Is it me or are tempers becoming as frayed lately as profit margins? I've been to a number of events and hosted several others over the past couple of months and that's the distinct impression I'm get...
Is it me or are tempers becoming as frayed lately as profit margins? I’ve been to a number of events and hosted several others over the past couple of months and that’s the distinct impression I’m getting.
Whether it’s fleet executives discussing the outlook for next year at OTA’s annual convention or industry stakeholders commenting on their relationship with government or shippers at several of the panels I’ve moderated, it seems everyone is on edge and the discussion is considerably more raw than in years past.
Trucking has been in a freight recession for four long years now and, as Richard Gaetz, head of Vitran, and moderator for the OTA outlook session, pointed out people are tired.
Tired and rather grumpy it would seem.
As you read this, you will be just a couple of weeks away from closing out the year. True, 2010 was a better year than the disaster of 2009 but nowhere near as good as we may have hoped. Had we not gone through 2009, I doubt 2010 would have looked like much.
Is there good reason to believe 2011 will be better?
Carriers are particularly incensed about the precipitous drop to what they’ve been able to charge for their services. One prominent TL carrier told me earlier this year he figured rates had dropped 18-25% over the recession. And carriers are not too shy to mention that shippers have abandoned long-term relationships based on quality service in favour of short-term deep rate cuts. But they also admit that, as Norm Sneyd of Bison Transport put it at our annual Shipper-Carrier Issues Roundtable, our industry sometimes takes “great aim to shoot itself in the foot.” Carriers desperate to make payroll for one more week are a large part of the reason for the downward pressure we’ve seen on rates.
Lest you think otherwise, shippers are not exactly a happy bunch these days either -despite the significant price concessions they’ve been able to wring from carriers. Their own transportation budgets and staff have been cut and they’re forced to do more with less. And as Eric Warren of LTL carrier Hercules Freight pointed out at the Roundtable, some shippers trying to get the lowest possible price are ending up with 10 carriers showing up in the yard all at once when the shipper only has five doors.
The detention and other ancillary charges that result make the total rate not quite what they thought they had achieved. And there is also the reliability factor as desperate carriers wade into areas where they may have little expertise.
From all the economic data I’ve seen, I think we’ve got at least six more months of painfully slow growth ahead of us. It’s going to require patience and a steady hand to ensure rash decisions aren’t made. Shippers after all are not the enemy; they’re the customer.