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Rail News: Rail Industry Trends

Truck brokers need to expand services to become shippers' go-to transportation provider, execs say


Truck brokers are experiencing some of the worst business declines in several years because of the absence of overflow freight from asset-based carriers, according to Noël Perry, a transportation economist and managing director with FTR Associates.

Perry was one of four guest panelists to speak during a truck brokerage industry conference call on Friday. The call was hosted by Stifel Nicolaus analyst John Larkin, who issued a research note Monday reviewing the event.

Perry noted that brokers that act as “core carriers” to shippers are likely to be in better shape than those handling overflow freight during slow periods, like the one currently in progress, according to Larkin’s note.

Trucking rates have slid an average of 6 percent, with less-than-truckload rates down even more and temperature-controlled rates down much less than 6 percent, according to George Abernathy, chief operating officer of third-party logistics firm Transplace and another conference call speaker. Most carriers can offset about two-thirds of the price decline through “intensive” cost control, particularly for equipment and labor, Abernathy said.

Landstar Carrier Group President Pat O’Malley, another panelist, said that fuel costs have increased about 20 percent in the last three weeks and some carriers’ customers are increasing days payable to 60 days or more from 30 days. Customers are doing so to conserve cash, but given that many carriers struggle unless their payment terms remain unchanged, it often falls to the broker to carry the extra working capital, O’Malley said.

Truck brokers need to expand their services to become a “go to” transportation provider, offering intermodal, international airfreight, and ocean freight forwarding services, as well as rail box-car and other services in order to be on the forefront of shippers’ minds, said David Wedaman, founder and chief executive officer of RE: Transportation Inc.

— By Desiree J. Hanford. A Chicago-based free-lance writer, Hanford covered the equities market, including transportation, for Dow Jones & Co. for 10 years.

Contact Progressive Railroading editorial staff.

More News from 4/7/2009