TheChek News Flow

While first quarter sales and margin strand to remain healthy due to the ongoing relief of our backlog, we have experienced softening demand in the first quarter that coincided with Russia's invasion of Ukraine in late February and the market volatility that followed. We believe it is prudent to remain conservative until demand trends return to normal and -- we are providing the following outlook for the first quarter of 2022.”

... It's probably one of the most difficult guides since 2008 and '09, because we -- we're right in the middle of this disruption from Ukraine and Russia, which I think -- I don't think it's all Ukraine and Russia. I think it's triggered a greater awareness. It's like someone rang the bell, and everybody paid attention, and then all of a sudden, everybody started talking. All of a sudden, the Fed's off to the races and that creates concern. You've got housing prices at all-time highs. I mean, is it sustainable? I don't know for how long; doesn't make sense on what's happening in the housing sector and other places. And you've got inflation like I've never seen.

Now I was telling people, when Yellen said, we're going back to 2%, we were just signing our new freight contracts, ocean freight contracts. I just wonder if the Fed has picked up the phone and called a business person and said, hi, what do you think is happening with inflation? How is ocean rates? How is this? How is that?

I mean I don't think anybody really understands what's coming from an inflation point of view, because either businesses are going to make a lot less money or they're going to raise their prices. And I don't think anybody really understands how high prices are going to go everywhere. In restaurants, in cars and everything. And I think it's going to outrun the consumer. And I think we're going to be in some tricky space. So everything is kind of happening at once. And I think you got to prepare for war. I mean if you're going into a very difficult, unpredictable time, you just got to be super flexible, you've got to be able to improvise, adapt, overcome and kind of be ready for anything.

And I don't mean that by playing defense. I mean it's by playing offense, but it's -- I wouldn't call it happy days right now. I'd call it pensive days. Be ready. And when we play like that, we usually have our best outcome. When we get overly optimistic, we have a higher likelihood to wind up in the ditch and get ahead of ourselves. So -- but if everything, if the war in Ukraine ends and inflation slows down some miraculous way, I don't know, everybody can sign new freight contracts because, I mean, most of the world all signed new freight contracts. Two years ago, price of the container for us went from 2,400 to 4,800? I'm not going to tell you what it just went to. But just let's say that looked like a nice increase.

So either people are going to do stupid things like take quality down to make their goods look like it's better value or they're going to have to take prices up and where they won't take prices up and they'll hurt -- their margin profile is going to change. But it's not just us, it's everybody I know in every industry. And I just don't think it's like -- again, I don't want to scare everybody. But I talk about them, like there's the scene in The Big Short, where everybody is in that ballroom and the guy from Bear Stearns or someone is up there, and he's saying how they are going to buy back $1 billion of their stock, and then one guy on his BlackBerry, goes, can I ask the question, sir? In the 20 minutes that you've been talking, your stock is down like 55%. And everybody ran out of the room.

... I wish the answers were different. I would prefer to say the U.S. trucking market was robust and the expansion will continue throughout 2022. But I can’t. Since I wrote the piece about the bloodbath, FreightWaves SONAR’s tender data continues to reinforce the perspective of a declining freight market.

Tender rejections are the best indicator into real-time supply/demand in the truckload sector. The data comes from actual electronic load requests – “tenders” in the truckload contract market.

A high rejection rate means that trucking companies have more options to choose from. A low rejection rate means carriers have fewer options in freight to pick from. Since this measures actual load activity and not load board posts or searches, it tells us what the market is actually doing.

And since it measures the willingness of carriers that are contracted to accept or to reject a load they have a contracted rate for, if the rejection rate declines, it suggests capacity is loosening.

"We should monitor the new recombinants closely, but we should not panic at the moment," said Leo Poon, a virologist and University of Hong Kong professor who has tracked and written reports on the emergence of new strains.

It’s not unexpected to see Covid recombinant variants, or a mix of two previous strains, particularly since the delta and omicron strains have been circulating widely, he said. It’s likely that some people would be infected by both strains. If a variant were to be detected in multiple regions and was spreading in the community, then that would be of concern, he said.