News & Publications
Truckload Rate Fluctuation
The market for truckload shipments has been up and down. The current market for truckload shipments has been lacking consistency crippling truckload carriers, putting many out of them out of business. Currently, the truckload market has a much greater volume of trucks willing to load than freight available. As a result, pricing is in the control of the shippers. Expectedly, shippers have been taking full advantage, driving down rates as low as possible resulting in superb cost savings. Driving rates lower and lower has been frustrating for some carriers, but there is not much they can do about it under the circumstances. Derek Leather, president and COO of Werner Enterprises, spoke about this matter at the 2016 NASSTRAC Shippers Conference, describing it as “aggressive procurement behavior”, putting many companies such as his in a spot where they feel the pressure financially. [JOC – Roller Coaster]
A big reason this is damaging for many companies, and fatal to some in the long term, is due to higher wages which are necessary in order to invest in new equipment. Jim Tate, an agent with Landstar Ranger, took a similar stance. He explained that the problem with operating inexpensively is that it doesn’t accommodate for a broken tire, a busted engine or transmission. These companies aren’t bringing in as much revenue, and in many cases they are struggling with debt for things such as gas, employees, or other expenses. These trucking companies are simply hoping to stay afloat until the market turns around. However, many of the smaller companies are going under, which inevitably leads to a loss of jobs. According to American Trucking Association, driver turnover was at 102 percent in the last quarter of 2015. That is the second straight quarter where turnover has surpassed 100 percent, which hasn’t happened since 2012. [JOC – Driver turnover]
Also during the 2016 NASSTRAC Shippers Conference, President Leather of Werner Enterprises proposed that both sides communicate together and collaborate on long-term contracted rates that are low enough to satisfy the shipping companies, yet still provide the carriers and all those involved fair pay to manage their businesses. [Roller coaster] However, with a great deal of savings being acquired by the shippers, this will be a difficult feat. It will require the carriers to rely on their expertise, availability and reputation as possible leverage.
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Allyn contributor: Kreg Semling
Sources:
[Roller coaster]
[Driver Turnover]