What’s Happening to Trucking and our Economy as we Enter 2009
As we enter 2009, it pains and saddens me to think about the state of trucking and our economy. With almost every phone now I hear about how drivers are looking for work, trying to keep their truck, or wondering how they're going to pay their bills.
I had the very unfortunate conversation, again, this morning with one of my shippers. 'Fuel is going down,' he says, and 'since you are still attaching a fuel surcharge, maybe that's why your rates are higher'. But our rates aren't higher than other trucking companies; our rates are higher than companies that are low-balling freight rates.
Many companies that don't even own trucks and offering freight have no idea what it costs to run a truck, nor do they seem to care. They still make their commission and pay their bills, so why not continue to keep going the way they are. In the process, however, it keeps an industry repressed -unable to grow and unable to help a failing economy.
Trucking is probably one of the worst industries I know of where rates have stayed the same through the years. In 1976 I hauled steel for about $1.35 to $1.50 per mile. In 1988 I was offered and ran for about $1.50 per mile. In 2003 I dispatched trucks for about $1.50 per mile- just to stay competitive. Everything in our lives has increased in value with the exception of freight rates. Thankfully, around that time rates started increasing due to the difficulty in finding trucks. Cost of fuel and insurance had increased about 140% and finally drivers were realizing they were running for less than they were making and refused to take cheap freight.
I watched as rates went up about 35% and then carriers started adding fuel surcharges. There was hope for trucking and our economy. Fast-forward five years. Now with fuel going back down and people spending less, trucking becomes one of the most vulnerable industries. Today with a failing economy, shippers and manufacturers are doing anything they can to keep costs down and stay in business.
Enter the brokers. Argue this if you will, but unless you own a truck, trucking company and or pay the bills to run a truck, consider some facts:
- Today, diesel still runs an average $2.31 per mile
- Tires cost are double from just a few years ago
- Insurance rates are up 140%
- Cost of living has increased significantly since the 70's.
If a driver ran strictly at $1.98 per mile, kept his or her deadhead (empty miles) down to less than 8% and was loaded all the time, they may still only make about $25,000 a year. Does that sound like a lot to be out there 24/7? I used to say that drivers are good at what they do, but not always good accountants. My facts come with 32 years of experience, have over 1700 owner operators leased to us and I have owned and operated multiple trucks.
Where do the brokers come up with their rates? I've heard them offering freight out at less than a dollar per mile. That would not even be enough to cover the operation of the truck. That would not even be minimum wage to the driver. Many drivers are already forced to live in their truck in order to send some money home and stay in business. Now there is not even enough money to send home and more drivers than ever are losing their trucks.
We must do something now to help the trucking industry or we will have no trucking companies or drivers left. Free enterprise is one thing, but people that do not own trucks or are allowed to obtain a brokers license should not be allowed to offer what would not even cover costs or pay minimum wage. Record numbers of trucking companies and owner operators are going out of business right now.
We must either start regulating freight again, stop brokers and people from quoting and offering out cheap freight-or we will have to sit idly by and watch as some drivers take freight to keep moving, only to put the money back in their truck, not into the economy, and then have no boost to our economy and no one left to move freight.
Even carriers that should know better (since they own trucks) are brokering freight out. People that find freight on the Internet should, at the very least, offer loads that would pay minimum wage to the driver. Again, right now these loads are being offered for less than the truck makes.
Watcha video from Good Morning Americaand ABC News titled 'Economy: Sectors to Watch:' - get to know a face this effects directly as this process is called low-balling or repressing an industry and again, only hurts all of us. As bad as things are already, this will eventually put America out of business. A manufacturer wouldn't sell their product for less than it costs them or they need to make so why should a driver run for less than they need to make? Many reliable sources say as much as 78% of everything we use is delivered by truck. So, in order to help trucking and our economy we must deal with this now!
