In a conference this past week I had the pleasure to listen to panel discussions from the viewpoint of shippers, carriers, financial analysts and other industry sectors. It was enlightening to say the least. I’ve already blogged on the topic of what the large retail shipper is looking for and also how best to handle the delicate subject of rate increases.
The shippers know they’ve had a good run and won’t be surprised by rate increases and the reintroduction of accessorial charges by Canadian carriers. Capacity will become an issue with a strengthening economy and many shippers are trying to lock in the low rates for longer terms while carriers are still struggling with lower revenue streams. The stars are not aligned for carriers to increase rates yet…but its coming.
The carrier panel at the conference was made up of 3 companies representing truckload, intermodal and regional LTL specializations. They spoke candidly to the small group assembled and highlights included the following:
- On the truckload side, optimism prevailed and extensive investments are being made to update fleets and retire old equipment to the scrap yard. As a point of interest a storage quality trailer can fetch $1500- $1750 and you get to keep the tires so scrapping it yields similar revenue as selling and it’s taken off the market.
- This brings us to the topic of Zombie truckers running the aforementioned tired equipment. These individuals are part of an underground economy running up and down the road with inferior equipment, a poor handle on costs and eroding the market on short hauls where their rigs can be nursed along to complete the job at hand. Apparently there is nothing in it for the finance companies to repossess the tired rigs and thus the problem has gone on longer than it should of. Maybe the finance institutions should look at the macro effect their decisions are making on the industry and their paying customers?
- A particular carrier was not well thought of across the panel. It was the panel’s opinion that this carrier was riding on the backs of their owner operators and hurting the industry in no uncertain terms. No specifics were mentioned but the culprit in question may have a name that rhymes with Telasong.
- There was a lot of discussion about the aging driving force, treating drivers with respect and increasing their wages. There was a concern that owner operators laid off during the downturn may not come back. Eventually the laws of supply and demand will kick in for the drivers that keep our supply chain flowing…but it’s not here yet.
- I never really thought about how the downturn affected truckload, intermodal and LTL carriers differently. I thought truckload would be the hardest hit because it is more of a commodity. It never occurred to me that regional LTL players had to keep their equipment and driver investment pretty much the same to maintain service standards…but with much less revenue in each consolidation. I also didn’t realize that the economy made the railways a competitor to the intermodal players, forcing their large hand on full load shipments to Western markets by dealing direct with shippers.
- Short strokes-everyone got hurt and the healing process is not so much dependent on the pending economic recovery as it is on the ingenuity of carriers to run smarter, refrain from adding capacity and essentially get back to running the lean mean truckin’ machines that built their companies in the first place.
I trust you’ve found this snapshot interesting. I believe I’ve covered most of the points from the conference. Its work hard, work smart, always lay tracks for the future, keep your people and your customers happy…and keep the faith as better times are finally on the horizon. Yahoo!