Trucking Industry in Trouble; Jevic Transportation Closes Citing High Fuel Costs

According to the Philadelphia Inquirer, Jevic Transportation announced it is closing its doors after it finishes shipping what is on the schedule. Jevic Transportation has been in business for 27 years. After twenty seven years you know mismanagement is a very slim possibility. High diesel costs and raising insurance rates put the squeeze to this company.

Jevic Transportation was in business for 27 years and had 1500 employees. That is one thousand five hundred people that are out of jobs. The economic downturn had been felt for months. Fuel prices were as much as payroll. The company had been reducing positions for quite a while. When you're in the transportation business you see a recession coming before anyone else. Customers aren't shipping as much.

According to the Inquirer, in a letter to the employees, Jevic said that it had been seeking "financing or other alternatives that would have enabled it to continue operations. However, it has been unsuccessful, due in part to unforeseeable tightening of the credit markets."

The country will soon be positive that it is in a recession. The trucking industry is showing signs of slowing to the point of ceasing. Any company that has been in business for twenty seven years doesn't just close its doors because it hits a few minor bumps in the road.

I owned a car transport company last year and prices were slowly creeping upward. I only had one truck so I certainly couldn't survive in that market. The vehicles were barely paying enough to pay the driver, fuel and insurance. The only companies I thought would make it were the six to ten car haulers. They could afford to take the cheaper freight. I don't believe customers and brokers cared that the semi trucks only get between six and eight miles per gallon. If you figure out the price of fuel and then charge the customer a little over that you should know the carrier couldn't take it.

Let's say you were moving a vehicle 500 miles. Let's say your truck got six miles to the gallon. For 500 miles the fuel last year would have cost at $3.399 a gallon $283.23. That would have been an eight hour drive not including loading. You have to figure the payroll for that trip at 35 cents a mile at the least. So the pay was $175 not including the payroll taxes the company has to pay for. I haven't even calculated a hotel room if needed and food. Don't forget insurance for the vehicle your driver is driving which is easily $1000 a month. Divide that by 30 days and insurance per day costs you $33.33. Your expenses (not all inclusive as previously mentioned) for the trip there is $491.56. We had a three car hauler. Cars going that distance, approximately Florida to Georgia, only paid about $150 when we got out of the business. At the very least just paying insurance, driver, and fuel costs $163.85. The $163.85 again doesn't cover additional payroll of dispatcher/router, company payroll taxes, and business expenses. You would have had to have at least $250 to $300 for 500 miles. Remember the 500 miles also has to cover the miles from wherever the driver is, and his payroll for going to the vehicle. This is how costs outweighed income. We had to get out of the business just because the vehicles didn't pay enough for the loaded miles much less any extras that were business costs.

I hate to be the bearer of bad news but if there is 1500 more people job hunting and a cargo/freight company that has gone out of business I would have to say we are seeing the progressive start of a recession. I would also like to thank the gas companies that sell the fuel for making enough money off the little people that they may not be seeing much business before long. The fuel prices have gone out of control and there is no reason for gas companies to be making millions of dollars in profits when the customers are struggling to pay.