think. Batts estimates truckload capacity has been cut 20 percent, but said that’s not enough to offset the drop in volume.
That will keep pressure on carriers to hold rates down, even as demand increases.
Fuel is the wild card. The price of diesel jumped 56 cents from March through mid-June, and higher fuel costs could push marginal carriers over the brink into bankruptcy.
But even at $2.594 on July 6, the national retail diesel price average was about $2 lower than it was a year ago.
“It’s really important to figure out what’s going on with fuel,” Batts said. “We know fuel suppliers will not carry the trucking industry. They get paid within 24 hours.” JOC
LANDSTAR CONTRACTOR REVENUE
Contact William B. Cassidy at wcassidy@joc.com.
ROLLING INTO HISTORY
MONSON TRUCKING isn’t the first trucking company to fail in this recession, but it is one of the oldest. Olaf Monson founded what was then called Monson Dray Line in 1915 as a horse-wagon operation, hauling goods from rail depots to local stores in Zumbrota, Minn.
Four generations of Monsons steered the carrier, which will shut down Aug. 31, through two world wars, the Great Depression and trucking regulation and deregulation.
Motor trucks replaced its horses in the 1930s, co-owner Michael Monson said, as the company evolved from rail-based drayage to road-based less-than-truckload carriage — though it reverted to horse-drawn trucks for local deliveries during World War II.
The LTL operation expanded in southeastern Minnesota until it was sold in the 1960s. Monson then switched to truckload “back before there was a truckload industry,” Monson said. Paper products became Monson’s primary cargo. “We got into paper in 1972,” Monson said, “and it’s what we’ve been doing ever since — until last week.”
It closed its terminals in Virginia and Red Wing, Minn., and Mauston, Wis., July 1, putting 100 employees out of work. The 100 or so employees at its Duluth headquarters will stay on until Aug. 31, Monson said.
The shutdown came on the heels of a new Teamsters contract late last year and the layoff of about 50 drivers early this year. The union agreed to wage cuts, but “it just wasn’t enough, and it couldn’t be enough,” Monson said. “The losses were just too big.”
TRUCKLOAD CARRIER Landstar System is expanding off-road by acquiring t wo technology companies that give it greater reach into shippers’ freight networks.
The Jacksonville, Fla.-based trucking and logistics holding group acquired Detroit-based Premier Logistics and A3 Integration of Ann Arbor, Mich., incurring about $2 million in costs related to the acquisitions.
Landstar is creating a new subsidiary, Landstar Supply Chain Solutions, to operate the companies, headed by Jim Handoush, president of Landstar Global Logistics.
It’s the latest foray by a trucking firm into supply chain management, and it underscores how the revolution in shipping technology that began in the 1980s is rapidly transforming many trucking companies from freight carriers into freight managers.
More and more companies with trucks on the road are offering services traditionally offered by third-party logistics providers, freight brokers, customs agents and soft ware firms.
It’s a trend that’s taken on greater urgency in the recession, as carriers vie for dwindling freight shipments. Taking on shippers’ outsourced transportation functions can help integrate carriers into freight networks and increase their overall volume and lane densities.
At Landstar, the new subsidiaries’ Web-based software will give shipper customers more control over freight management and greater visibility into their supply chains, said Henry Gerkens, Landstar’s president and CEO.
It’s also the first acquisitions by $2.6 billion Landstar in more than 15 years.
The acquisitions “position Landstar as a premier supply chain solutions provider for small and large customers alike in a soft-ware-as-a-service environment,” Gerkens said. “Additionally, our third-party capacity should benefit from increased loading
opportunities” created through the new units, he said.
Premier provides freight management services through two operating units, National Logistics Management and Interactive Capacity Gateway. Its services include Web-based bidding, scheduling, shipping, and shipment tracking and reporting.
A3i offers shipment optimization, carrier visibility and supply chain event management, with multilingual, multicurrency and multimodal capabilities.
Scott Taylor, president of Premier, will remain with the company. He founded NLM in 1989. Lorne Darnell, a founder of A3i, will continue as president of the company.
“The success of the initiative will be dependent on buy-in at the agent level,” R. W. Baird & Co. trucking analyst Jon A. Langenfeld said in a note to investors. Landstar’s subsidiaries are non-asset-based companies that do business with shippers through independent sales agents who secure loads and “business capacity owners” or owner-operators who haul them.
“These added IT capabilities could allow agents to attract a broader book of business benefiting Landstar’s overall freight volumes,” Langenfeld said. JOC
–20% –15%
–10% –5% 0% 5% 10%
1Q’09 4Q 3Q 2Q 1Q’08
Source: Company reports
■ Year-over-year percentage change in freight revenue from independent owner-operators.
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