biggus

Why Watching Bankruptcies Can Help Stock Performance

What structural problems do you see that will cause the independent trucking industry to fail? Car haulers are one example, but they are tied very closely to just one industry and have highly specialized, expensive equipment. The independents (JBHT for example) serve multiple industries, and regardless of how bad you think the economy will get, not ALL of the industries in the US will fail.

Chungst's argument is that internal fleets that are a subsidiary of a larger company (i.e. Ford having its own trucking fleet) are more efficient at transportation than companies that specialize in trucking. This would be like saying that Ford should also operate its own airline to transport its employees, its own shipping line to import materials from overseas, etc. While I agree that there are some companies that operate their own internal fleets more efficiently than an outside trucking company would be able to, by and large efficiency in the logistics industry, especially the trucking industry, is driven by lane density. If you only have one company, you are limited in the freight that you can source and deliver. If its concentrated and predicatable, then an internal fleet may well be the best option. However, if you have multiple production and delivery points in multiple locations, you will be able to develop lanes that minimize empty miles and out of route miles. You will be able to reduce those empty and out of route miles to a greater extent than the internal company fleet, which means that you will be able to charge a lower price. If you can charge a lower price, companies are more likely to decide that they want to stick to their core strengths rather than get involved in handling DOT audits, inspections, unionization efforts, volatile fuel prices, etc.

If anything, internal fleets are the ones that will suffer in the future: they are very similar to the car haulers, as the internals depend upon their mother company for their freight. Any variation in that demand, and you will get load imbalances in different regions of the country where you will have too many or too few tractors.