No doubt you have on occasion passed up what proved to be a golden opportunity. Perhaps you paid tens of thousands of dollars more for fuel than you would have had you hedged. Or maybe a family vacation cost you an extra grand because you waited one day too long to book those deep-discount airfares.
For-hire trucking companies are in the midst of a golden opportunity. With shippers generally perceiving capacity as tight for the past two years, many carriers have successfully achieved pricing and productivity priorities. And like many golden opportunities, you don’t know exactly when this one will end. But with freight growth slowing, inflation rising and the housing market apparently cooling, economic conditions likely won’t get any more favorable for you in the near term.
Have you taken true advantage of today’s market? Your freight rates surely have risen, and you probably have received some rate increases without even asking. But as the recovery matures, has your business plan matured with it?
“Last year, our attitude was: Let’s get the hay in the barn because the next recession may be three years away,” said Tom Kretsinger Jr., president and chief operating officer of American Central Transport (ACT). “Now we are looking at this a bit differently. A little softness this spring was a reminder that 2004 was an exception. We’re looking at how we can take advantage of this situation by getting our customer base where we want it.” Kretsinger spoke during a panel discussion at the Randall-Reilly Fall Trucking Symposium last month in Phoenix.
Today, ACT is looking at freight from several angles. For example, freight tends to be seasonal in the Kansas City area where ACT is based, so the carrier looks for new customers with less seasonal freight, Kretsinger said. ACT also has decided to be competitive in certain lanes and less competitive in others.
And ACT is looking at the health of its customers more carefully – not just facility closings but also changes in union pensions and benefit packages, Kretsinger said.
Dart Transit Co. also has been reviewing its account base to diversify into more commodities that are recession-proof, said Joyce Jordan, Dart’s executive vice president of sales and marketing. Another goal is a better balance of capacity and freight throughout the year.
“We give accounts points for shipping in the first quarter or more in the first quarter,” Jordan said during the panel discussion. “A retail account can suck up all your trucks in a market during certain times of the year. Then when they slow, you’re scrambling for other accounts.”
Other concerns include account diversification and productivity. At O&S Trucking, no account represents more than 12 percent of the business, said President and Chief Executive Officer Jim O’Neal. The carrier also has focused heavily on reducing waiting time to increase productivity and has used software to better measure dwell time and delay and to highlight freight that isn’t really as good as managers thought.
And the entire approach to business must change, O’Neal argued. “The good-old-boy network in this business is gone. It’s become more professional in that you have to know what’s going on in the industry, communicate that to customers and justify price increases.” Salespeople trained in the old ways may not be able to handle today’s adversarial relationships, O’Neal said. “I’ve come out of more than one meeting with shippers and felt like I’d been in a bar fight.”
Although market conditions may offer profits today without changing your business, that won’t always be the case. There’s nothing wrong with making hay while the sun shines – but you might do better if you use this time to build a new barn or plant a different crop.