The views expressed here are solely the author’s and do not necessarily represent those of Truckload Indexes or its affiliates.
Last week I was invited to be a guest on the popular Road Dog Trucking program on Sirius XM radio with Mark Willis, always a gracious host. My favorite part of appearing on the show is the opportunity to dialog with professional drivers who call in from across the country.
The topic this time was the recent feud between brokers and truckers over depressed truckload rates. The disagreement boiled over into trucker protests in several cities, with protestors claiming that pandemic-related disruptions in the supply chain have left them with scraps, while brokers reap hefty profits. My company, The GTI Group/Jetco Delivery, operates asset-based trucking and freight brokerage businesses. So, I see it from both sides.
I expressed to the radio audience the hope that those on both sides of the rift would tone down the rhetoric. I understand the frustration and the desire to find someone to blame for a market in turmoil.
In the public arena, the Transportation Intermediaries Association and the Owner-Operator Independent Drivers Association are engaged in an increasingly hostile (and dumb) battle over the current rate environment. The fight distracts from the actions that truckers and brokers need to take to survive and ultimately thrive. I am unapologetically bullish about the long-term future of the trucking industry. It’s time to put down the bullhorn and take control of your future.
What’s your plan to survive?
If we exit the COIVD-19 era unchanged, we’ve missed an opportunity to reinvent our businesses and our industry. To accomplish that, we must first have a clear plan to survive the crisis. One of the Road Dog Trucking callers, the owner of a seven-truck fleet, brought the issues to light in a compelling way. He described a situation in which most of his customers have at least temporarily abandoned him or offered him rates around $1/mile. The trucker was desperate to find loads, anything that would permit him to keep his drivers. I could hear the pain in his voice. He was most concerned about his employees’ well-being, a feeling that I certainly share.
This caller asked about accepting bargain-basement rates to stay afloat. I took a tough-love position, suggesting that we are better off parking trucks than running at a loss (unless we’re operating a charity!).
The key to making decisions about what to take and what to leave is simple math—know your costs. It can be scary to refuse an offer. Truckers like to run. We like to work, and we like to see our people working. But if your costs exceed your profit, what’s the point?
In an industry as fragmented as trucking, there’s always going to be somebody who will take a run for less, or even for practice. It doesn’t have to be you.
Ultimately, it’s your decision whether to accept a rate which locks in a loss.
As you plan to survive, this is not a popularity contest. You’re going to make gut-wrenching decisions. You’ll have plenty of critics screaming at you from the stands. And, you’ll make mistakes along the way. But in order to survive, you’ve got to have your plan, act upon it and adjust as needed.
Imagine your future
The best way to address the perceived slights and inequities that led to the protests and rhetoric is by deciding what about your status quo must change. For instance, if all you do is compete on price, load after load, year after year, you will not have built the shield of relationships and consistent business that will provide some level of protection in tough times. Memory matters, and when the market turns, those who have been treated fairly will be inclined to take care of those who took care of them.
As you imagine your future, develop a plan that works in all market cycles. While COVID-19 presents an extreme challenge, freight markets will always be cyclical. Think long term. Unless you’ve just entered the business in the last couple of years, you’ll recall that the freight market took a significant hit in 2016, followed by an impressive surge the following year. When the turnaround came, the clients that stood by us were the first to get trucks. Shippers want more than an assurance that their load made it from Akron to Albuquerque. They want reliable capacity and peace of mind. And, as in all things, they get what they pay for.
Plan to thrive
I hear the bitterness in the voice of truckers who feel they are being low-balled into submission or driven off the road. We can’t control the market and we can’t control people from taking unfair advantage of a bad situation. But we can concentrate on emerging from this pandemic smarter than we went in.
Use any downtime to reach out to your industry partners. Let them know you’re here and ready to serve them reliably and with an eye to the future. Build new relationships. Eliminate wasteful processes. Find new ways to add value. Drivers can learn new skills and get new endorsements to pull away from the pack. Great carriers assist their drivers as they build new skills.
Focus on safety. Prior to COVID-19 hi-jacking the headlines, a lot of attention was placed on the trucking insurance crisis. This issue is not going away. Insurance rates will keep rising, and more truckers will become uninsurable. Safe carriers will have a strong competitive advantage.
Admittedly, it can be hard to look at the bright side right now. That said, we have a choice – we can accept defeat, or we can rise above the crowd. Remember that over 800 carriers failed in 2019, with more COVID-19 induced failures to come. Capacity will continue to tighten as players leave the market and as demand rebounds. The general economy does not need to have a “V” shaped recovery for trucking to enjoy such a recovery. We must have one foot planted in surviving today’s crisis and the other firmly planted in building a brighter tomorrow.
Brian L. Fielkow is CEO of Houston-based Jetco Delivery and executive vice president of Montreal-based The GTI Group. He is co-author of “Leading People Safely; How to Win on the Business Battlefied.” Fielkow is a frequent keynote speaker on the topics of building healthy company and safety cultures.