Motor carriers turning down record amounts of freight in current peak season
Trucking executives report they are rejecting record amounts of freight in this current booming peak freight season.
“We’re turning down freight,” Myron P. “Mike” Shevell, chairman and CEO of the Shevell Group that operates New England Motor Freight on the LTL side and Eastern Freightways in the truckload market, tells Logistics Management. “We could probably double our business if we had the drivers.”
Privately held Shevell Group ranks collectively as the 70th-largest trucking concern nationally, according to American Trucking Associations data. It posted $439.5 million revenue last year, a 0.8% increase over 2016 revenue. NEMF is the 17th-largest LTL with about $400 million of that revenue.
“It’s like running a crap shoot,” Shevell said of how selective carriers are in the current bullish environment.
The current rate environment favors the carriers, Shevell and others said. And it may be that way for the foreseeable future, they added.
“This is probably the best market I’ve seen in 20-plus years of doing this,” Greg Orr, president of CFI, which operates 2,400 company-owned tractors and 8,000 trailers. CFI, formerly Con-way Truckload, is owned by Montreal-based TFI International, which posted $3.9 billion (U.S.) revenue last year.
“We continue to see a very, very strong and positive market place,” Orr said. “There was just a teeny dip (in demand) in August. But we’re pretty confident these are levels above the industry norms for this time of year for the past three-to-five years. At this point, there is no major sign of a slowdown any time soon.”
August ended with average spot rates lower than June and July, but still up about 20% higher annually, according to DAT Trendlines, which tracks the truck market place.
DAT data show demand for flatbeds has returned to 2017 levels, but reefer demand is strong in several Northern states as harvests are underway for apples, potatoes, onions and other late-summer crops. The national average rate fell one-cent per mile for vans, dropped two cents for flatbeds and held steady for reefers, DAT said.
As the summer ended, shippers posted 3% fewer spot market loads while available capacity improved 5% during the week ending Sept. 1, said DAT.
Average TL van rates fell one cent to $2.14/mile, the flatbed rate declined two cents to $2.64/mile, and the refrigerated rate was unchanged at $2.49/mile week over week as shippers entered the fall peak season.
Carrier executives say it’s about time rates were rising. It’s been over a decade, veteran truckers say, since profit margins were much above pennies on the dollar, they say.
“Rates have been traditionally too low to warrant the reinvestment in the business that needs to happen,” Shevell said. “The costs of drivers, equipment, fuel, insurance, all the things you need to run a business, are all off kilter. This has to be corrected.”
Shippers need to be aware this current spike in trucking rates is no longer a temporary blip, carrier executives say. Rather, it should be viewed as a longer term trend as the pricing pendulum swings in favor of carriers.
“A lot of shippers are still playing the game of ‘Let’s beat up the carriers,’” Shevell said. “Those days are over. This situation is well beyond anybody’s control. This is a long-term adjustment that has been needed for decades.”
