Those With A Logistics / Brokerage Focus Will Continue To Do OK
— AND —
Small Niche Fleet and Independent Contractor Opportunities Will Remain Good
Things will eventually improve!!!
Transportation is a key component of the economy. Over 10% of the jobs in the US are in transportation, and “If You Got It – A Truck Most Probably Brought It.” For those trucking companies still in business today, it will continue to be strong for a number of reasons.
The trend toward logistics will help both large fleets directly involved in it and smaller fleets using those same logistics services. With the help of the information age, the traditional brokerage network will change to be fairer. Additionally, independent contractor growth will continue at fleets at a much higher rate than trucking in general.
Many have ideas how the growth will show up in the economy in general, but most believe that it will be in selected segments. These include the military, in energy, telecommunications, health care and segments of transportation. Along with that will be a focus on companies making a profit (unlike many dot-coms), trust (no scandals), relationships (imagine that) and making new ideas useful (not figure-it-out-yourself).
They believe that there will be sustained growth in trucking and rail (especially Intermodal) transportation, while the airline business will undergo more changes, mergers, start-ups and potential failures.
Trucking is a mature business segment (meaning well understood), it will continue to grow with the rest of the economy and it is directly connected into almost all of the other noted growth areas (except healthcare).
Since late 1999, trucking profitability has again been dramatically impacted by rising fuel (crude prices) and insurance costs, along with softening used equipment values. Low fuel prices prior to that allowed many to raise driver and contractor rates. In these cases, many rightfully used some of that money for wages to upgrade life at home. Fuel Surcharge is widely accepted.
The current squeeze has resulted again in a number of companies going out of business or merging with others. Many do not remember that the Gulf War related oil problems (and the mid-90′s OPEC supply squeeze) impacted the industry and economy similarly. Again, there were oil recessions in 1973, 1980-1981, 1990, 1995, 2000 and today.
As we look ahead, the good news is that insurance rates seemed to have settled out (higher deductibles, etc.), but fuel costs are trending downward (but still in large part can be offset by surcharge). Interest rates will continue at low to moderate levels depending on creditworthiness, but equipment financiers will be wary. Those who planned their businesses around these issues will do better in the future.
For additional information on planning around the fuel cost issues, click into our “Basic Planning” and “Norms” pages for operational savings, surcharge and crude price relationship information.
OUR SURVEYS INDICATE A NUMBER OF TRENDS
- “Education” (not just information) is key in the new economy
- Technology, computers and the Internet allows us to discuss business in a consistent way
- Operational issues are fairly well understood by most operators
- Many are looking to build relationships (trust) and want help with basic business planning (our focus)
- Majority of industry is make up of small fleets and independent contractors
- Over 80% of contractors are leased to fleets
- Most want contract / product information, a comparison to industry norms and recommendations on addressing their needs
Remember, this is a people business – and communication will be more important than ever. We will see many things coming that will help each of us in everything we do in our work and personal goings on. When we tie all of this together, we also find that trust, loyalty and a personal connection are as important today as it will be in the future.
We know this to be true when we see that the best on-road recruiters are drivers and contractors talking to others about what people at companies do for them. In addition, retention is maximized once the system (and relationships) are figured out.
We all must recognize that “Technology and the Information Age” bring tremendous efficiencies, but tend to depersonalize our daily work, products and companies. Successful companies are addressing this through more “personal” care and attention, more inclusive programs and better communication of mutual expectations.
Each of our goals should be to do our part in helping build these relationships – ours is through our work and programs. We look forward to building a relationship with you.