Freightways - FRE

[Timesurfer]

I presume most owner driver contracts pass the fuel price risk back to the freight company. Owner drivers are in no position to manage this risk or enter into hedging products.

The smart ones have a ratcheting up clause if there is significant inflation. I am not aware of ratcheting down ones (because fuel never significantly drops!) but when contracts are renegotiated they will get a haircut.

[King1212]

What..before the lock down....91 fuel was almost $1.80.

Now ....$1.60....that is .20c ..drop. what do u mean not significant drop...

[Sideshow Bob]

The smart ones have a ratcheting up clause if there is significant inflation. I am not aware of ratcheting down ones (because fuel never significantly drops!) but when contracts are renegotiated they will get a haircut.

With any of the carriers or refrigerated carriers we use for work at least, there is a 'FAF' which think is a "Fuel Adjustment Factor" which carries on any of our freight. Some of these are using owner-drivers.

Issue is, last time I looked at a notice from a major nzx-listed carrier, I could buy diesel cheaper than the lowest FAF rate or price band!

[Stumpynuts]

Can anyone connected with the industry shed any light on their current prospects?

I'm a direct employee of one of the wider FRE companies.

Courier drivers - The majority are owner operated contractor drivers - They bear all the cost of the fuel purchases themselves. It's up to them as independant operators to correctly claim for their fuel as part of their operating expenses - One would assume they've got proper tax advisors to do their yearly returns.

The fuel adjustment factors are generally factored into product price increases across all FRE products in order to keep paying the courier drivers - ie. The cost of fuel goes up which the courier has to pay for directly, the consumer product must also increase in order for each of FRE's individual companies to pay their contractors directly.
The same thing happens with Supermarket linehaul truck contractors - Costs are passed onto Foodstuffs/Countdown, they in turn pass the cost increase onto price of the bread & milk that you pay for at the checkout.

For those that aren't aware of how the courier industry works - Courier drivers are paid for each individual item of courier successfully delivered only.
They're generally not paid a guaranteed base or whatever, although in some cases some companies will offer that at the start of a new courier franchise in order to get them up and running.

[King1212]

A bit of korero from the Jarden

Great time ahead....

Qantas Cargo, Air New Zealand Cargo, Mainfreight, Til Logistics, K&S and several other logistics companies have all either upgraded or maintained their earnings guidance since the Covid-19 lockdowns, so we would expect this information is already priced into their shares. While Freightways, Lindsay and CTI Logistics may also have benefited from higher demand for home deliveries, lower fuel costs and less traffic congestion, these companies have stayed quiet about their earnings. If these factors have not been fully priced into their shares, these companies could surprise on the day of their result

[King1212]

Lockdown is good for freight companies! Will see more delivery...

[percy]

.................................................. ...
Changed my mind.

[King1212]

Monday is reporting day. So far no news....so...let see e koro Jarden is right or not... whether freightway can maintain thier earning or upgrade.

So far...HLG and a lot of retailers reported significant increase of online sales. Together with online food delivery.

Spoke to one of the drivers....he is flat out! 6 days full delivery

[bull....]

no dividend yuk wonder if it get smashed because of this?

[JohnnyTheHorse]

no dividend yuk wonder if it get smashed because of this?

Thanks for that heads up. Went short on open.