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Why small carriers are shrinking

Sep 24, 2015 at 11:57 AM CST


Smaller trucking companies are shrinking. I’m not referring to our waistlines, despite Karen Bowen’s health advice, but rather the number of trucks we operate.

I know of several smaller trucking companies, including our own, that are willingly getting smaller lately.

Larger trucking companies may feel this is a good thing, but I don’t think it’s advantageous to anybody. Last year, I predicted this would happen; I just didn’t expect it to happen this soon, or to be almost entirely by choice.

Realistically, the market needs us and large carriers need us to thrive also, whether they admit it or not. Smaller shippers still require reliable, loyal trucking companies to service their needs.

Generally, they don’t want to deal with large trucking companies, and the large carriers don’t want to deal with them.

Often, their needs and demands aren’t of large enough volume to interest the large carriers or, in many cases, the shipper/receiver is geographically located such as to prevent large carriers, usually stationed in or near large cities, to be able to properly service the customer.

These smaller shippers still represent a substantial piece of the economy and provide plentiful employment, and as such, consumers need them to have practical, reliable trucking availability.

Sometimes, they will prefer being serviced by the same, smaller and consistent, recognizable driving staff, so there is familiarity with the product and the customers.

None of this is a realistic expectation using larger carriers.

Our existence is no threat to the large trucking companies; we don’t have the equipment, staff, patience, or resources to challenge them on multiple truck contracts with the Fortune 500 companies and besides, we wouldn’t be financially competitive, as we don’t have economies of scale.

As contentious as a shared existence in the market seems to be, large and small carriers need each other in order to provide marketplace balance. I think there are three primary reasons for the downsizing of small fleets.

The driver shortage: This isn’t exclusively our problem, but it affects us more, as recruiting becomes more expensive and less effective.

It makes a bigger impact in our operation. Too many drivers and owner/operators erroneously assume the grass is greener at the large carrier, relating company size to their individual success.

When we offer much higher remuneration, many drivers, who’ve been deceived so often in the past, assume the higher pay is another lie and don’t even apply for our openings.

In our case, my wife (dispatcher, payroll, manager, etc.) knows the name of every driver’s spouse, kids and likely their dogs.

How often do you see that level of familiarity at a large carrier? We’ve all seen drivers pass us up, only to travel further to get to work and be home less often.

Eventually, this manpower lottery consumes more time and revenue than we could regain with another unit on the road.

Foolishly ‘competitive’ rates: Often, large carriers, load brokers and even an occasional desperate small carrier will underbid freight – even for small customers – usually during slow periods. During a sluggish economy, any shipper would obviously be tempted to risk lower quality service in exchange for lower costs.

When business improves, there are no cheap trucks available for the freight they’ve slashed rates on, but the damage has been done.

The shipper now believes they’ve previously been overcharged and the low rate offerings become the new benchmark. Until the customer realizes the difference in levels of service and loyalty, we lose a substantial piece of our clientele.

This often puts us in a position where the revenue per truck is actually higher with fewer trucks, because we now pick and choose whose freight to haul. This makes difficult business growth less attractive.

We’re tired: Tired of fighting battles in the industry, not of our making. Tired of offering higher pay, and still not being able to hire driving staff. When another driver has a mechanical or personal issue, we have to pick up the slack.

We’re tired of watching business growth measured in larger negative numbers the longer we’re in existence. Tired of interviewing drivers with verifiable experience but still lacking in skill or attitude, making us wonder what the industry’s future looks like, and if we really even have a place in it.

Tired of the pressure from influential carriers and organizations that we upgrade to expensive, unreliable, newer equipment, when our current equipment is better suited to our needs, besides being more reliable and economical.

I often hear the statement “This business isn’t fun anymore,” and that’s from owners who, at some point, really enjoyed getting behind the wheel. Imagine the attitude of those of us who just considered it a familiar, comfortable way to make a living. I always try to offer a solution when I discuss a problem, even though my suggested solutions don’t always meet with approval. I’m sorry, but this time I don’t have a solution.

When I review the changes in this industry that have occurred over the relatively brief time I’ve been in an ownership position and see the direction this profession is going, I don’t see how to turn this around. In the long term, I can’t see this as good news for anybody.


Bill Cameron and his wife Nancy own and operate Parks Transportation, a flatdeck trucking company. Bill can be reached at [email protected]