Before the economic meltdown, trucks were going to the highest bidder because there were not enough drivers to supply the demand. As a result, carriers were driving rates upward and freight brokers were competing for trucks with Olympic intensity.
Although we may not see such extreme shortages again for a while, a long-term capacity shortage is looming. As the Chinese proverb goes, we must “dig a well before we are thirsty”. Baird Freight Flow Analysis reports a capacity shortage of domestic modalities and the following consequences:
Large TL companies will be disciplined in growing fleets- Small TL companies will bump up against limited access to capital
- Intermodal capacity will be tapped off the west coast
- Regulatory initiatives such as CSA 2010 and HOS revisions will reduce the driver pool by 5% and increase transit times. 5% loss nationwide is real and significant.
- Aging fleets, rising replacement costs and shorter lifespan of tractors will add to the problem
- Rising operational costs will also impact truck capacity.
Matchmaker Logistics isn’t waiting for the next crisis to find a solution; we’re already digging our well:
- By treating carriers fairly, keeping receivables timely and demonstrating carrier loyalty (for the past 30 years), we build relationship equity that will garner preferred status on availability when a full-blown capacity shortage returns.
- We are consistently working to maintain and grow an up-to-the-minute database of competent carriers. In fact, Matchmaker is currently implementing a new web-based system to augment and refine our carrier database.
- Additionally, we are taking steps to increase the number of automated payments to carriers via ACH, an electronic clearing house for financial transactions. This will effectively speed up our pay terms and eliminate any mail delivery problems.
- Recently, we surveyed our database of carriers on their response to CSA 2010 so that we can better understand how carriers are interpreting the changes in regulation. Look for the poll results in an upcoming Matchmaker newsletter.
As a customer, we encourage you to “pick up a shovel” to ensure that you don’t end up thirsty in a capacity shortage desert storm. We recommend:
- Communicate your requests with plenty of lead time. That we can lock in capacity for you early.
- Commit early. The temptation to delay to see if you can get a better deal may have paid off during the economic recession, but in times of equipment shortage, it’s wise to lock in early even at a slightly higher rate to avoid an encounter with a broker that seeks to profit via last-minute opportunism.
- Demonstrate flexibility in the loading schedule. In many instances, there may be no allowed scheduling variance, though many times delaying the load for the right truck can save hundreds on a shipment.
- Finally, work with a vendor you know and trust; one works with your best interests in mind and is dedicated to getting the job done efficiently and effectively.
