An article recently published by FreightWaves regarding the conditions carrier companies will face in 2019 may have smaller carrier companies worried about what their future holds. The freight market is currently characterized by terms like “driver shortage” and “capacity glut,” meaning some carriers are left with trucks that don’t have anything to transport.
To further exacerbate this problem, the U.S. advanced a tariff on Chinese imports which caused freight volumes to take a deep dive in May - typically a high-volume month. Because capacity is up and volumes are down, truckload spot rates have dropped by 36 percent compared to this same time last year. In addition, the price increase in oil since the beginning of the year is a financial burden. These factors combined can mean that some carrier companies might ultimately struggle to pay their bills.
But don’t fret - 2019 doesn’t have to be a tough year! There are things you can do to survive this market:
- Be proactive about getting (and staying) loaded. It’s likely that many carrier companies will reduce their fleet size to fix the capacity issue. When this happens, the demand for trucks will increase and carriers need to be ready to go when it happens! Stay informed about capacity levels and have a reliable source to go to for consistent loads. Before your truck unloads and is empty, you should know where your next load is coming from. And remember - 3PLs can help with this!
- Build relationships. Having a trustworthy relationship with a shipper or a broker is necessary for carrier companies in a market like this. High-quality relationships build the foundation for a successful business and open-up the door for future opportunities.
- Have a diverse service market. A carrier never knows what economic changes are coming next. Case in point: one day tomatoes could be shipping out of Mexico at a high rate, and the next day, they may not. Because of the potential for abrupt economic shifts like this, carriers need to make sure to work with a variety of customers and industries to always have load options available. Don’t just ship the same product for the same customer all the time. It is very beneficial to have an established, regular lane, but a carrier should also ensure a certain level of diversification!
- Keep cash flows steady. If a carrier doesn’t have the money needed to pay their bills, they simply can’t stay in business. Guaranteed cash inflow is integral to keeping trucks moving. Many carriers struggle when it comes to getting paid by customers because customers don’t always pay very quickly. To help with cash inflow, consider using a 3PL who has a variety of payment options to ensure you get paid when you need to.