00:00It means higher costs and lower margins and possibly less demand. I mean, that's really
00:04what it means. I'm sure you've seen diesel prices hit five bucks. We haven't seen that
00:09since September of 2022. Back in 2022, fuel accounted for about 28 percent of a trucker's
00:17cost. It typically hovers around 20 to 25 percent. So, you know, hopefully the prices
00:25that we're seeing now are temporary. Obviously, that all depends on what's going on in the
00:29Middle East. But it's definitely going to crimp margins and probably crimp demand just
00:34because, you know, the longer that fuel is higher, folks out there will just have less
00:40money to spend on stuff. What about the transition to electric vehicles for the trucking
00:46industry? Once upon a time, that was a big talking point and it was kind of seen as, you
00:50know, the future. Is that still the future for this industry? It may be the future, but
00:55the future is nowhere near, especially for the over the road trucking companies. I mean,
01:01electric does make sense for certain applications, but those are few and far between. I think
01:07the technology has to get better. You have to remember that, you know, trucks can only haul
01:12a certain amount of weight and electric vehicles tend to add to a weight of a truck. So that means
01:18that's less stuff that they can haul. And then also you have the whole, you know, the reality
01:23of some of these trucks are just going across the road and they need to be sure that they
01:30can charge their trucks. And the costs are just so much more expensive. So it's not like
01:36a shipper is going to, oh, I'm going to spend 50% more on rates just because you're driving
01:41an electric truck. That's just not going to happen.
01:44So what are the, I mean, obviously fuel is a big issue for truckers here, but what's the
01:49demand side of the equation? What's it been over the last several months? And has it materially
01:53changed since the war in Iran began?
01:57I mean, it's all about the consumer really. And so, you know, I would say demand was tepid,
02:03but it was at least growing. You know, what you have here is the inflationary pressure from
02:10higher fuel costs, the inflationary pressure for higher food costs, coupled with the fact
02:15that I think a lot of folks were hoping that interest rates would start coming down. And
02:19that seems to be slowing as well. And therefore that impacts, you know, and markets like housing
02:25and the automotive industry. So, you know, we're not, we don't think that, oh, you know,
02:32the consumer is going to totally pull back and this is going to drive us into a recession,
02:36but definitely the consumer is going to pull back and it is going to impact demand. And people,
02:42you know, will have to shave off expectations for GDP the longer this conflict goes on in the
02:49Middle East. John Tucker mentioned two words, fuel surcharge. And I believe either FedEx or UPS at one
02:55point did tack that on for a while before removing it once oil prices came back down. Is that in
03:02our
03:02near future? Lee? It could be. It depends on how high we go. And, you know, a lot of other
03:09transportation companies like trucking companies, whether it's truckload or less than truckload and
03:13railroads, they do all have a fuel surcharge. And when fuel spikes quickly, like we've seen,
03:20the lag effect can be a drag on margins because they are paying for fuel today and then charging a
03:29surcharge from the past. And trucking, that delay or lag isn't that long. It's only a week. But for
03:35railroads, it could be 30 to 60 days. So that can impact, be it be a headwind for earnings going
03:42into
03:42the first and second quarter. But what I'd say, like, you know, over time, it kind of plays out
03:47because when fuel prices decline quickly, it becomes a tailwind for earnings.
