On Monday, our CEO, Jeff Tucker, joined Mark Willis for a special two-hour deep dive on SIRIUSXM’s Road Dog Trucking News. Didn’t have a chance to tune in? Check out our recap below:
The market today is like riding the newest and fastest rollercoaster — blindfolded.
The United States’ 2020 second-quarter GDP declined 32.9%, which is more than three times worse than any quarter in American history. The previous record for a GDP contraction was 10% in 1958. Few, if any managers were managing 62 years ago, but many of today’s workforce and managers worked through last decade’s Great Recession. Using the Great Recession as a yardstick, 2020’s second quarter is four times deeper!
The freight market’s volatility from January through today has also been unprecedented. We moved from a flat January and February to skyrocketing demand in the first days of the pandemic, to plummeting trucking demand and prices in April and May, to a very steady rise in pricing and demand through today. On July 21, 2020, Morgan Stanley’s Freight Demand Index (the gold standard when it comes to measuring trucking demand against past performance) was steadily heading up and crossed the 2007-2019 average. U.S. factory orders rose 6.2% in June, with experts predicting continued growth in activity. China’s factory output in July was the largest growth it’s had since 2011. What’s it mean? We’re literally in historically tight capacity territory and we’re about to get tighter.
Shippers are demanding freight savings, reliability, and visibility.
With America’s worst-ever quarter behind us, virus uncertainty here for the foreseeable future, and 20 million Americans out of work, it’s understandable that shippers today have an eagle eye on pricing. They want freight savings. Many went to bid in the past few months, obtaining deep recessionary pricing before the steep recovery occurred, which explains why demand in the spot market is so high. In addition to getting the best price available, they also need reliability. They have sophisticated scorecards tracking load tenders and rejections. They use TMS systems integrating with their brokers and carriers, and they deselect poor providers.
In that vein, our customers also want electronic visibility across the board. Many owner-operators are hesitant to deploy it, but in a crowded market, electronic visibility (or lack thereof) can be a difference-maker and, in some cases, a deal-breaker.
Recent advocacy misses on behalf of the trucking industry have underscored the need for a member-run owner-operator trade association.
It is our CEO Jeff Tucker's belief that owner-operators don’t have a trade association in the truest sense of the term. Our second-generation owner, Bill Tucker, co-founded the Transportation Intermediaries Association (TIA). Why? So that the one, two, and 8-person broker operations back in 1978 could share best practices and elevate the industry’s importance. Big issues get some attention from groups purporting to represent truckers, but they don’t own and operate a true member-run association — and that is a critical differentiator. Of course, there are organizations out there that advocate for truckers, but in Jeff's opinion, there’s the American Trucking Associations (ATA) for the big carriers, and other organizations that just don’t provide owner-operators and small fleets with the representation, education, and opportunities they deserve.
Who knows better about the interests of truckers than the truckers themselves? Just recently, there were three huge advocacy misses for owner-operators and small truckers, where their “representatives” were either absent, asleep at the wheel, or simply ill-informed.
Just as much as advocating on Capitol Hill is important, so is reaching across the aisle and building relationships with others in the industry. During the Road Dog trucking segment, we asked drivers if they had a message for shippers, what would it be? Virtually all of their answers centered on the need for respect: access to restrooms, adherence to appointment times, kindness … things we can all get behind.
The largest carriers in the country can’t grow anymore. They can’t grow their fleets because drivers increasingly want to drive independently, or they want to join small fleets. According to FMCSA data, the average size fleet in the category of 1-100 trucks is about 5 trucks! More growth occurred in the smallest carriers by a factor of 2-1 than the largest carriers. Shippers and brokers must face the fact that owner-operators and small fleets are fundamentally necessary to move freight today and tomorrow.
As an industry, we need more owner-operators at the table with shipper and broker groups, so we can all hear each other’s struggles firsthand and learn how to work better together. After all, an informed industry makes for a healthy, productive one. When we understand the value each party provides to transportation, we can rise the tide for all ships.
Whether you have a simple question about our services or a complicated logistics problem, we're here to help. Contact us today!