I hate to say “I told you so.” Okay, that’s wrong. Like most of you, I get a certain sick pleasure out of it. I may not be very smart – just lucky – but in the last few years, I seem to have been able to say it a lot and this is one of the few times that being right about something provides little, if any, satisfaction.
In 2008, when the economy first started to slide, we had an owner/operator leave the company. I had a really uneasy feeling about what I was seeing, so not only did I not replace him, I sold the trailer he’d pulled and our spare. As a small operator, I’ve never felt that optimism was a wise strategy for business planning. I was teased relentlessly for my pessimism, told that I was over-reacting to a ‘seasonal slowdown.’
The teasing stopped when I went into the recession owing not a nickel on equipment while others around us learned some very creative accounting practices just to stay afloat.
The next year, I had the engine on my truck rebuilt. Some people questioned the wisdom of sinking that much money into an eight-year-old truck. At the time, we had two owner/operators working here who had trucks spec’d the same way I did, only a few years newer.
My fuel mileage with my faithful antique was the same pulling seven-axle trains as the other guys got pulling tandems. My engine paid for itself at the fuel pumps in 14 months, in a truck that doesn’t have multitudes of sensors and wiring, and runs every day. Told you so.
The same year, an owner/operator’s truck finally died a long-expected death. He wasn’t great with finances (always broke, no matter how much he earned), and not remotely mechanically inclined, to the point that changing a headlight meant a trip to the shop.
We encouraged him to dump his lemon to the scrap dealer and use the funds for a down payment on an immaculate, low-mileage truck at the local dealer. Instead, he started visiting other dealerships and after some incredibly creative financing, drove a brand new truck home, strengthening my theory that new truck manufacturers shouldn’t be allowed to have a finance division.
His co-workers had all advised against a new truck. He fell into the ‘warranty trap’ though and couldn’t be convinced that warranty doesn’t cover downtime, which new trucks at that time were well known to experience. He also swallowed the sales pitch that the new truck would practically cover its own payments through fuel savings. How many ’09 models are more fuel efficient than an ’02? Right. Within months, umpteen days in the shop, with multiple non-warranty rides behind a tow truck, combined with a ‘spend every penny’ attitude, the truck was turned back in. The 2005 model we recommended is still running strong today. We were unfortunately all painfully thinking: Told you so.
When the recession really hit full strength, we all remember how many carriers slashed rates simply to keep the wheels turning. I think we can all agree that behaviour was foolish and destructive, for several reasons.
How do you steadfastly stick to a freight rate, then slash it by 30-40%? You’ve just shown the customer, whether true or not, that you actually can work cheaper than you were – much cheaper.
Considering the 4% profit margin that many large carriers claim, I can’t imagine many weren’t operating at a loss, something any small business owner can’t even fathom. If we have no profit, we cease to exist, so break-even operation, or worse, operating at a loss, isn’t even an option.
The common justification at the time was that the revenue lost on southbound freight was regained on northbound loads. US to Canada freight rates climbed dramatically because of a shortage of trucks able to get to the US.
I thought anyone building this shaky ‘house of cards’ was playing with fire. So now, with a 70-cent Canadian dollar, what’s happening with Canada-bound freight? Predictably, it’s far scarcer than before and paying lower rates. We now have carriers running south too cheap, with less freight coming home – and at reduced rates. How’s that game of Russian freight roulette working for you? If this keeps up for even a few months, get ready for more trucking companies to fall, something that, when it happens, will give me no pleasure to say “I told you so” about.
Maybe the herd needs culling occasionally, but a bloodbath benefits nobody. This isn’t rocket science – it’s just the lessons of 2009 repeated, hopefully on a smaller and shorter scale. I understand that some were desperate enough to try nearly anything, no matter how dangerous, to stay afloat in 2009. It’s just regrettable they didn’t have time to get rates back to where they need to be before present circumstances occurred. Some otherwise good carriers may unfortunately be doomed.
With my political views, given the result of our most recent federal election, I foresee many upcoming opportunities to say “I told you so.” Now, if only I could figure out how to be right with some more positive predictions.
Bill Cameron and his wife Nancy own and operate Parks Transportation, a small flatdeck trucking company. Bill can be reached at email@example.com.