Summary
Will transportation companies be willing to cut there slim profit margins? No
Analysis
Mr. McWilliams opinion was very well written, but in today’s markets it would be financial suicide for a transportation company to deplete their profitability pertaining to rate cuts.
This issue would be argued among transportation executives like 49 CRF rules and regulation. One hundred people would be surveyed, and the one hundred people surveyed would have different interpretations and opinions.
We can all agree that the economy is bleak for transportation companies in today’s market? Yes.
Here is what I believe transportation companies will do, to maintain a stable 2008 profit margin.
1) Transportation companies will maintain the same freight rates from 2007, but increase their fuel surcharges to match the national average.
2) All long term contractual rates will only jump one or two percent, but the fuel surcharge will rise to the national average.
The reason for my opinion is this, with the amount of competitiveness in transportation, if a carrier were to make any bold moves pertaining to rate increases; they then would ultimately lose their customers. If they were to cut their rates, then they would ultimately lose any chance of long term profitability.
Thank You,
Tony Sottile
