probably seem small! HAHA. As others already mentioned, I try to avoid dining out and not buy on impulse unless I'm buying something for my wife. LOL! Oh, the 30% food waste number is accurate and has been the norm for quite some time. We waste a lot of food here in the States.

As for trucking economics, again, new to trucking. However, my degrees are in applied science, and I am naturally a curious individual. For the past month or so, I have been reading through every formal research article related to trucking that I can find. Primarily about driver utilization and optimizing distribution channels. Let me tell you; the results are very compelling. The supply chain in this country, especially transportation, isn't running anywhere near as efficiently as it could be. Driver utilization isn't even close to capacity. Often we hear that we need 80,000 more truck drivers in this country. Well, the average driver in the US only drives 5.5 hrs/day. They're sitting the rest of the time waiting to get loaded or unloaded. That's not a driver shortage issue. That's a supply chain issue.

The overwhelming consensus in most of the research I've read suggests that the supply chain needs reorganizing to affect long-term sustainable change that benefits everyone. This could mean a company relocating a distribution center or warehouses to maximize driver utilization by streamlining shipping lanes (shortening) to serve customers better. I can't get into all of the details. But the more I read, the more I see on the road, the more I'm convinced of it. But suffice to say, experts suggest this type of effort will require competitors to work together toward the big picture, not just what's in it for them. Yeah, that's going to be a tough sell for sure!

Ultimately, it all trickles down to the consumers that pay for it. Anything that raises the cost of buisness gets put into the price.

Why did that not happen this summer? People found ways to buy less gas, thus decreasing the demand for gas. Price decrease was necessary to increase demand. Basically, temporary increases in shipping costs are basically considered a cost of doing business.

People stayed home because they chose between vacations vs food on the table, hence less demand for gas.

"Temporary increases"? Is that like "temporary inflation"? Everything is temporary when it's put onto a lengthy enough timeline.

What seasonal grocery item that I pick up at a Walmart every 10 days has decreased in price over the past 20 months? I have the records to show I'm spending 35% more now than I did a year ago. Some common items have become scarce, and I guarantee you all this is only the tip of an iceberg. The bottom is nowhere in sight, but some are driving the bus there as fast as it will go.

How do companies absorb the cost of such a long deadhead?

Simple, they make enough from the hundreds of other trucks that are pulling freight profitably that day to cover the loss and then some. While the company makes less than the driver on the load after paying the bills (truck, maintenance and fuel) they make more than enough to cover the deadhead.

Link

A $1000 investment (in Knight-Swift) made in August 2012 would be worth $4,703.33, or a 370.33% gain, as of August 16, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

The S&P 500 rose 205.73% and the price of gold increased 5.84% over the same time frame in comparison.

How do companies absorb the cost of such a long deadhead?

Simple, they make enough from the hundreds of other trucks that are pulling freight profitably that day to cover the loss and then some. While the company makes less than the driver on the load after paying the bills (truck, maintenance and fuel) they make more than enough to cover the deadhead.

Link

A $1000 investment (in Knight-Swift) made in August 2012 would be worth $4,703.33, or a 370.33% gain, as of August 16, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

The S&P 500 rose 205.73% and the price of gold increased 5.84% over the same time frame in comparison.

Wow, that is some eye-opening information. I wish my time machine was still working.

Ultimately, it all trickles down to the consumers that pay for it. Anything that raises the cost of buisness gets put into the price.

Why did that not happen this summer? People found ways to buy less gas, thus decreasing the demand for gas. Price decrease was necessary to increase demand. Basically, temporary increases in shipping costs are basically considered a cost of doing business.

People stayed home because they chose between vacations vs food on the table, hence less demand for gas.

"Temporary increases"? Is that like "temporary inflation"? Everything is temporary when it's put onto a lengthy enough timeline.

What seasonal grocery item that I pick up at a Walmart every 10 days has decreased in price over the past 20 months? I have the records to show I'm spending 35% more now than I did a year ago. Some common items have become scarce, and I guarantee you all this is only the tip of an iceberg. The bottom is nowhere in sight, but some are driving the bus there as fast as it will go.

Temporary increases are in reference to things like gas prices where the price fluctuates seasonally and based on other factors.

The cost of other goods is subject to inflation, but prices don't fluctuate from one shipment to the next because a particular load was more costly to ship.

We are talking about the difference between microeconomics and macroeconomics. The cost of an individual shipment of goods is microeconomics. The price of a particular good in a store is driven by factors of macroeconomics.

The cost of gas (and other fuel) is its own case study in market trends because there are many factors that go into how much a gallon of fuel costs at the pump. One natural disaster can drive up the cost for a few weeks, but the market usually corrects. I really don't know exactly why fuel costs rose so high this summer. I do know that the oil companies have been making record profits quarter after quarter, while trying to get people to believe that prices have to be that high in order to make money. I also know that one political party receives huge amounts of donations from oil company executives.

Ryan wrote:

The cost of other goods is subject to inflation, but prices don't fluctuate from one shipment to the next because a particular load was more costly to ship.

You did mention fuel surcharges in your synopsis. They are applied to freight charges during periods of high fuel prices, like now. This enables trucking companies to recover some of their inflated fuel costs.