Academics, consultants, and forecasters say the capacity crunch in truckload isn't improving. Meanwhile, carriers are buying trucks at a pace that exceeds the replacement rate. Is the crunch real or is this just an excuse for carriers to "cherry-pick" freight and push rate increases?
Good question Perry. Are the carriers hiring fast enough to actually get these new trucks rolling? Perhaps the driver shortage that has been all over industry headlines is the reason.
Luckily, I haven't been hit too hard by the capacity crunch. Being located near Chicago, IL definitely has it's advantages when procuring equipment. Our outbound freight is predictable and routine, for the most part. This makes planning easier. We'll occasionally hit a snafu with a last minute shipment going somewhere drivers don't want to go, particularly on the weekend. Those tend to be our biggest challenge.
Similiar to dpratt - My inbound freight is typical and can usually be forecasted several weeks out. Where I'm having trouble is generating new loads out of particular areas of the country. I'm located in the heart of the Dallas-Ft. Worth area and for the life of me can't seem to get truckloads out of the mid-west. Because of the type of business I'm in (foodservice), I am bound by contract pricing and can't always afford the exorbant prices that some of these carriers are charging. In my opinion, you can buy a truck every day of the week, but you can't put somebody in the seat at the same pace.
There 3 reasons for trucking companies buying new trucks. 1)The competition for experienced drivers almost requires that you have late model or new equipment. 2) New Truck Dealers are giving more for trade ins makes it a good time to buy equipment. Those companies that put off investing in new equipment post 9-11, are having to update aging equipment. And 3) Clear Air vs. Fuel economy. Starting in 2007, new polution US standards will be instituted on all new "heavy" diesel engines. Unfortunately to meet this new clean air standard will cause a reduction in fuel economy of (est.) @ 4%. http://www.eia.doe.gov/oiaf/servicer.../chapter6.html .
I agree that some carriers are taking advantage of the situation for margin improvement?
From where I sit, I don't see any real changes in attacting new drivers. Demographics and lifestlye are working againt the industry.
I can't see where there will be enough drivers to seat additional tractors.
I currently run a OTR Long Haul operations (bulk and flatbeds) of 10 Peterbuilts and Freightliners. Six teams, three singles, two locals. Average tenure 10 years. We keep all equipment up to date, replacing tractor every three years. Operation logs approx. 1.5MM per year. We have found a rather successful combination of new equipment, mileage rates, meal allowances, good home-base accomodations and just as important, created a level of independence and identity in the company.
My point is driver incentives are probably the most important area one must endeavor towards for driver retention. As indicated above, our average tenure is approx. 10 years; this say quite a bit.
When it comes to the commercial side of transportation, I fully agree the use of a "fuel surcharge" is being taken advantage of by the carriers...there is quite a bit of "fudge factors" in those figures. We have held our carriers to the fire by requiring a full breakdown of the base rate calculations, including the basis of their fuel, and allowing a specific surcharge increment above that base, tied into the weekly EIA/DOE national averages. This has been quite effective and allowed us to hold our rates (quite competitive) without increases for 2006.
Hopefully this is helpful to those interested. Would be happy to share additional information if requested.
RE: how to educate your managers to retain your drivers
...good compensation, a good working environment, keep them fed. Privately held chemical company with long history of encouraging good balance between family and work. When they see management encouraging not only positive change, but supporting increased internal operations growth, it instills a sense of security, which they in fact do have.
I think it's the lack of "quality" drivers that we have caused a capacity issue. They can buy all the equipment they want but with out drivers....
2005 & 2006 have been very good years for our company. The Birmingham market is a tough area for flatbeds. In a time when capcity is tight we have covered more loads and covered them much quicker then ever before. We attribute this to the longterm relationships we have built with our carriers. By working "with" them and becoming a more driver friendly facility we have been able to cover our loads with one or two calls verses the 10-12 calls it use to take.
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Steve Monson
Logistics Manager
Vulcan Steel Products, Inc.
Where's the truck?
how to educate your managers to retain your drivers
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