Independents need to focus on profits, not volume

Sept. 15, 2003
Though recent upticks in freight volumes are viewed as good news for long-suffering owner-operators, one seasoned veteran warns that profitability must be the watchword of the independent community in the days ahead. “One of the reasons Consolidated Freightways went bankrupt a year ago is that it went after market share growth through volume discounting at the expense of profitability,” Kenton, TN-based
Though recent upticks in freight volumes are viewed as good news for long-suffering owner-operators, one seasoned veteran warns that profitability must be the watchword of the independent community in the days ahead.

“One of the reasons Consolidated Freightways went bankrupt a year ago is that it went after market share growth through volume discounting at the expense of profitability,” Kenton, TN-based owner-operator Tim Brady told Drivers.

“For the future, owner-operators have to consider the cost of their operations and the profit they expect to make in their rates – they have to build on rock, not sand,” he said.

Brady’s words of caution come after the American Trucking Assns. reported that its July Truck Tonnage Index increased 5.4% to 155.6, the second consecutive monthly rise in the index.

For the first seven months of 2003, the truck tonnage index was 3.7% higher compared to the same time period in 2002 – numbers that indicate to ATA chief economist Bob Costello that the trucking industry is on a recovery path.

However, Brady contends that owner-operators would have to watch their bottom line carefully because rate increases may not follow rising freight volumes.

“The hardest thing owner-operators are dealing with is companies that haven’t taken into consideration the full cost of an owner-operator's operation in their rates,” he explained. “That’s why owner-operators today have to budget and stick to that budget because so far at least there’s not a lot they can do about the rates they are getting.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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