I’ve heard the odd person allude to a possible double dip in the economy but for the most part (as mentioned before) it looks like the worst is behind us. In discussions with our carrier customers, most have followed a cost cutting protocol, regardless of the size, scope and nature of their business. Still, if we look at Ontario vs. Western Canada, it appears carriers can raise rates in the west, while the shippers still carry the big stick here. Available capacity seems to be the predominant trump card.
You’ve probably all heard something along the lines of “Quality, service and price…pick two”. In this new, post-recession economy, smart operators are forced to follow that guideline. Where shippers are under pressure to maintain or lower their transportation spend, carriers have had to modify their thinking accordingly. Where a partial load west used to move Friday for a Monday delivery, now it might wait to get topped up Monday for a Thursday delivery. This brings us to another saying “Better to beg for forgiveness than ask for permission”.
Even though driver demand here has never been higher, the carriers can’t increase their wages. This will discourage new drivers to enter the industry and as the aging driving force retires, this lack of drivers to move the freight will either push more freight to rail or decrease capacity (as it has in the west) and then maybe rates can rise… and the cycle continues. Interesting how supply and demand eventually gets things sorted out. Hopefully it will again and everyone can breathe a little easier.
What are the biggest lessons you’ve learned since the recession? My top 5 follows and you can probably add the statement “like never before” to each one:
Lee’s Quote for the day
“By the time everything all comes together, it’s time to retire!”
At the recent Transportation Workshop (Hosted by Dan Goodwill & Associates and Motortruck Fleet Executive) we, along with the other participants couldn’t get enough from the two shipper panels featured there. When it came to the topic of rate increases, the shippers were all singing the same tune. Somewhat paraphrased the comments were, “Don’t come to me with a rate increase. Come to me as a partner, who can work with me to cut my transportation costs. Tell me what I’m doing wrong. Sometimes what you think we know, we don’t.”
“Okay, so much for sending out that blanket increase of 4.5%” was the reaction of the carriers in the audience that day. Rate increase? Forget about it, was the look I read on the faces of the carriers represented in the room that day. A stronger move to rail and a shift to more local distribution hubs were also in the forecast for some. Man, how tough is it going to be for truckers to make a dollar going forward?
It is a tough life for trucking companies and their drivers. It’s not uncommon for a company’s driver force to totally turnover in the course of one year, especially in the U.S. What’s going to happen? That’s a billion dollar question. Some innovative thinking that increases driver income, reduces time away from home, gives drivers more respect and promotes a healthier life style were all topics discussed at the conference.
Other comments made like “uncover any rock” seemed to be a shared sentiment on both the carrier and shipper side. There is nothing holy, nothing that can’t be looked at with a fresh viewpoint and possibly changed for the better.
This economy is forcing us all to get smarter and in a hurry. Maybe that’s not such a bad thing. Maybe it’s what we should have been doing all along.
Lee’s Quote for the Day
“I always get uncomfortable when things are too perfect. I try for a few perfect things and let a couple of things fall purposely short. That keeps any real bad stuff from coming my way.”