Sobedesign ™

Still, good on Conway.

Estes and Yellow have worked together before … Estes is a carrier for Yellow in some markets, and they’ve done real estate deals before.  But last Wednesday Estes announced that they’ll buy properties from YRC (primarily Yellow, Roadway, and USF terminals in the US) and then lease them back to YRC.  Estes’ investment could top $120 million, and will significantly enlarge their real estate portfolio, while Yellow gets sorely-needed capital.

Is anyone else getting a sense of reverse-balkanization among the majors?

OK, it IS related to transportation … and is really cool … so I’ve decided to include this link here.

Enjoy … I particularly liked the shot with the small model — reminded me of Spinal Tap’s “Stonehenge” snafu.

I read an article this morning that said Wachovia is downgrading Conway’s stock status … the thinking is that they (Conway, along with most of the other major LTL companies) is going to hold onto their unused trucks for a while, and the cost of carrying that excess capacity will hurt them for at least the first half of 2009.

The reason WHY everyone is holding on?  Because they’re all hoping someone ELSE goes out of business first, and when that company’s freight hits the street, they’ll be ready to pick it up.  Looked at casually from the outside, that level of brinksmanship is like an insanely high stakes game of chicken.

My quick thoughts about it?  Well, the short-term effect is that all the carriers who buy into this strategy will not be *quite* as efficient as they could be.  To be sure, acting as individual companies, it’s the smart move: Think long term, and position yourself to take advantage of a likely future opportunity.  But as an aggregate, they all hurt the economy by unnecessarily inflating rates … and if they’re all less efficient price-wise, it actually HELPS someone who is struggling.

Huh?  Well, think about it … if everyone else got rid of the unnecessary lease, insurance, and maintenance costs of all those empty trucks, they’d ALL have lower prices, which would give them a price advantage in the marketplace.  If that occurs at, say, 9 of the top 10 LTL & TL carriers across the country, it would lead to a widespread reduction of the freight volumes of any other single large carrier that currently can’t afford to drop their rates as well.

THAT revenue loss would absolutely push a top-10 carrier already in dire financial trouble over the edge.

Funny: it’s been almost a year since I’ve posted, but (entirely coincidentally) the last post mentioned the very same “single large carrier” that everyone is keeping an eye on right now …

Red Star … the fallout continues. Exactly how many people in Red Star’s Bridesburg office wanted into the union? 2,000 people out of jobs … including 1,400 Teamsters.

More dominoes …

(Most of us call them “terminals” … drivers, dock guys, girls in the office, TM’s, dispatchers. Think they’ll find lots of jobs waiting for them with competitors in this soft market? What a shame.)

Starting in mid-January, Fed Ex Freight will have a general rate increase of 5.48% for regional LTL.  National rates will also increase “a commensurate” amount.

You can’t blame them … costs go up … but what does your carriers “minimum price” mean when there’s a 25-30% surcharge tacked on to every single bill?

There’s more than one way to skin a cat … or move them: Short Lines.

The most interesting bit is that they control 29% of the nation’s tracks, but only generate 9% of the revenue. Underutilization is where value — and competitive advantage — hides.

You can bet we will be looking for new opportunities here.

Spun that puppy a bit too far.

Hub Group — or just “Hub” occupies a special place in my mind … they were the leasing company that for years supplied (and serviced) trucks to the regional distribution company my dad worked for.

When I was working in the warehouse and on the loading dock in high school, the manager, Mike, could often be heard telling a driver something like “Take that truck down to Hub to get the oil changed” or “604 isn’t back from Hub yet, go get 608.” They were THE company that did everything. I didn’t realize that at the time they were actually pretty small.

Though Dad is way past retirement age, he still goes into work 5-6 days a week, now managing a small warehouse selling mostly to contractors. As such, and given the nature of the products, he has just one warehouseman/driver. The truck? A typical tilt-cab Mitsubishi diesel box, bought used from the rental fleet of — you guessed it — Hub.

They just officially bought DNJ Transportation in Chicago.