COVID-19 has thrown a wrench in the works of most supply chains, especially that of automobile manufacturing, which saw U.S. and Mexican plants close in the wake of the pandemic. The sudden shutdown in automobiles leaving the factories, compounded by a decrease in consumer demand for cars has left many auto haulers in a precarious situation.
Things may be looking up, however, as automobile manufacturers across America including Detroit’s “Big Three” (Chrysler, Ford, General Motors) restart their assembly lines for the first time in almost two months.
“New car manufacturing is going to have a trickle-down effect on all other automobile businesses,” said Reliance Partner’s Director of Sales, Eddie Claridy, adding that the purchase of new cars is usually the result of trade-ins, which also benefits used car markets. “The reopening of automobile plants will greatly benefit auto haulers as there will be a lot of shipping going on.”
This comes as a sign of hope for struggling auto haulers as many have searched far and wide for business to no avail. Claridy noted that disruptions caused by COVID-19 have hit smaller carriers and owner-operators the hardest including “hotshot” haulers, who pull cars via wedge trailers.
Claridy explained that auto haulers make up a small percentage of trucks on the road because only a few truckers are willing to haul automobiles. Plus, finding loads can be difficult as easy-to-use freight boards generally lack automobile postings.
“Auto hauling is a tighter fit for most truckers because it requires a lot of people and moving parts,” Claridy said. “It’s not like other truckload types where you just back up to a dock and await loading. It’s not uncommon for the truckers to load and unload the cars themselves.”
The lack of available loads has resulted in significant losses of revenue for many in the auto hauling industry. As they sit idle, Claridy explained that insurance companies have been doing what they can to help those struggling, with some suggesting putting a few trucks out of service temporarily as to not affect their premium payments.
Unlike other affected areas of trucking, auto haulers may have found it difficult to transition to other load types. For many, it’s not as simple as just hitching on a new trailer; some auto hauling trucks are designed to only pull automobiles because their trailers extend above the cab. Making the switch to a different trailer-type can also be quite expensive and require additional insurance and training.
“Trailers cost money, especially when you’re stuck in a period when there’s not a lot of money coming in,” said Reliance Partners Executive Vice President of Sales, Jason Coleman. “For some, it can be very difficult to buy a new trailer.”
The volatile nature of automobile hauling hasn’t attracted new entrants to the sector either, according to Claridy. He said, “I’ve seen a huge decline in truckers wanting to haul automobiles right now because they believe the industry is dead, but I do foresee business picking up again now that car manufacturing has resumed.”
Auto hauling is generally more expensive than other truckload sectors because of the high-price, high-risk cargo they carry; he noted that no one wants to buy a dinged-up car. Claridy explained that many big shippers want a minimum of $250,000 in motor truck cargo coverage, but in some cases, they may want as much as $500,000.
While auto hauling definitely has its fair share of challenges, it can be rewarding for those willing to literally go the extra mile for each vehicle.
“Auto haulers are some of the smartest truck drivers on the road; they’ve really got to piece together deals,” Claridy said. “They get paid by the car and not all get picked up in the same location, so they’ve got to do a lot of math.”
Coleman stated that things are getting better but he thinks that it’s going to be extremely hard to get back to the level where the industry was at before the pandemic. He added that positive signs are out there, though.
Claridy suggested that for those interested in becoming an auto hauler, there’s no better time than now to get started. He added that many auto haulers have either shut down or transitioned to other truckload sectors. A decrease in trailer capacity may result in a larger availability in loads when the market returns to normalcy.
While auto hauling is and will always be a volatile market, Claridy believes that an auto industry rebound will be just what auto hauling needs to get back on track.
“Reliance Partners can help those wanting to dive into auto hauling because we have the markets that write auto haulers and the cargo they need,” Claridy said. “For those already in the industry, we’d love to help auto haulers get into a larger market that will work better for them and see if we’re able to shave some of the costs that they’re paying now.”
To learn more about auto hauler insurance and its marketplace, reach out to Reliance Partners for a quote regarding an insurance plan that best fits your operations. Reliance offers programs specifically aimed at car hauling operations across the U.S.
