Overdrive Magazine

January 2020

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4 | Overdrive | January 2020 Join all our friends at facebook.com/OverdriveTrucking Follow breaking news and commentary at twitter.com/OverdriveUpdate Subscribe to our YouTube channel at youtube.com/OverdriveMag Subscribe to our daily newsletter at OverdriveOnline.com/newsletter-signup Exercise your trucking business mind at " Overdrive's Trucking Pro"group at Linkedin.com Share and comment on photography from around the trucking world at Instagram.com/overdrivetrucking Trucking analysts have been saying roughly the same thing for the last year: e 2018 boom is history, but doomsday is not at hand. Freight demand, like the economy, is luke- warm. A recession might be around the corner … or maybe not. is mantra surfaced repeatedly in its more pessimistic form during 2019 with news of eet closures, climax- ing with Celadon's sudden collapse. Its size – operating more than 3,300 trucks and tractors – made its demise notable, but its nancial troubles well predated the good times of 2018. at particular closure adds little support to a gloomy outlook for trucking. Looking more broadly at eet closures, Brough- ton Capital LLC counts 640 eets that had closed through the rst nine months of 2019, more than twice the 310 carriers that closed in all of 2018. "It looks like a dramatic jump, and indeed it is, but it's o an extraordinary all-time low," said BC's Donald Broughton in an interview with my colleague Tom Quimby. Other points to be made on the glass-half-full side: Unemployment was still at record lows as the year ended. Major stock markets hit all-time highs in December. e U.S.-Mexico-Canada trade agreement is expected to at least prevent the eco- nomic hit that would have accompanied President Trump's planned withdrawal from NAFTA. Among industries expected to gain are some of trucking's favorites: auto production, agriculture, manufactur- ing, mining and energy. On the glass-half-empty side: Trump's trade negotiations with China seem to have threatened economic stability more than encouraged it. Other uncertainties, such as those surrounding the November elections and the Trump impeachment initiative, tend to inhibit economic growth and con dence. Also, some trucking indicators pointed in the wrong direction. North American Class 8 truck orders in November were 17,300, down 21% from October and the lowest November total since 2015, according to a preliminary report from consulting rm FTR. Spot rates, sensitive to current market demand, have dropped 15% to 25% lower than contract rates in dry van, atbed and reefer, Broughton said in a Dec. 17 PrePass webinar. He also cited declining trends in steel production, railroad tanker carloads, construction materials, housing starts and automo- tive sales. ese developments are largely out of own- er-operators' control, notes Todd Amen, head of nancial services provider ATBS. " e best advice is to prepare for the downside," he says. " e upside will take care of itself." Part of that downside prep is ensuring your nances are in order. Whether the next notable downturn comes this year or later, for starters, do what you can to start paring down any signi cant debt. "I'd plan for a 2019-like year," Amen advises. "Control costs, don't be picky on freight, generate revenue, and cover xed costs." Dec. Feb. Apr. June Aug. Dec. Oct. $120 $110 $100 $90 Landstar System 2019 stock prices Amid uncertainties, fix what you control By Max Heine, Editorial Director mheine@randallreilly.com, twitter: @maxheine After a notable decline in May, the stock price of Landstar Systems, the largest all-owner-operator fleet, has reflected continuing investor confidence in the owner-operator market since June.

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