For-hire fleets have a hard time gaining share in a market that finds trucks cheaper to buy than run
Conventional wisdom has long held that private carriage is a dying art, practiced only by companies too stubborn or too dumb to realize how much more they were paying for freight services than folks who had ditched their hayburners for hired trucks, dedicated fleets, integrated logistics, or some other flavor of the month. After all, in an era when trucking came in more varieties than Heinz, with super-sophisticated management of vehicles, drivers, and every item that makes both run, how could anybody operate trucks just as an adjunct to their own business?
Supposedly, private trucks would finally ride off into the sunset after intrastate deregulation took hold in 1995. By 1996, dozens of more competitive fleets, offering better service at better prices, had invaded the once tightly regulated states that gave some companies reasons to operate their own trucks.
So how much were those prehistoric private trucks still carrying in 1997? The envelope, please ...
The Census Bureau has started to release the results of the 1997 Vehicle Inventory and Use Survey, along with comparable figures from the 1993 Truck Inventory and Use Survey. Lo and behold, the share of freight transportation accounted for by private trucking has risen, while the share of for-hire trucking has fallen, stagnated, or risen, depending on the measure chosen. (Say, have you heard the one about the three-handed economist?)
Census says the value of shipments handled by private trucks rose from 30% to 31% of all shipments between 1993 and 1997, while the value carried by for-hire trucks tumbled from 45% to 41%. The tonnage carried in private fleets was up from 37% to 39% of all tonnage; for-hire tonnage stayed at 29% of all tonnage. Private fleets racked up 11% of the ton-miles in 1997, up from 10% in 1993; the for-hire carriers raised their percentage from 26% to 27%.
Is the conventional wisdom really that wrong? Perhaps not. One other set of figures from Census shows these really are separate industries. In 1997, the average for-hire truck shipment traveled 424 miles. That was down 10% from the 472-mile average recorded in 1993. But it's still a far cry from the 51 miles for the average private truck shipment in 1997 or 52 miles in 1993.
In fact, both industries are growing apace. The value, tonnage, and ton-miles of trucking as a whole all went up by 25% during that four-year period.
Although these numbers don't make it clear, for-hire trucking probably has continued to displace private carriage over medium and long distances, even while the average length of haul in the for-hire industry has come down. Meanwhile, the strength of local economies, as reflected in strong construction and service sectors, has generated enough demand for private trucking to more than make up for the loss of longhaul business.
It will take the release, expected over the next year, of more detailed data on numbers and miles driven by various configurations of private and for-hire trucks to fill in the many blanks in this picture. But it's safe to assume that the private truck that just passed you won't be the last one you'll see.
The bottom line: Private trucking is far from dead. Interstate and intrastate deregulation, the biggest reasons to turn freight over to for-hire fleets, are no longer driving the decision-making process. Plunging fuel prices and stable or falling equipment prices in the past year make the convenience of having your own trucks less of a luxury than they may have seemed a few years ago.
Nor do companies have as much to fear as they once did from unionized drivers in their midst. In fact, in a tight labor market, companies with a more diverse work force may be able to offer a better benefits package to attract drivers than pure trucking companies can. So, unless for-hire carriers can achieve a new breakthrough - or bogeyman - to drive freight out of private fleets, they are unlikely to make their share of the trucking pie grow.