Last year was the best of times for truckers. It was the biggest freight boom in over two decades and every shipper in town was your new best friend. Most expect demand to last well into 2022.
But it’s also been challenging times, as fleets struggle with high costs and shortages of pretty much everything. Weather, inflation, and Omicron only add to the chaos.
Putting the past 12 months into words is hard to do. Personally, I’ve never seen anything like it. All I know about the year ahead is that we should keep our seatbelts fastened because already there are curves in the road.
As I write this, Canada and the U.S. plan to start enforcing vaccine and testing requirements for truck drivers in January.
Canadian drivers handle 75% of cross-border truck freight. The Canadian Trucking Alliance (CTA) expects 22,000 of these 120,000 drivers to stop their U.S. trips. Pulling drivers off the highways that run between the world’s biggest trading partners during a supply chain crisis is just dumb.
Truckers have been dealing with Covid safety since before vaccines were bacteria in a petri dish. They never stopped working. Protecting themselves and the scant few people they come across on the road is old news to these professionals.
Whenever I tried to recruit one of my three kids’ university-educated friends into a career in trucking they’d scoff at the idea. For decades, people at dinner parties looked at me cross-eyed when I said trucking paid the bills.
But the perception of trucking is changing. Our stock is on the rise and the respect we’re getting as an industry is good for us in many ways.
Most important, we are able to compete for workers who previously would have never considered a job in trucking. We see a huge difference in the attitudes of people who want to come to work for us. We hear the same from our carrier partners.
Buying and selling
It looks like double-digit organic growth wasn’t enough for many companies last year. Owners continue to pack it in.
According to supply-chain M&A advisors Left Lane Associates, there were at least 33 acquisitions of Canadian-based trucking companies announced in the first 11 months of 2021—including some blockbusters.
This year, sellers who fear that Trudeau might soon mess with capital gains will continue to exit. At the same time, there is unprecedented interest from outside investors (private equity, family offices, etc.).
Expect robust M&A activity to continue. And why not, when a 200-truck fleet parked against the fence last year can increase by $10 million in asset value?
Need to be nimble
We put our 2022 strategic plan into the junk file a long time ago. With every day bringing a new twist, it’s hard to predict a month down the road let alone six months. Case in point: the truckload spot market.
In crazy times like this, C-suites need to be nimble. Organizations have to move as fast as the industry. We replaced weekly staff meetings with short morning briefings that have allowed us stay on top of all the day’s moving parts.
In boom times it’s critical to keep your financial reporting on point. It’s super easy for the bottom line to slip away with unprecedented truckload load-to-truck ratio tension. This year budgeting will be no easy task.
All the good-paying e-commerce business flooding the market can be a red flag if not closely monitored. The sheer size of online sellers would make me nervous. Several fleets have told me that before they blinked, they ended up with a serious customer-concentration problem.
Adding capacity will require some creative thinking this year. Remember the good old days when you could order a truck?
It’s going to be a wild ride, friends. Glad we’re in it together. All the best to you in ’22.
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