Bearing in mind what I said about our increasingly tangled, overwhelmed logistics chain earlier this morning . . . I'm sure you've heard of the Texas transportation company that's paying its commercial drivers up to $14,000 per week. That applies to owner/operators, as far as I know (i.e. drivers who have their own trucks, and hire out themselves and their vehicles to trucking companies), rather than drivers operating the company's trucks, but it's still an immensely high rate compared to even a few months ago.
It's yet another sign of the warped, twisted logistics and supply chain we're currently experiencing. Consider:
- That trucking company isn't paying those inflated figures out of its own pocket. It's charging them to its customers in the form of higher transport rates - and they're obviously willing to pay them.
- If the supply situation is so bad that customers are willing to pay such high rates, it's a sign of how desperate things are becoming. Under normal circumstances, no business could afford to pay that high for truck drivers. Now, it's simply the going rate to be sure of quality, on-time service.
- Owner/operators are jumping at the chance to earn that high, because if it lasts for just a few years, they'll be able to retire and never work again. Who's going to take their place when they do?
Now consider those rates in the light of inflation. If a vendor has to pay five to ten times as much to get his goods to his warehouse(s) and store(s), you can be sure he'll pass on that increased cost to his customers in the form of higher prices. Without a single physical component having gone up in price, the cost of the product as a whole has just jumped significantly. I'd love to know what proportion of our inflation rate is attributable to transport, shipping and logistics costs. I suspect it's a lot more than usual.
Meanwhile, I can only repeat what I said a few hours ago: buy what you need, right now, and don't quibble about settling for substitutes if you have to. Make sure you're prepared for a national logistics crisis. Our supply chain is so close to overwhelmed that I fully expect a major breakdown within the next one to two months - certainly by Christmas.
Peter
Desperation! Plain and simple. If they want to continue as a company, they MUST have drivers. And yes, that cost will be passed along. A current owner operator with a 'new' rig can make $250,000+ a year now, so this is about triple that rate.
ReplyDeleteI would bet the 14 k would be a pretty special haul. Something like a crane or maybe windmill parts. Would not be ups or a commodities hauler.
ReplyDeleteAs far as your trucker being able to retire and never work again in the comparative future, with the real inflation we are naw experiencing along with the huge government spending they are trying to ram through they will need to invest in a wheelbarrow to take their money to the store to buy bread. When that cash runs out they can retire to the government resettlement camp for free bread! I hope not but things sure look bad if the current administration isn’t slowed down!
ReplyDeleteA buddy of mine did 3 tours as a contractor in Iraq to bankroll a business that failed in 18 months. He is also retired military. He worked in the communications field but had a CDL. At 60 he had blown his retirement on the business. He bought a used Mack cab-over. He has made $$$,$$$ the past 4 years. He has retired once again as he worked his ass off as an owner operator.
ReplyDeleteIf a driver drives 500 miles a day, 7 days week, that's 3500 miles a week, which works out to $4 a mile, which should pay for the driver's time, the fuel, the truck and maybe $1 a mile bonus.
ReplyDeleteMy wife and I stopped by a dealership to look at a little car she thought was cute, just on a lark, after having dinner across the street. The car itself was only 25K and change on the factory "Munrony" sticker. But next to that sticker was another stickerthat explained that the dealer was also including a few minor baubles. Wheel locks, carpet floor mats, full tank of gas AND A $10,000 'MARKET ADJUSTMENT CHARGE".
ReplyDeleteYep, a 10,000 dollar extra charge on a 25,000 econo-box. And someone will gladly pay it. This shit is getting out of hand, and it is going to get much worse before it gets better.
I have 18 years of truck driving experience, and I am currently dispatching trucks from home. The rates are DOWN, no up for freight... This is because there is a shortage of freight, and too many trucks to haul it... what a few months ago would have gone for $3.50/ mile is now regularly going for $2.25/ mile... and with the price of fuel skyrocketing, it is hard to to find freight that barely covers expenses these days.
ReplyDeleteBacon was on "sale" at one of my grocery stores for $6.99/lb. I usually get it at Aldi's for $3.49/lb. Even there, last time I checked it was over $4/lb. My freezer has a little more room - time to stock up again à
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