Signs of Recession or More Noise?

[audreyh1]

Recently I saw an article about the low salary for truck drivers. Can't find that article, but I think this is the data.
https://www.bls.gov/ooh/transportat...g/heavy-and-tractor-trailer-truck-drivers.htm

It looks like a difficult and demanding job.

Yeah, so considering the severe driver shortage, which has been going on for years, why aren’t they being paid more?

 

[MRG]

There's no shortage of people who have little education and think they can make a good living. Sadly they get sucked into the "if only this expense didn't come up" mentally and spend a lot of time peddling their bike faster and harder.

Yeah, so considering the severe driver shortage, which has been going on for years, why aren’t they being paid more?

 

[ERD50]

Yeah, so considering the severe driver shortage, which has been going on for years, why aren’t they being paid more?

I don't get that either. Bugs me when I hear "We can't get people to do this job!" What they really mean is "We can't get people to do this job at the compensation we offer!"

-ERD50

 

[aja8888]

I don't get that either. Bugs me when I hear "We can't get people to do this job!" What they really mean is "We can't get people to do this job at the compensation we offer!"

-ERD50

The real reason why they can't get drivers is a large percentage of applicants can't pass a drug test. After 30+ years in the oilfield, that was the biggest issue, not the pay.

 

[davebarnes]

The recession is here.

Recession Looms: Cass Freight Index Negative for 7th Month
https://moneymaven.io/mishtalk/econ...egative-for-7th-month-uZztn4xxWEC0cBH8rFm7EA/

 

[ERD50]

The real reason why they can't get drivers is a large percentage of applicants can't pass a drug test. After 30+ years in the oilfield, that was the biggest issue, not the pay.

So the answer is to offer more compensation to attract from a wider group of applicants, until they get enough to pass the drug test.

The next thing we hear is "we can't afford to pay that much!". OK, but that's different than just not being able to get people. Again, that's not getting people at what they offer.

And if they have the problem, their competition must have the same problem. So if a an industry needs to get their product shipped, and their aren't enough trucks with drivers, this trucking company will get the business - at a higher price, because the industry that needs something shipped can't get it from anyone else.

-ERD50

 

[aja8888]

So the answer is to offer more compensation to attract from a wider group of applicants, until they get enough to pass the drug test

-ERD50

Typical solution from a desk jockey (like many "coders" here?). If it was that easy, there would be no issues or driver shortage.

(like there is an unlimited source of qualified drivers sitting around waiting to apply for the BIG BUCK jobs!)

A sign I saw a few years ago in a small Mexican restaurant in Carrizo Springs, TX went something like this:

"Truck Drivers wanted,

Must have CDL, clean driving record, must pass a drug test and periodic tests, 40 Hr work week, average $100,000 per year, two weeks paid vacation...call....."

This was for oilfield tanker truck drivers, not over the road long haul rig drivers. Even small companies were having a tough time finding and keeping qualified divers.

Like it or not, paying higher wages to drivers is not the total answer. Many people don't want to live in a truck, have to conform to Fed and State DOT rules (they are tough), sleep in truck stops, and obtain and carry a CDL with few, if any violations.

 

[NW-Bound]

Then, maybe $120K/year?

 

[aja8888]

Here's a good article that discusses the freight recession:


https://wolfstreet.com/2019/07/15/trucking-rail-lead-the-new-transportation-recession/

Freight shipments in the US across all modes of transportation – truck, rail, air, and barge – fell 5.3% in June compared to June last year, after having fallen 6.0% in May, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for Shipments. This decline, along with other freight indicators, including orders for heavy trucks, now clearly outline the new Transportation Recession – number 2 since the Great Recession – in this very cyclical business:

On drivers in trucking companies:

On Thursday and Friday last week, news emerged that two more trucking companies had shut down. Less-than-truckload carrier LME Inc., headquartered in Roseville, Minnesota, with 30 delivery terminals in several states and hundreds of workers, suddenly shut down. And Timmerman Starlite Trucking in Ceres, near Modesto, California, which was specialized in transporting agricultural products and had 30 employees and 28 trucks, also suddenly shut down.

“We tried to provide a healthy work environment for our employees and give them the best wages and benefits we could,” said Starlite CEO Colby Bell, cited by the Ceres Courier. “But in the end, the rates that were available did not support the cost structure needed to compensate our employees appropriately.” He said that freight rates were about the same as 10 years ago, but costs have risen nearly 40% with additional regulations.

 

[ERD50]

Then, maybe $120K/year?

Exactly.

Here's a good article that discusses the freight recession:

https://wolfstreet.com/2019/07/15/trucking-rail-lead-the-new-transportation-recession/

On drivers in trucking companies:

..“But in the end, the rates that were available did not support the cost structure needed to compensate our employees appropriately.” He said that freight rates were about the same as 10 years ago, but costs have risen nearly 40% with additional regulations. ...

Just as I said. If there is demand for shipping things, and shippers can't get drivers, then there will be pent up demand. Then those needing the service have to offer to pay more. Then the shippers can afford to pay drivers more, and attract more of them.

Unless there is something other than a free market here, how can this not get adjusted until supply meets demand?

Short term, sure. It takes time for a trucker to train and get a CDL, etc. But longer term the needs should be met.

In the late 90's tech companies were taking anyone who showed a bit of aptitude and trained them for computer jobs, and paid pretty well. That's how they filled the jobs.

-ERD50

 

[joeea]

Like it or not, paying higher wages to drivers is not the total answer. Many people don't want to live in a truck, have to conform to Fed and State DOT rules (they are tough), sleep in truck stops, and obtain and carry a CDL with few, if any violations.

Robot trucks will solve all of that eventually.

 

[jimandthom]

Exactly.



Just as I said. If there is demand for shipping things, and shippers can't get drivers, then there will be pent up demand. Then those needing the service have to offer to pay more. Then the shippers can afford to pay drivers more, and attract more of them.

Unless there is something other than a free market here, how can this not get adjusted until supply meets demand?

Short term, sure. It takes time for a trucker to train and get a CDL, etc. But longer term the needs should be met.

In the late 90's tech companies were taking anyone who showed a bit of aptitude and trained them for computer jobs, and paid pretty well. That's how they filled the jobs.

-ERD50

Then we will have people b*tch about prices going up, stocks not appreciating as quickly, divies being cut --- including peeps on here.

The way that companys will respond to the above is then to try to find the cheapest production, ie import, to maintain stock price, dividend etc. So lets pay the truckers more, but we will offshore/import part of the product. But by god, we can't cut dividends, stock growth, exec pay etc.


1990s tech expansion was in part the creation of a whole new industry. Supposedly there is a whole bunch of offshoring of tech now-- seems awfully similar to what I stated above.

Admittedly, I am nowhere near as smart as so many here!

 

[ERD50]

Robot trucks will solve all of that eventually.

I think the idea of self driving semi trucks, regulated to drive only on select, approved sections of highways, and with lots of controls (signage, live tracking, etc) will come far sooner than the dream of private vehicles self driving around your town and neighborhood.

Several reasons for that. The first being economics - Those trucks could drive almost 24/7, coupled with the cost of drivers, the payback could be very quick on even an expensive system, one that might not be affordable for most for private use.

Second, a section of highway has nowhere near the complexity of a city street with pedestrians, traffic lights, intersections, etc.

The truck could pull off that highway, stop and a human driver gets on board to navigate it to the delivery area.

-ERD50

 

[NW-Bound]

... Those trucks could drive almost 24/7, coupled with the cost of drivers, the payback could be very quick on even an expensive system, one that might not be affordable for most for private use.

Second, a section of highway has nowhere near the complexity of a city street with pedestrians, traffic lights, intersections, etc.

The truck could pull off that highway, stop and a human driver gets on board to navigate it to the delivery area.

-ERD50

The above idea was talked about 3 years ago. They even had a demonstration or two. I wonder how close to deployment they are now.

 

[LRDave]

I think the idea of self driving semi trucks, regulated to drive only on select, approved sections of highways, and with lots of controls (signage, live tracking, etc) will come far sooner than the dream of private vehicles self driving around your town and neighborhood.

Several reasons for that. The first being economics - Those trucks could drive almost 24/7, coupled with the cost of drivers, the payback could be very quick on even an expensive system, one that might not be affordable for most for private use.

Second, a section of highway has nowhere near the complexity of a city street with pedestrians, traffic lights, intersections, etc.

The truck could pull off that highway, stop and a human driver gets on board to navigate it to the delivery area.

-ERD50

They could travel longer periods, but slower and still improve freight/mile performance. This would also reduce wear-and-tear on roads. They could also be dynamically controlled to drop out of traffic congestion. I think fed/state/local governments could get behind this idea.

 

[NW-Bound]

Then we will have people b*tch about prices going up, stocks not appreciating as quickly, divies being cut --- including peeps on here.

The way that companys will respond to the above is then to try to find the cheapest production, ie import, to maintain stock price, dividend etc. So lets pay the truckers more, but we will offshore/import part of the product. But by god, we can't cut dividends, stock growth, exec pay etc...

It's a good theory.

It is still free market forces at work, but the competition is more than just between trucking companies, but also wider to alternate production methods that would require less shuffling of goods between stages of manufacturing, etc... And it is also competition between different sectors of the stock market to attract investors that drive companies to optimize their profits.

It is never simple.

 

[ERD50]

Then we will have people b*tch about prices going up, stocks not appreciating as quickly, divies being cut --- including peeps on here.

The way that companys will respond to the above is then to try to find the cheapest production, ie import, to maintain stock price, dividend etc. So lets pay the truckers more, but we will offshore/import part of the product. But by god, we can't cut dividends, stock growth, exec pay etc.
...

In a competitive environment, a company is already doing those things, to stay ahead of their competition. They don't wait for something like an increase in labor rates to look into cost cutting.

Cost cutting could get increased attention if there are alternatives, but if you have to ship a truckload of product, you have to ship it.

-ERD50

 

[Spock]

Autonomous trucking is not going to require re-wired interstates. Its up and running hauling freight between Tucson and PHX now with Tucson to El Paso up next.

Time lapse ride along:

 

[jimandthom]

NW Bound-- you are right that it is never simple and that was also part of my point. The trucking costs are just a part of the total picture.

It might be shipping costs this time, production costs the next.

ERD50-- yep a business is always looking for ways to stay ahead of their competition.

What kind of ruckus would be raised in the boardroom/trading floor if the way to pay the truckers higher $$ was to cut the dividend?

Sorry to say folks, but many here would be outraged, that their "dividend/income" was cut as a way to pay someone else more.

 

[jimandthom]

Spock -- neat video

Of course the mantra will be that the autonomous trucks, or new technology in general will create whole new employment. I don't buy that, as the present mechanic will just add another notch on their belt of skills. The same that they did, when cars went from standard/clutch trans to variable speed automatics etc.

 

[joeea]

I think the idea of self driving semi trucks, regulated to drive only on select, approved sections of highways, and with lots of controls (signage, live tracking, etc) will come far sooner than the dream of private vehicles self driving around your town and neighborhood.

Agreed.

The truck could pull off that highway, stop and a human driver gets on board to navigate it to the delivery area.

More and more delivery areas will be optimized with robot trucks in mind. In most cases, no human driver will be required.

 

[joeea]

Of course the mantra will be that the autonomous trucks, or new technology in general will create whole new employment.

Of course it will create new emplyment. The "new employment" will likely involve new skills (like programming and optimizing vehicle routes, for example), and will almost certainly involve fewer workers than the truck drivers that are displaced. Those former drivers will need to find a different job.

I don't buy that, as the present mechanic will just add another notch on their belt of skills. The same that they did, when cars went from standard/clutch trans to variable speed automatics etc.

The introduction of automatic transmissions is a poor analogy to what will happen with robot trucks. And looking only at the effect on mechanics is far too narrow of a focus.

 

[ERD50]

...
ERD50-- yep a business is always looking for ways to stay ahead of their competition.

What kind of ruckus would be raised in the boardroom/trading floor if the way to pay the truckers higher $$ was to cut the dividend?

Sorry to say folks, but many here would be outraged, that their "dividend/income" was cut as a way to pay someone else more.

That's just not the way things work, well, they do work that way, but not in that kind of relationship.

If a business is being hurt by rising costs, and and can't recoup it by raising prices the same amount (because their customers have alternatives, the old 'if beef prices go up, people eat more chicken' analogy), then their business takes a hit, That might mean cutting dividends, or some combo of div/stock-price.

What alternative does the business have? The raise driver pay so they can ship goods, or they don't raise driver pay, and they can't ship goods. Neither one is good for business, but they probably can recoup some of the driver pay hit by charging more for shipping. If they keep paying a dividend they can't support, they will go out of business, driving the stock price down. It isn't really a choice of A vs B, B is a result of A.

-ERD50

 

[jimandthom]

Of course it will create new emplyment. The "new employment" will likely involve new skills (like programming and optimizing vehicle routes, for example), and will almost certainly involve fewer workers than the truck drivers that are displaced. Those former drivers will need to find a different job.


The introduction of automatic transmissions is a poor analogy to what will happen with robot trucks. And looking only at the effect on mechanics is far too narrow of a focus.

Are you suggesting that shipping offices didn't optimize vehicle routes prior to GPS et
Maybe there is something that self driving vehicles will need that isn't presently being done. It may not be being done to the same level of tech, but the job is still being done.

We might be saying the same thing actually--- there will be new skills for employment but its the same function just done diffrantly.

The former shipping clerk, would write up the route using knowledge available on roads etc. The new tech is someone writing a program that taps into GPS data etc. Wheres the difference--- its a the old time shipping office vs the new time programmer. Still a job, still working to the same end and that is getting the product to the destination.

My mechanic was certified in +30 areas of repair. He was also working on electric vehicle certs when we moved here.

Mechanic-- gas and diesel
Mechanic-- electric.

Same guy, he just moved into new fields.

Onaway Michigan, in the early 1900s was the largest producer of wheels for buggys and cars. Evenutally they got out of the buggy business and stuck with cars. Same company, same people, same hard maple.

I am not certain that tech creates jobs, it just replaces similar/older functions with the modern equivilant.

 

[jimandthom]

ERD50--- not saying that they can't support the dividend. I am asking what would be the result if they cut the dividend to pay the truckers more to get more truckers available? It would still be the same result on the bottom line.

And the earlier posts were regarding paying the truckers more-- to help reduce the apparent shortage of drivers. That's more the direction I was hoping to be addressing. Probably didn't do it well.