It’s a Carrier’s World
Because this is still a hot topic in all of the industry publications, we thought we would revisit the subject of carrier capacity. If you are involved in transportation then you have noticed that it is getting harder to find trucks and that your transportation costs are going up. As the economy continues to slowly recover and as the demand for trucks continues to surpass the supply, it is time to accept the fact that it is a carrier’s world. You are going to have to learn to play by their rules and realize that you need them more than they need you.
It was a few short years ago when the majority of the shipping community used the down turn in the economy to put the screws to carriers and drive rates down to levels that had not been seen in more than a decade. As a result thousands of trucking companies went out of business and hundreds of thousands of trucks were taking off of the road for good. Tight credit markets and reduced manufacturing capabilities are impacting the ability of the carrier community to expand their capacity to meet the demand. In fact, before they can add additional trucks to their fleets, many carriers need to replace older equipment. During the economic downturn the average age of most fleets increased because many carriers decided not to buy new equipment for various reasons. After more than a year of consecutive freight tonnage increases many carriers have felt comfortable enough to spend the money to replace older trucks and some carriers are even feeling good enough to add additional trucks to their fleets. This is a positive sign for the trucking industry, but it is not a quick fix and it may not be a good thing for shippers.
Many truck manufactures had to downsize their operations or close plants over the last few years and as a result they may not have the ability to efficiently handle this surge in new truck orders. Currently there is about 6 month backlog for truck manufactures and if orders continue to come in at the current pace then the backlog is expected to grow to about 9 months. Over the next 6 to 9 months if the economy continues to recover at the current rate there will be will be an increased demand for capacity and the gap between supply and demand will continue to grow.
So, if you are a shipper you should make your freight and your facilities as carrier friendly as possible. Be prepared to pay more for less service and prepare your customers for possible service problems. It is carrier’s world and all indication are that it will be that way for the foreseeable future.