2011: The Year Ahead

January 10, 2011 in General Transport, trucking | Tags: , , | by | Leave a comment

Rather than offer a rash of predictions for the coming year, we would like to focus on some key facts that are of importance to shippers and drivers alike.

CSA 2010 is here.  The new safety standard implemented by the Federal Motor Carrier Safety Administration (FMCSA) underwent intense scrutiny in 2010 and prompted serious debate between the FMCSA and the transportation industry.  While we suspect there will be continued discussion in the months ahead, the program has been launched.

In our opinion, there are two sides to consider with CSA 2010. The transportation industry is predicting increased pressure on its labor pool as drivers will be forced out because of the standards of CSA 2010.  The labor market in transportation has been challenged for many years, with an aging population of drivers and fewer individuals interested in entering the profession.  This challenge was somewhat alleviated during the recession, but is expected to resurface as the primary concern for motor carriers in 2011.  On the other hand, increasing safety on the roads should always be a common goal for both motor carriers and the government alike.  The disagreement, of course, begins with whether or not CSA 2010 will in fact impact driver and motor carrier safety. 

Proposed changes in hours of service rules are under scrutiny as well.  The FMCSA proposed new rules on December 23, 2010 with a final rule expected on July 26, 2011.  Again, there is debate between the transportation industry and the FMCSA as to the need for a change.  We will monitor the debate in the coming months and keep you updated as to how pending developments may impact your operations.

Finally, the truck tonnage index increased for the 12th consecutive month in November 2010 (Transport Topics, Jan 3, 2011).  Increased volumes are good news for both shippers and motor carriers and reflect a positive indicator for economic recovery.  Should this level of recovery sustain in 2011, there will most likely be an increase in freight rates as motor carriers readjust their pricing from 2009 and 2010 levels.

The Swinging Pendulum in the Truckload Market

August 4, 2010 in trucking | Tags: , , , , | by | 1 comment

Although it may seem hard to believe, 2010 is half over.  It is astonishing to reflect on where truckload carriers were at this time last year…some barely hanging on with too little freight generating too little cash.  Some carriers slashed prices, further exasperating their bottom line.  Many carriers parked equipment and decreased their fleet size, choosing to hunker down and wait out the recession.  Whatever the strategy, those who survived 2009 have been able to enjoy an increase in freight levels in 2010.  But carriers are still in a delicate position and cannot and should not consider themselves out of the woods yet.  This is why.

As we have previously discussed, the increased freight volumes of 2010 have challenged carriers to recruit and retain drivers.  Predictions are that the looming regulations of CSA 2010 will cause the driver shortage to get worse before (or if) it gets better.  So what are carriers doing?  Offering hefty sign-on bonuses and other teasers to entice drivers their way.  Some carriers decreased driver pay in the past few years, and they are now increasing pay scales back to prior levels.  While this may solve some immediate recruiting issues, the main concern is that carriers are hastily increasing their cost structure before freight rates have had a chance to settle in at profitable levels.  With so many carriers barely recovered from 2009, increasing their largest cost, driver and owner operator pay, may cause more harm than good.

Freight rates have continued to rise in the spot market throughout most areas of the country.  Based on this, the idea of carriers increasing costs as discussed above may not seem like such a bad idea.  The problem is that many carriers are under contract with customers with rates that were set in 2009 when shippers were able to negotiate very competitive pricing for their truckload freight.  Furthermore, although the increased freight volume has been a welcome relief to carriers, the economy is still in a precarious position.  Some economists are warning of a double-dip recession, or certainly a slowing of growth for the remainder of 2010.  Carriers have to position themselves to weather another economic storm if one is indeed on the horizon.

The problem, of course, is that no one knows exactly what will happen, even for the remaining months of 2010.  This is why it is so important for carriers not to ride the swinging pendulum caused by fluctuating freight volumes, pricing and costs.  Too often, once costs increase, it can be difficult to realign them if volumes and pricing do not solidify.  Carriers need to stay focused.  Swinging on the pendulum may just cause financial upheaval…and who needs that.

Recruiting and Retaining Drivers

June 28, 2010 in trucking | Tags: , , , , | by | Leave a comment

For the last several weeks, we have introduced the challenges of the truckload sector in today’s market.  Factors that include rising freight volumes, produce season, and capacity constraints caused by carriers and drivers exiting the industry are all contributing to growing difficulties in moving truckload freight. 

From your perspective as a shipper, asking “Will there be a truck available?” depends on your type of freight, your location, your rate and your planning.  The ability to communicate as far in advance as possible to your carrier gives the carrier an opportunity to plan their drivers and commit trucks to your freight.  However, it is just as important for shippers to understand what carriers are doing in response to the increased demands.  For most carriers, the answer is summed up in two words: Recruit and Retain.  Recruit new drivers and retain good drivers.  In pre-recession years, the turnover rate for drivers was well over 100 percent.  In today’s market, the turnover rate has fallen to approximately 40 percent, much improved, but still high by other standards.

Why is it so difficult for carriers to hire drivers and why is it so difficult to retain them?  Much of the reason lies in how a driver is paid.  There are as many different pay structures as there are carriers.  It is difficult for drivers to compare apples to apples when trying to calculate how much money they will make with different carriers.  Some carriers pay a lower base rate per mile, but do not charge the drivers for various items such as taxes and equipment rental.  Some carriers pay a higher base rate per mile, but charge the driver for a variety of miscellaneous items.  Some carriers pay a flat percent of what they will receive on the load.  And the most important factor of all is how many miles a driver will run each week.  If a driver is making a high rate per mile, but does not run enough miles each week, he or she will make less than the carrier with a lower base, but who can keep their drivers running.  Drivers must ultimately consider how much cash ends up in their pocket at the end of the week.

Quality carriers who have survived these tumultuous years are now putting time and resources into building their driver pool with qualified drivers.  Good carriers communicate in a straightforward fashion to driver applicants; they tell it like it is and don’t try to muddy the waters with false claims to candidates.  Recruiting is an ongoing process with carriers, but it ensures they can answer yes to customers who ask, “Do you have a truck available today?”

CSA 2010

June 18, 2010 in trucking | Tags: , , , , | by | 1 comment

This week we would like to delve deeper into the new driver and carrier safety standards, known as CSA 2010.  CSA 2010, which stands for Comprehensive Safety Analysis, is receiving a great deal of attention by industry analysts and is very much on the minds of carriers and drivers alike.  If you are a shipper, you may not be interested in all of the details of the new regulations, but it will be helpful to have a basic understanding of the program and why it may affect the answer to your pressing question, “Will there be truck available today?”

 Basically, CSA 2010 will be rating the safety of both carriers and drivers.  This is different than the current federal safety program known as SafeStat, which provides safety rankings for carriers only.  There are differences in how safety will be measured, which we don’t need to detail here, but CSA 2010 will be using a seven category program, called BASICs (Behavior Analysis and Safety Improvement Categories), to rank a driver’s behavior that could lead to accidents.  Data and history of unsafe driving, fatigued driving, driver fitness, controlled substances and alcohol, vehicle maintenance, improper loading or securing cargo and crash history will be monitored through roadside inspections and other traffic enforcement processes.  The safety ranking of an individual driver will include 36 months of performance and will follow the driver, even if he or she moves to another carrier.  CSA 2010 has also implemented a carrier intervention program with increasing severity of intervention, ranging from warning letters to ultimately a determination of suspension of carrier authority.    

What will change for carriers once CSA 2010 is fully implemented (target date has been delayed to November 2010, with full implemention probably some time in 2011)?  If you read industry publications, carriers will have a much more difficult time recruiting drivers who can pass safety standards, and insurance companies will be increasing premiums for drivers and carriers.  This may very well be true for many motor carriers, but what about YOUR core carriers?

 Here’s the bottom line- qualified carriers have followed their own high standards of driver safety, which naturally include any government regulations, and surpass those standards by ensuring their drivers can safely and responsibly service their customers.  CSA 2010 will not catch these carriers by surprise, rather it will validate how they have been managing their fleets for many years.  To be sure, qualified carriers will feel pressure in growing their fleets, but CSA 2010 will force sub-par carriers and drivers to either improve or leave the market.  This is a good thing; good for our highway safety and good for our industry to promote safe practices. 

Now, when you ask yourself if you will have a truck today, maybe rethink the question and ask yourself, “Are my core carriers safe and conscientious?”  A very good question, particularly today when we all feel the effects when companies operate outside their industry’s safety standards.

Watching the truckload market in June 2010

June 11, 2010 in trucking | Tags: , , , , | by | Leave a comment

This week’s news in the truckload market can be summed up in two words: Capacity Shortage.  The shortage of available equipment is particularly felt in the South where the produce season continues to take capacity.  This happens for two reasons; first, there is more freight moving during this season, and second, produce freight can pay a significantly higher rate for carriers.  Couple this with the increased volumes of all freight moving in the first five months of 2010, and the result is a definite challenge in finding enough trucks.

The best approach a shipper can take to maneuver through this environment is to plan ahead and communicate future loads to your core carriers as soon as possible.  Carriers are better able to plan when they know what freight they have to offer their drivers.  As shippers work with their carriers, be aware if your carriers will “abandon” you during produce season.  A carrier’s low rate may be appealing in the off season, but if that carrier is not committed to you throughout the year, that low rate will not help you move your freight. 

This week has also seen the spot market for freight rates continue to push higher.  This is an important indicator to watch.  This obviously impacts the immediate cost of freight, but also, the industry is watching to see if this is a precursor to a more permanent increase in rates.  Naturally, this depends on whether or not the increased volumes will continue through the year, but all indicators seem to point in that direction. 

We will continue to watch these developments and report to you as they unfold.

What’s ahead in 2010 in the truckload market?

June 2, 2010 in trucking | Tags: , , , , | by | 1 comment

For those companies touched by transportation, which is just about every organization involved in purchasing raw material, shipping finished product, or carrying the freight, there has been a significant change in business dynamics during 2010.  Whether one can attribute this to an overall improvement in the economy or a natural increase in volumes due to historically low levels of inventory throughout 2009, there is no doubt that the first five months of 2010 have been riddled with challenges in the supply chain brought about by equipment capacity shortages, particularly in the truckload sector.  Depending on where your plants or distribution centers are located, you may also be experiencing cyclical equipment shortages brought upon by the produce season which grabs capacity out of the market.  Or worse, the carrier who you have worked with may not even be around anymore, having joined the ranks of thousands of carriers who did not survive the recession and continued to declare bankruptcy well into the first quarter of 2010.  For whatever the reason, this year has been an unexpected and bumpy ride and the coming months will very likely continue to be more of the same.

The question you should be asking yourself is “What is ahead for the next several months, and how can I be sure there will be a truck available when I need one?”  Simple question, but with several points to consider; all happening “behind the scenes” that represent some of the core reasons why there may or may not be a truck available.

First, how much capacity can a carrier expect to add to react to the increased freight volumes?  It depends-depends on whether or not lending institutions will release credit so carriers can add equipment and expand their fleets; depends on whether fuel prices will increase, further challenging some still cash-strapped carriers. Second, how many long-distance drivers and owner operators have permanently left the industry and how will pending regulations affect the already challenged labor market? CSA 2010 will be implemented beginning in November 2010 with the goal of improving safety on our roads and highways.  Some estimates state that up 6 % to 7% of drivers will not qualify under these new regs (Logistics Management, May 2010, p. 15) and conscientious carriers will proactively review their driver pool to insure they are compliant.

Third, carriers with limited capacity, no matter the cause, will commit equipment to those customers who offer consistent lanes and volumes, coupled with other beneficial areas such as consistent and timely payment.

As the year unfolds, we will be keeping you abreast of the latest in the transportation industry and how it will affect that ever-pressing question “Will there be a truck available?”  Hopefully, we can offer insight that will help you ship your product and satisfy your customers.  We look forward to creating this dialogue.

General Transport’s Blog

April 21, 2010 in General Transport | by | Leave a comment

Thank you for visiting General Transport’s Blog! Please check back soon for future articles regarding our expertise in the Trucking, Logistics, and Brokerage Industries! We look forward to sharing this experience with you! Below is a little bit about us.

GENERAL TRANSPORT provides customers with service, professionalism, reliability and safety. It’s what our customers expect. It’s ingrained in our culture.

GENERAL TRANSPORT has grown into a world class carrier, delivering freight to many of the Fortune 500 companies.

For drivers, GENERAL TRANSPORT provides a competitive compensation package, great benefits and one of the most modern and best-maintained fleets in the industry. We know our success depends on shippers’ satisfaction.

GENERAL TRANSPORT pays attention to details that others might overlook. Our dispatchers continuously monitor weather conditions. If there are storms in your area, we will reschedule pickups to ensure on-time delivery. Satellite tracking and proprietary computer software gives us a rolling ETA so we always know where your shipment is. Continuous system information updates allow for fleet managers to quickly know if a change in scheduling is required.

If a bill of lading is different than planned, our drivers are trained to alert GENERAL TRANSPORT of any changes, and a customer service representative will call you to verify the correct information before the load is dispatched.

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