Truck News


The only way forward for 2013

Listening to the executives on the panel discussing the state of the trucking industry at this year’s Ontario Trucking Association convention, it’s hard to feel much love for the road ahead.
The panelists — Rob Penner, executive vice-president and COO, Bison Transport, Jeff Bryan, president, Jeff Bryan Transport, Scott Tilley, president, The Tandet Group, Gord Smith, president, Manitoulin Transport, and Ron Tepper, CEO, Fastfrate – all expressed frustration with how long it may take to grow their business.
For Smith, the best case scenario was that things were likely to “go sideways for a few years.” For Bryan we are already at the top (it must be a pretty low hill if that’s the case, I’m thinking) and things are going to stay flat. He’s already telling his people to stop looking for rainbows and learn how to make the best out of the situation.
Unfortunately, this slow growth, nothing to be excited about, scenario of the future squared with the economic outlook Emanuella Enenajor, economist with CIBC World Markets, provided the delegates attending OTA’s annual convention. Enenajor said the North American economy enjoyed seven “bountiful” years prior to the economic collapse and is now enduring a period of seven lean years.
Almost sounds biblical. Should we expect a plague of locusts too?
Our own market research, conducted across Canada, shows that 53% of shippers expect to boost their shipment volumes in 2013 above 2012 levels. That’s marginally better than the number who said likewise last year (50%) but down from those who expected volume growth for 2011 (60%). And almost 40% of shippers are expecting their volumes to stay about the same next year as those in lacklustre 2012.
Perhaps more of a concern is the current state of the shipper mindset. Research we conducted earlier this year in partnership with the Canadian Industrial Transportation Association shows shipper priorities will make it difficult for carriers to push through the rate gains they’ve envisioned. Shippers remain in a cost-cutting frame of mind with maximizing profitability and reducing costs cited as their top two priorities. Growth and increasing customer satisfaction trail considerably behind in their list of priorities.
Requests for proposals (RFPs), maligned by many motor carriers, seem to be something the industry will have to get accustomed to as a result. As Lance Norman, vice-president of Apps Transport Group, acknowledged while participating in another OTA panel discussion on how the sales game has changed: It’s an RFP world and RFPs will likely be the primary method of sales going forward. In the last 12 months, his company had done 87 bids. Speaking on the same panel, Daryl Clancy, vice-president of sales with Challenger Motor Freight said his company completed 13 RFPs that day alone.
Another trend is increased emphasis on technology with just about every customer demanding some IT, electronic or EDI component to the transaction. And, of course, the carrier is expected to absorb the cost. As Norman said, it’s ironic that transportation solutions are becoming more complex and more customized, but buyers are not willing to pay more than one-size-fits-all rates.
Another trend is that distance to decision-makers – both geographically and figuratively – is widening. It’s becoming harder to get in front of the ultimate decision-makers and the net result is less subjectivity in carrier qualification and the selection process and more objectivity in that process. And nothing is perceived as more objective than rates.
The growing use of 3PLs and 4PLs by shippers to manage their transportation purchasing is also adding a middleman to a financial transaction that already had little room for maneuvering.
What it all adds up too is that although motor carriers won’t starve in 2013 like they did during the recession, they will have to fight tooth and nail for every scrap of new business, for every chance to increase rates to more profitable levels.
And that will mean concentrating on service levels. It’s easy to say you’re the best carrier in the country, Norman pointed out, but keep in mind that any shipper has heard the same from every carrier it has talked to on any given day.
Can you prove that? In Norman’s words: Know what you’re good at, focus in on it, measure it and be able to prove you are the best at it.

Lou Smyrlis

Lou Smyrlis

With more than 25 years of experience reporting on transportation issues, Lou is one of the more recognizable personalities in the industry. An award-winning writer well known for his insightful writing and meticulous market analysis, he is a leading authority on industry trends and statistics.
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