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Oct. 1, 2011
By most of the major indicators, this is a time of economic uncertainty. Unemployment remains high, housing in a slump without a recovery in sight, stock markets swinging wildly on every hint of good or bad news. The response of most businesses is to hold tight and wait to see how things shake out. Caution is the rule. But for trucking private or for-hire this is a time of opportunity for those willing

By most of the major indicators, this is a time of economic uncertainty. Unemployment remains high, housing in a slump without a recovery in sight, stock markets swinging wildly on every hint of good or bad news. The response of most businesses is to hold tight and wait to see how things shake out. Caution is the rule.

But for trucking — private or for-hire — this is a time of opportunity for those willing to look beyond the big picture.

Before 2008, truck capacity was plentiful and freight rates reflected that. But the great recession brought large numbers of fleet failures, and those that managed their way through the tough times did so by shrinking. The general consensus is that capacity shrank by at least 15% by the end of 2009.

Trucking reaped the benefits of the upturn that began in 2010, watching freight volumes quickly absorb available capacity and higher rates follow right behind. The growth in freight is slowing right now, but capacity remains tight. Unlike previous upturns, fleets have resisted adding capacity to chase that growth, both out of caution over the unsteady economy and an inability to find drivers that pass muster in the new CSA era.

Moving back up the supply chain, this tight capacity has made shippers nervous. And that's where the opportunity lies for fleets that can figure out what the shipping community wants and needs in this environment.

When capacity was plentiful, many shippers decided it was more cost-effective to move away from dedicated carriage arrangements. And as making profitable margins on company-owned trucks became more difficult, many truckload carriers began turning to non-asset based brokerage operations to bolster profitability. Non-asset based third-party logistics (3PL) also grew to take advantage of the excess capacity and shippers' renewed push for cutting transportation costs.

With capacity now an issue, you may be shortsighted if you just concentrate on regaining rate leverage. Whether you're an in-house operation serving corporate logistics or a for-hire carrier, this is the time to think about what it is your customers want in the current transportation environment.

For some, dedicated carriage is again looking more attractive than managing the constant hunt for trucks, especially since the cost savings are evaporating. Obviously, that is an opening for both the well-run private fleet and the truckload operation that understands how to build a profitable dedicated relationship.

But maybe shippers want more. Maybe they want transportation management, or warehousing, or even ancillary manufacturing services. In other words, a deeper partnership that goes beyond trucks and enters the realm of true 3PL activities. And if they do, wouldn't they be more comfortable in this environment with a 3PL that actually controls assets rather than just hires them?

It takes some courage to make radical changes to your business model when everyone else around you is sitting on their hands, as well as a solid handle on your costs and capabilities. Real opportunity always comes with real risk, but for anyone in the trucking business this may be the right time to defy the prevailing atmosphere of caution and make your move.

About the Author

Jim Mele

Nationally recognized journalist, author and editor, Jim Mele joined Fleet Owner in 1986 with over a dozen years’ experience covering transportation as a newspaper reporter and magazine staff writer. Fleet Owner Magazine has won over 45 national editorial awards since his appointment as editor-in-chief in 1999.

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