Why are small fleets viewed as the scourge of the industry?
October 1, 2012
I see my role here as a Truck News contributor as quite simple. Once a month, I climb up on my newsprint soapbox and offer an opinion on an industry-related subject, while periodically mixing in a little useful information. My only firm...
I see my role here as a Truck News contributor as quite simple. Once a month, I climb up on my newsprint soapbox and offer an opinion on an industry-related subject, while periodically mixing in a little useful information. My only firm guidelines are to address these issues primarily from a small carrier’s standpoint, and to avoid being confrontational or insulting towards any group or individual. The latter is my biggest challenge. Even if I wasn’t painfully cynical and opinionated, some issues facing small carriers must be addressed with an occasional verbal jab, just to be properly understood.
This month, I need to temporarily change gears and shake up the whole premise of this column; kind of an uphill backhaul, if you will. Rather than offering an outright opinion, I’m using this month as an opportunity to raise questions instead. I don’t expect answers; rather these questions are intended as a tool for serious self-reflection by those managing both small and large carriers.
The largest share of industry interviews in trucking publications and the mainstream media are conducted with large carriers, for obvious reasons relating to accessibility, profile and recognition. (Aside from Truck News, few publications provide any outlet at all for the small fleet perspective). These interviews with owners of large carriers don’t always express an opinion that is shared industry-wide. I’m not a huge fan of any industry organization or trucking support group – large or small – and in that, I’m not alone.
So how, aside from regular correspondence with the Truck News editorial staff, does a small carrier representative offer his or her opinion? You will note that nearly every industry study or initiative is conducted by a panel consisting solely of OTA or CTA members who, arguably, conduct their affairs very differently than us smaller outfits. This usually results in noticeably slanted policy.
If the action was initiated by OTA or CTA, fair enough, but why the limited input for government-requested commentary? Although we make up the majority of trucks on the road, our presence doesn’t exist on the national or legislative stage. Shouldn’t this change? How? Any contact that I have had with transport ministries, past or present, left me with the impression that my opinion was not only unwanted, but an intrusion. Strange that if highway safety and productivity is supposed to be a universal goal, input from anyone heavily involved in this industry should be anything less than welcome, whether or not you are affiliated with an association.
Ask a large carrier what has been the single biggest downfall to strike this industry, and many scornful fingers will be wagged towards smaller carriers; primarily involving deregulation. How, exactly, was this such a tragedy? Some of the largest carriers in Canada were born after deregulation. Those of us who continue to operate small are quite confused about what we’ve done wrong. Although supposedly the cause of falling rates, our freight rates, with some exceptions (even I can admit there are always exceptions) are traditionally higher than those offered by large carriers. At one time, trucking surveys identifying the largest carriers included revenue numbers which, when divided by number of power units, appeared laughable to the manager of a small carrier. The laughing grew louder when we noticed trailer inventories were two to three times the number of power units.
Most flow charts on expense calculations and staffing costs usually range from 2-4% profit margins, apparently because the industry has not shown a need for the profit margin chart to go any higher. In my experience, small carriers, although paying higher costs for equipment, fuel, and even drivers, are generally above 8%. Although our equipment is often older, our maintenance is frequently far above the standards followed by large fleets.
This is possible, mostly because our equipment is accessible to home base more often. The other reason is that more frequent preventive maintenance services are viewed as a good investment in equipment. We do not generally stretch maintenance intervals as do large carriers, because our equipment numbers are not so large that stretching intervals represents a savings; rather, it is a poor and misleading practice, or as I refer to it, false economics. Our drivers and owner/operators are generally very well paid. Bearing all these facts in mind, what the hell have we done that is such a detriment to the industry?
Nearly all the large carriers started small and grew quickly. This shows that in the early days, the owners of these companies displayed a nearly unmatched business sense and an uncanny, thorough knowledge of the trucking industry.
Simple good luck doesn’t allow the growth from one truck to 1,000. So in the matter of rates and customer service, what happened? Did the ultra-successful growth formula get forgotten along the way? Did growth in vehicle numbers become more important than practical, manageable, and profitable growth? Or are we small carriers greedy, and reaching for unrealistic customer service goals?
I’ve saved my largest question for the end: We’re all in the same line of work, during the same economic times. The phrase “Level the playing field” is used more often than a tire hammer during a pre-trip. The smaller carriers with a “revenue per travelled mile” 20% higher than the large carriers are not driving new Cadillacs. So why have I been able to ask any of the above questions at all?