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SWIFT - We have too many trucks - Halting fleet growth, may reduce fleet size

Mike

Well-Known Member
Just seen this news posting on Facebook, and was a bit surprised. I don't really follow stocks of trucking companies, because I would likely never invest into a trucking company, but was a bit surprised to hear that this SWIFT has dropped off this far.

My totally non-expert opinion, making these sudden changes regarding not buying more trucks is not a good idea. You do things like this quietly, as to not bring fear to your investors.

All this taking place when there is a larger than ever push to increase driver pay and benefits due to retention problems throughout the industry.

It will be interesting to see the direction that SWIFT takes over the next 3-5 years.
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On Tuesday, Swift Transportation announced that they’ll immediately freeze the growth of their fleet, and may even reduce its size, due to the company’s falling stock price.

Over the last year, the company’s stock price has been cut in half, and touched a one-year low of $14.26 just last week.

Swift’s CEO Jerry Moyes spoke about the company’s poor performance on Tuesday and made the announcement to halt fleet growth in order to increase profitability.

“We are extremely disappointed with the current stock price,” he said. “Effective immediately we will enter into a zero fleet growth mode. Until we reach a best in class utilization level, we will not be adding any new equipment.”

The company blamed falling profits on sagging freight demand, coupled with the over-expansion of their fleet size. The company also said they’re considering selling off some of their fleet.

http://www.livetrucking.com/swift-says-they-have-too-many-trucks-and-its-hurting-their-profits/
 
... I would likely never invest into a trucking company

:stare2:

images
 
Ever wonder where they came up with words and phrases? Stock Market for instance; could it have come from the ancient days when tribes traded in cattle or goats or whatever? (EG. I'll trade you 4 goats for one cow).

Now conceivably one tribe could have too many cattle for it's grazing area (let's call them the Swift tribe) and be having troubles finding enough qualified tribe members to move the herd around so they don't overgraze the area (let's call them "drivers".... or cowboys if you prefer:D).

So, the tribe elders (management) decides to get the "drivers" to take part of the herd to the "Stock Market" and get the best price they could.

Unfortunately, the drivers got flim-flammed by a "stock broker" and wound up having to trade the cattle for twice as many goats (stock price).

When the "drivers" got home, the Swift elders were shocked and confused. "Goats? Whadda we do with goats? We don't know nothing about goats.". The head "driver" told them "It's cool. We found a guy who knows all about goats. His name is Rab. He's gonna take all the guys who ain't smart enough to herd cattle and teach them goats."

So, as time passed the Swifts and their drivers tended the cattle and Rab and his guys tended the goats. The goat herders were constantly calling out "Hey Rab, what do I do about...." and quickly became known as the "Hey Rabs".

Ain't it cool how history keeps repeating itself???? ;):D
 
I am surprised they are seeing sagging freight demands while everyone else is seeing freight demands near capacity.

Swift is a very large company. I could see them wanting to take a step back and not expand their fleet further.

I have seen some very large companies expand rapidly and then implode or damn near close to it.
 
Ever wonder where they came up with words and phrases? Stock Market for instance; could it have come from the ancient days when tribes traded in cattle or goats or whatever? (EG. I'll trade you 4 goats for one cow).

Now conceivably one tribe could have too many cattle for it's grazing area (let's call them the Swift tribe) and be having troubles finding enough qualified tribe members to move the herd around so they don't overgraze the area (let's call them "drivers".... or cowboys if you prefer:D).

So, the tribe elders (management) decides to get the "drivers" to take part of the herd to the "Stock Market" and get the best price they could.

Unfortunately, the drivers got flim-flammed by a "stock broker" and wound up having to trade the cattle for twice as many goats (stock price).

When the "drivers" got home, the Swift elders were shocked and confused. "Goats? Whadda we do with goats? We don't know nothing about goats.". The head "driver" told them "It's cool. We found a guy who knows all about goats. His name is Rab. He's gonna take all the guys who ain't smart enough to herd cattle and teach them goats."

So, as time passed the Swifts and their drivers tended the cattle and Rab and his guys tended the goats. The goat herders were constantly calling out "Hey Rab, what do I do about...." and quickly became known as the "Hey Rabs".

Ain't it cool how history keeps repeating itself???? ;):D
I don't think that's how it happened. o_O
 
Swift is a very large company. I could see them wanting to take a step back and not expand their fleet further.

Halting growth doesn't surprise me. Trucking was awesome last year, and lots of people got in, and current fleets expanded. Many failed to look at 2012 and 2013 numbers and just jumped on board the false theory that the economy was roaring back.

Rates are way down from last year. Partly from a lower fuel surcharge, but fact is rates in every market have dropped even farther than the changing fuel surcharge would reflect.

The thing that did surprise me is how far the stocks for SWIFT has dropped, and the way they appear to be responding. Could simply be the way the article was written, but it seems as though they are in a mild panic about the situation.

Which makes me wonder how SWIFT responded to the gains in 2014. Did they go all in and expand their company fleet, with the assumption that things were going to continue to rise? Did other companies get a jump on this in terms of attracting drivers with better benefits?

If you were a stockholder, how would you respond to this announcement? Would you hang on to the stock, or would you see this as a sign to cut your losses and get rid of it?
 
Let's just say......


I'm glad I bought a better trailer and not a new truck.

Trying to scare me? LOL.

I know freight slowed down this year, but nowhere near enough for me to even notice it. It just meant that when I was headed to Indianapolis, I only had 400 loads to pick from rather than 1100. Our rates, for the most part, dropped according to the surcharge, not really much difference from there. All in all, my net profit per mile this year is better than last year. Part of this though is simply me knowing the system better and better, combined with moving from South Arkansas up to Northwest Arkansas. Being an hour from Interstate 44 and Interstate 40 (an hour drive from Joplin), makes for a good place to operate a truck.
 
You work inside a rather larger system. Freight is down. I see it in the way the manufacturers are turning stuff out. The brokers I work with are seeing it. The other trucking companies are seeing it.

Rates are down, volume is down. It's going to be a rough winter.

Check out the cass index too.
 
You work inside a rather larger system. Freight is down. I see it in the way the manufacturers are turning stuff out. The brokers I work with are seeing it. The other trucking companies are seeing it.

Rates are down, volume is down. It's going to be a rough winter.

Check out the cass index too.

Yes, it is down. That is only part of the problem though. The industry also got flooded with more trucks, both company and 0wner operator.
 
Here are the ones that seem to be making the biggest news for dropping stocks and drops in freight volume
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–UPS reported a significant drop in daily package volume.

–Roadrunner slashed its sales forecast because of weak demand and aggressive pricing practices. Roadrunner stock fell 46% today to a new all-time low for the company.

–Swift announced it would no longer be expanding its fleet to try to keep prices competitive.

–After recently acquiring Con-way, XPO Logistics stock has fallen 14%.

–YRC stocks fell 16%.

Trucking Stocks Plummet Dramatically Today

Grabbed that link of the rates and lanes facebook page.
 
Swift added a huge number of trucks when failing Central Refrigerated was brought in. With those trucks came drivers and staff who literally didn't give the first crap about freight, fuel or maintenance.

Central had gotten into a bidding war with some large contracts and won the contracts, but ultimately lost in the long run. Whoever bid them for Central did so at a loss. When Central was folded into Swift, losing contracts were cut loose, real assets sold or repurposed and power unit count went from 17,000 to 22,000. Swift has infrastructure to handle 17,000 trucks, but the added 5,000 strain their system.

It makes perfect sense to contract the fleet through deactivation and sale of old equipment along with severance of poorly performing drivers to bring the company back to a more manageable level. Should have been doing that all along, but I think it was fun being that big for a while.

We're going to be looking at another crash. Freight rates and utilization are already showing this. I just hope it's not as severe as the last one was.
 
Central had gotten into a bidding war with some large contracts and won the contracts, but ultimately lost in the long run. Whoever bid them for Central did so at a loss. When Central was folded into Swift, losing contracts were cut loose, real assets sold or repurposed and power unit count went from 17,000 to 22,000. Swift has infrastructure to handle 17,000 trucks, but the added 5,000 strain their system.

Sounds like Central has made a big mess for SWIFT to try and clean up, and it comes at a bad time in the industry.
 
We're going to be looking at another crash. Freight rates and utilization are already showing this. I just hope it's not as severe as the last one was.

Yes and no. Truth is, we never came out of the previous one. Lots of doctoring reality to make things look better than what they are for the past few years now.

That said,

This is a great time to be an owner operator, if you have your finances in order. Things will be tight from now through the upcoming election. Those in the industry who are "racing to the bottom" will suffer big time, some will fail.
 

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