In the United States, keeping up with the Joneses isn’t just a cultural phenomenon. It’s a fairly accurate portrayal of the economy. And the trucking industry barometer hasn’t been looking too hot since December 2007. So, how are people coping?
Due to the most extreme recession to hit the U.S. economy since the Great Depression (1929 – 1940), carriers across the United States have been downsizing in order to avoid shutting down, especially the small owner-operators, who represent the lion share of available capacity, have been hit hard in this economy. “Many small owner-operators, those with one to five trucks, have gone out of business,” says Ron Masiello of Crystal Motors Express. “I’ve had to terminate 10% of my workforce to stay afloat.”
Meanwhile, most carriers that have not gone under cannot afford to buy brand-new equipment for their already smaller fleets. Instead, they are buying used equipment in good repair, or keeping mechanics busy making sure equipment is up to code. Some are even looking to cut costs in other ways: “I’ve actually invested in a hybrid truck to see if we can save on gas while being more eco-friendly,” says Masiello.
Those carriers that are still succeeding in this business show a common thread: Adaptation and experimentation are key! From investments in green equipment to the expansion of services, small carriers are finding success in thinking outside their normal boxcar. However, the struggle to stay afloat while the economy has experienced only a hiccup of improvement has caused many carriers to jump ship, never to return.
With suddenly smaller fleets inhabiting the trucking scene, and with demand recovering ever so slightly, we have shifted from a buyer’s to a seller’s market once again. Full truckload capacity in particular is difficult to come by, to the point where less-then-truckload (LTL) carriers are picking up full containers “Suddenly, LTL carriers are picking up truckload and vice versa,” says Mike Starling, a consultant with BirdDog Solutions. “One LTL representative told me they’re getting requests for quotes for LTL. These quotes are about four times the cost of truckload, yet they are being accepted because so little truckload capacity is available.” As a result, expect carriers to increase prices once again in reaction to market conditions.
The good news is that strategies do exist for shippers to cope with the rising prices in today’s rag-tag capacity market. First, shippers should continue to build strong relationships with their core carriers to ensure coverage for their recurring lanes. In addition, shippers can use third-party freight management firms, such as BirdDog Logistics, to access additional capacity. BirdDog specifically has access to regional and national carrier networks to provide short-term or long-term options for moving loads. Thanks to its large network of carriers, BirdDog Logistics has the ability to match available capacity to your demand. Furthermore, leverage technology for evaluating the various modes in terms of cost and service levels. In BirdDog’s case, our hosted online rating/routing engine allows our customers to balance between parcel, LTL and full truckload. Due to the instability of the market, maintaining flexibility in terms of mode will often help you get what’s most important: the best deal in terms of service levels and cost.
