Truck Shortage

Has the Flatbed Truck Shortage Left Your Freight Sitting on the Dock?

The  Shortage Problem

If you are a shipper, you probably know by now that there is a shortage of trucks, particularly flatbed and stepdeck trucks, in the United States. Shippers have spent much more time searching for trucks in the past year. What happened to them?

The Causes

You have probably been told that two factors are responsible for these problems: rising diesel fuel costs and
the new hours of service regulations. That’s not the truth….at least not all of it.
The story starts long ago. Once upon a time, the trucking industry was regulated by the federal government. The government controlled the freight commodities a carrier could haul, the freight rates that could be charged and the geographical area in which a carrier could operate. In the early 1980’s, trucking was deregulated. The rules were relaxed. It became much easier for people to start trucking companies. Rates were not regulated; the free market
took over. It was also much easier to expand a carrier’s geographical service area. This was not totally a bad thing (although some trucking old timers will vehemently disagree). There was a lot of inefficiency in the system. I have heard of carriers that shipped lumber from Idaho to Chicago, IL (approximately 1800 miles one way). Before deregulation, since they did not have the proper governmental authority, they had to drive those flatbed trucks home empty. THEY STILL MADE A PROFIT! It seems a little wasteful to only load your trucks 50% of the time, doesn’t it?With deregulation, companies began to focus on keeping their trucks loaded all the time. Efficiency increased and the rates have stayed more or less flat ever since. Until recently, the trucks were operating for the same rates they charged in 1980. The increased efficiency made up the difference for many carriers. As time went on, costs increased but the rates stayed flat. The market started to take its toll on carriers. Some got bigger. A lot went broke. Lots of new carriers started business and the rates stayed flat.

Fast forward to the year 2000. Diesel fuel is approximately $1.12 per gallon on a national average. Some
carriers are marginally profitable. They are certainly not earning the return on investment that many other industries expect. And then….Insurance costs start to rise dramatically. Stories of insurance rates doubling or tripling on smaller carriers circulate in the industry. Equipment costs have risen steadily since deregulation. Fuel prices start to climb, reaching $2.24 per gallon in October 2004. A shrinking driver force causes driver wages to increase. The driver force is also aging. Younger people are simply not entering the driving profession to match the rate of older drivers leaving. The economy is a little weak but improving as September 11, 2001 occurs. The economy slows. And the rates stay flat.
Carriers really begin to feel the pinch. Thousands go out of business in the first years of the new millennium.
Trucking bankruptcies are at an all time high. AND THE RATES STAY FLAT.
Carriers become hesitant to add trucks to their fleets. They are not profitable and if they did increase their
fleet size, they wouldn’t be able to find enough drivers. Self employed drivers (owner operators) leave the industry in droves. There is simply no longer any profit in trucking.
The economy gets better. The federal government changes laws regulating the amount of time a driver can
drive. Suddenly the freight increases beyond the ability of the industry to supply trucks. Frustrated shippers wonder where the trucks might be. Freight rates go up but fuel costs rise quickly too. And trucks are
suddenly very, very hard to find.

The Future

Flatbed trucking has some seasonal fluctuations. Demand for trucks will be in better balance with the
supply of trucks this winter but shortages can still be expected. The spring will bring a continued shortage of trucks.

Rates are not likely to decrease.

Solutions- that won’t raise your costs

The market will determine your freight rates. However, there are some things a shipper can do to attract
trucks. If the rates are equal, the carriers (particularly the independent contractors or owner operators) will choose the more truck friendly shippers. You can make your freight more truck friendly

1)Remember time is money to the truck driver. He is paid by the mile. Drivers see the time spent waiting to
load as lost time. If you can decrease the loading or unloading time, you have made your freight more appealing when compared to slower loading/unloading freight paying the same rate per mile. Educate your customers to help see that the truck is unloaded without delay.
2)Be flexible

Do you really have to have a flatbed trailer? Or will a stepdeck trailer also be able to haul the load? If you give the carrier the option of  loading either trailer type, you have substantially increased the number of trucks available to you. Many loads will fit on either a flatbed or a stepdeck trailer. Be willing to measure the freight and let the carrier know the dimensions. This extra effort will go a long way toward getting more trucks to your dock.

3)Does the load really need to be tarped in transit? Loads that do not require a tarp are far more attractive to
a driver. Tarps usually weigh about 100 pounds . It takes two tarps to cover most loads. Drivers often have to lift the tarps higher than head height when tarping. I could not physically do that. Many older drivers can’t either. They wind up hauling the freight your competitor shipped without a tarp.

I am not advocating that you risk damage to your cargo. If the cargo needs to stay dry, request the tarp. If the freight really doesn’t need to tarp, more trucks will be available to haul your load.

4) Buy a coffee pot. (OK, there is cost here but it is minor). Make the driver LIKE to load at your business. Ifhe likes your company, he will be glad to come back and load again.Remember, those owner operators get to choose where they load. Drivers often prefer to load at a place they have loaded before. They don’t have to drive around searching for the facility and they know the requirements for loading there. A pleasant atmosphere goes a long way to making them want to come back.

5)Offer carriers a window of time to pickup your load. A 2 day window is good. It allows the carrier time
to send trucks into your area.

6)To avoid freight sitting on the dock, develop a strong relationship with brokers and carriers. Shippers and
brokers/carriers need each other. Each should try to help the other make a profit. This relationship is the biggest factor in assuring trucks will be available to you.
The comments and observations on this page are intended to be informational in a business climate that is unprecedented. The broker /carrier must always provide service to the shipper. What else does a broker/ carrier have to sell? Nothing. Service is their only product.  Please understand that  these comments are not meant to be anti- shipper in any way. Shippers are my
customers. Those of you who know me are well aware I believe in customer service. We need to be very creative in this climate in order to provide that service. Let’s work together and build those relationships.
Call me and let’s load your trucks.

James Nester
November 11,2004
Copyright  J C Nester Co., Inc. 2009 All Rights Reserved