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The industry that carries 72% of US goods is experiencing an economic downturn as some truckers call it a "bloodbath".
There were signs of reversal; Retail sales are up and big names like UPS and JB Hunt have posted better than expected results this month.
But until trucking regains its rights, other companies may go bankrupt, according to Jason Seidl, general manager of airline and surface transportation in Cowen.
And others are on the right track not to make money. That includes the Van Buren, Arkansas-based US truck, which announced its revenue last week. USA Truck did not respond to a Business Insider survey.
USA Truck reported a net profit of $ 2.5 million in the second quarter of 2018. In the second quarter of 2019, it reported earnings of $ 1,000.
The total number of kilometers traveled actually increased in the second quarter of 2019 compared to the previous year. However, revenue per shipment, a key performance measure in the trucking industry, declined 18.4% from 2018. It also declined 8.5% from the first quarter of 2019.
USA Truck executives emphasized in the call for results that the company was simply turning all take advantage of difficult market conditions for the industry in the face of falling spot rates.
Spot rates, in which retailers and manufacturers use on-demand trucks rather than under an agreed-upon contract, have decreased by 18% in June 2019 compared to the previous year. to June 2018.
Because of this, USA Truck has stated that a large part of its contract business has been withdrawn to move towards the ultra-cheap spot market.
The company will continue to focus on reducing fixed costs by 5 to 10% and adding new customers to its base to improve its bottom line.
Read more: Amazon has quietly ordered more than 2,000 vans to deliver your Prime packages – and UPS and the postal service should feel stressed
Last year, trucking was incredibly profitable, with unprecedented bankruptcies, remarkably high rates, eight-month waiting lists for new trucks, and huge salaries.
"I think the market is correcting itself," Seidl told Business Insider. "Basically, we put too much capacity on the market and you found that the rates were going down very hard, the market can only bear a part of it – so it corrects itself." And that's the market who corrects himself alone. "
"We know who has benefited from us in this market"
Trucking is very cyclical, with huge peaks and troughs that often surprise trucking companies and their customers. In 2018, for example, extremely high rates forced companies like Amazon and General Mills to raise their prices just because they could not otherwise afford the move of their goods.
Now that prices are going down, retailers and manufacturers can move their goods at unbeatable prices, but the trucking companies are being squeezed.
"It's a self-directed cycle and we are shooting ourselves in the foot," Business Insider Ahmad El-Dardiry, Financial Director at Transfix, told Reuters. "We need to find a way to get together and standardize this variability that is pushing shippers to really make sure carriers are viable and viable in a struggling market." It's hard to understand that all of these Trucking companies stop business when the market is soft. "
USA Truck Finance Director Jason Bates alluded to this issue at the Financial Results Conference, when he frankly praised long-term clients who had not benefited from it during the conference. the slowing down of trucking.
By not claiming extremely high prices last year, USA Truck was able to charge a reasonable amount to its customers this year.
"We had a customer last year who said," We know who took advantage of us in this market from his point of view and we will have a long memory, "said Bates." And they've been loyal to that. They entrusted us with the bulk of the freight that we entrusted to our largest customer, which you can consult. RK is disclosed here. They were very loyal in giving us the freight we accepted. "
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