I read in Logistics Management that a new trucking advocacy group, “Trucking Moves America Forward” is buffing up and modernizing the image of the trucking industry. With all the tumult going on in trucking right now my humble opinion is that a healthy, well financed dose of PR is exactly what the industry needs and will undoubtedly solve all their problems !
Small Operators Are Finding it Tough
Small trucking companies are going out of business. Owner operators cite government regulations and quality of life issues as the two primary causes.
Quoted from a Wall Street Journal Article
Everybody’s quitting, all us old-timers are done. We’re done with the regulations,” said Eric Peterson, 47 years old, in Burlington, Wis. He drove his own truck for 17 years, but recently decided to sell it because he could no longer afford to make payments.
Fleet Operators Are Expanding but Finding it Tough Too
The larger fleet operators are expanding rapidly by buying up the small ones. However their biggest challenge is recruiting drivers.
According to Daniel England, chairman and CEO of CR England , the nation’s largest refrigerated carrier, in a Logistics Management article:
This challenge of finding and keeping drivers has altered the most basic ways of our business,
It’s not a simple problem—it’s not just a matter of compensation,” England said. Increasing quality of life is a goal of many carriers. Gaining home time is “huge” for drivers, England said, noting that some long-haul drivers are home about once a month.
The only solution they see is to increase rates to finance additional compensation for their drivers. . Fedex Freight and Con-Way Freight have both announced rate increases of 4.9% recently.
Concerns About Capacity
In a tight market where demand exceeds capacity you would think that carriers would be in the driving seat (pun intended). Not so if Swift’s performance is anything to go by. They have slashed their 2015 earning s forecast citing in part the move by shippers toward longer term contracts, which are less profitable for carriers.
A lot of customers are super-concerned about capacity,” said Jason Bates, Swift’s vice president of investor relations, in an interview Friday. “They’re moving freight out of the spot market into the contract market. They want to lock that up and know that they have a contract with a contract carrier.
Retailers Are Scaling Back
To add insult to injury large retailers are still working through excess inventory resulting from the backlog being cleared caused by the West Coast Ports labor dispute.
From a Wall Street Journal Article
While the flow of product from the port has now returned to normal, we’re working to efficiently clear excess inventory to keep our in-line channel healthy,” said Trevor Edwards, president of Nike Brand.
We will continue to feel the effects of our elevated inventory levels the remainder of this year,” Pier 1 Chief Executive Alex Smith said on an earnings call. “This is particularly frustrating and we are disappointed about the impact it’s having on our margins and profitability.
Long Haul Trucking is Going Away
I’ve said this before but I think long haul TL trucking is going away and it’s about time the trucking industry recognize it. It’s getting too difficult and expensive to recruit and retain drivers who rightly care equally about their quality of life as they do the money they earn.
The opportunities lie in short haul trucking and the big driver is omnichannel retailing.
Amazon is out front promising same day delivery and utilizing their sortation centers and local couriers to make it happen. Cargomatic is a player using technology to transform local shipping. The big manufacturers and retailers are all bringing final product closer to their customers via distribution centers and warehousing.
Rail will take the majority of long haul freight and drop the goods at regional and local transloading centers, such as ourselves, for onward local distribution or storage.
The writing is on the wall and no matter how much PR polishing is done the writing is still very plain to see.
I’m not very optimistic. What do you think? Share your comments below.