EXTRA EXTRA!!! Read All About it!!! The Trucking Boom is Over, Theres no Doubt About it!

What in the world is happening to the Trucking Industry? That is a question that many industry professionals are asking themselves right now. With Freight Waves reporting an antagonistic point of view, stating that a "Trucking BloodBath" much like what the industry experienced in 2019 (Covid-19) is upon us now in 2022. What are those of us in the industry to do?

Let's just keep it a buck, the Trucking Industry has always had a high turnover rate. There are little to no hurdles to enter into the industry, Carriers come and go, Rates go up and down. The cycle is good generally for 3 years and then becomes over saturated with trucks and not enough freight, a simple case of Supply and Demand.

The Problem:

March is generally the month where we see freight volumes pick up. As many stores stock their shelves and get ready for the Spring and Summer months. This year we have not seen this, we have actually seen the opposite with reports stating that freight rates were lower in March 2022 than all of 2021! This is a serious statistic!

Not only that, Consumers just aren't shopping like they were in 2020 and 2021. It seems like those stimmy's may have over stimulated the economy, causing massive spending in a short period of time not accounting for the backend affects. Consumers would rather spend their money on concert tickets and a fancy hotel than physical goods in a store. After shippers coming out of a period of dealing with scarcity and, not being able to keep up with demand. Shippers are now faced with overstock and less consumers to buy.

Fuel prices are at an all time high and inflation is up 7.5% and counting. Consumers are moving full speed ahead as their travel hasn't decreased, so they're paying the higher fuel prices and penny pinching elsewhere.

The Trucking Spot Market Rates (load boards) are projected to possibly reach a low of $2.50/Mile by Mid-year which will send many Carriers out of business. There is just simply to many Trucks and not enough Freight.

The Solution:

Now that I've told you that all the unexperienced and unseasoned operators are going out of business and the trucking industry is going down the toilet, let me help restore your faith! Now, one thing stands true Consumers dictate the wave of goods but, goods are not the only thing that gets transported on a truck! Most business owners get caught up on what works and don't like to deviate, they forget that other things work too!

TIP #1:

Diversify Your Fleet!

Often times Carriers focus so much on purchasing another truck when it comes to expansion that they don't realize another trailer type could increase profits as well. Although you may have a reefer company and you feel safe with the Dry Van backhaul alternative, imagine having a flatbed in the a time like this? Brokers can barely find one! The Biden administration just passed a $1.5 Trillion spending bill which has OVER $81 Billion dollars allocated to Transportation and Infrastructure. Flatbed work is going to be at an all time high for the next 2-3 yrs in our humblest opinion. There will be a need for Over-sized loads indeed and I'm sure there will be government contracts for transportation and trucking to say the least.

TIP #2:

Fuel Costs!

If you haven't been asking for your fuel surcharge fee when booking loads with Brokers you should be. Not all brokerages honor this surcharge so it is important that you read your Carrier Packet and Rate Confirmation! In some instances, the Broker provides a fuel surcharge fee and you just need to ask for it to be added. Also be sure that your are checking gas prices in each state alongside the load to truck ratios. At the time of this article these states: TX, OK, IL, MI, KS, AR, MO and, MN have diesel for less than $5.00/gallon and decent rates! Now wouldn't be a bad time to apply for a fuel card either. Companies like RTS Factoring have amazing fuel cards that allow you to find the cheapest fuel and gain reward points for even more perks and discounts!

TIP #3:

Comb Over Your Financials!

Tough Times don't last tough people do! With that being said you may have to cut some expenses in order to keep your profit margin intact during a market downturn. It is going to be so important that you know your numbers! You need to know your operating cost and your breakeven point per mile. Download a free template here! . This very thing here is the reason most companies will find themselves out of business. Another way to comb through your financials is by looking at the expenses you're paying and seeing what can be eliminated. Some tasks that are being outsourced can possibly be brought in house. Look into enlisting a family member to assist with Dispatch, this can potentially increase profits for your company as now you can assist other owner operators with this service. Obtaining a good Dispatch Training is relatively easy and, if you've been building the right relationships as a carrier in the space this can become very lucrative.

TIP #4:

Spot Market Vs. Contract Market

Many newcomers and some old-timers truly never understand how to play the Spot market like the Stock Market! In a time were spot market rates are dropping, some Carriers that hold contracts have not seen a decline in rates. They are locked in at a set rate for a set period of time. Now contract rates have their down side as well. Being locked into a set rate when freight rates are up could have the reverse affect. Maybe a perfect blend of the two makes for a great business model. Take this time during the spot market decline to maximize efforts on landing some contracts to offset the decline while you still can.

In Conclusion

Buckle up guys and gals it's going to be wild unknown ride. Covid-19 was a experience that no amount of historical data can account for. We have seen turns in the freight market that historically just don't add up. So we have to use facts and sound reasoning to navigate this trucking storm that's among us. Fret not, as these tips that we've provided will not only help but they will also get your problem solving juices flowing. This industry requires Grit and Resilience and if you don't have it, get out now!

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