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Survey: Some carriers shift to spot market, but most remaining loyal to shippers

( Photo: Truckstockimages.com )

High spot market trucking rates have caused more carriers to move to that market, but the majority of carriers in a new Transporeon Group survey have remained loyal to their shippers.

The survey, of 3,700 North American logistics service providers within Transporeon’s network, found that about 15% of carriers reported a move from the contract to spot market. The majority have stayed with their current shippers.

“When asked for additional insight into these metrics, carriers have stated that many of them wish to continue working with their preferred shippers and retain relationships they have spent the leaner years developing,” the survey noted.

Transporeon said that more than 60% of carriers had a 75% long-term contracts/25% spot market split in 2017 but that has dropped to just a little over 50% in 2018. The number of those at a 50/50 split increased from 20% to almost 30% in one year. Very few carriers are either 100% spot or 100% contract.

Transporeon is a logistics software provider.

Not surprisingly, the lack of drivers is the topic expected to have the biggest impact on their business in 2018, with more than 30% of carriers citing it as their main concern. Regulatory factors and shipping volumes (both increasing and decreasing) also topped the 15% threshold. Very few carriers, fewer than 5%, believe the election, e-commerce or interest rates rising at concerns at this time.

The survey was conducted between July 19, 2018 and Aug. 31, 2018.

To address the driver concerns, wages have been rising, but at least one respondent noted the pay is still not in line with other industries.

“Professional drivers are still making 23% lower wages than construction workers right now,” he said. “Historically, drivers have made up the difference by working longer hours. Due to ELDs, this is no longer possible.”

Another carrier said he would like to add capacity, but it’s just not feasible right now due to the difficulty in finding drivers. ““My plan would be to add capacity, however executing on that plan is much more difficult and it is far more likely our capacity stays the same or possibly even contracts or reduces.”

Nearly 50% of carriers stated they are at 95% capacity utilization and 15% said they are sold out on the contract market.

The survey also asked truckload carriers what their expenses were. Driver wages and benefits represent 22% of the total with fuel and oil at 17%. Equipment lease/depreciation makes up another 12% with insurance now comprising 10% of operating costs. The carriers are reporting a 9% margin.

“Many of the carriers surveyed stated that they felt stuck between rising costs and lower margins and remaining competitive with their pricing in order to maintain partnerships with shippers in their current customer bases. For this reason, it is now more important than ever to remain a “shipper of choice” to hold on to capacity. There are many opportunities to gain preferred shipper status by scheduling realistically, minimizing empty miles and paying your carriers sooner,” the report said.

The survey included 56% asset-based carriers, 23% broker/3PL/non-asset based, 12% hybrid or asset-light brokers, and 7% warehousing/contract/ or value-added logistics operations. Nearly 11% of participating companies move more than 1,000 shipments a day with another 8% moving between 501 and 1,000. Forty-one percent move between 101 and 500 shipments.

The largest percentage of companies – almost 25% – get their revenue from CPG/food and beverage or retail. Just over 10% derive revenue from automotive and another 10% from packaging.

When it comes to their outlook for 2018, 92% of businesses expect to increase revenue through the remainder of the year. About 20% or respondents connected price increases to growing demand on the shipper side, and as a result, 74% planned to add capacity in 2018. To add capacity, 51% of those surveyed expected to add equipment either through buy or lease programs and to add drivers while 29% hoped to add more owner-operators to their contractor base. Whether that becomes reality could be impacted by the long backlog to get new trucks – about 9 months by most accounts – and the lack of drivers.


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Brian Straight

Brian Straight covers general transportation news and leads the editorial team as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and fleetowner.com. Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler.