A much-needed kick in the pants?

Freight will continue to slow, today’s low fuel prices will probably spike, and more owner-operators and fleets will go out of business. That’s the forecast for the coming months – probably into late next year. And that’s the good news.

“Good news?” you’re probably thinking. “You have to be kidding.”

Nope. These negative conditions might be just the kick in the pants needed to weed out less-than-viable trucking businesses. Sounds harsh, I know, but hear me out.

Unless you want to continue living on marginal freight rates, something has to give. Only when there are fewer carriers available to move freight will prices go up, giving you the opportunity to put more money in your pocket.

While there’s no doubt we’re suffering after the events of Sept. 11, we can’t lay the blame solely at the feet of Osama bin Laden. Thanks to bad business decisions by fleets, owner-operators and industry suppliers, we were already ill-positioned to withstand an economic downswing:

  • Guaranteed buy-back programs and easy credit plans have left us with a glut of used trucks that has sucked the value out of new and used vehicles.
  • Ample capacity has given fleets and owner-operators little bargaining power to earn higher rates.
  • Unprecedented fuel price increases forced thousands of undercapitalized owner-operators to park their rigs, leaving 161,400 owner-operators who operate Class 8 trucks.

    Your ranks have thinned some – and for the short term that may continue. But you operate more than $14.5 billion worth of equipment and move freight nearly 25 billion miles each year. You are a viable part of this industry.

    And there’s more good news: If you’ve survived falling equipment values, tight margins and high costs for this long, you are well-positioned to prosper when things turn up. By the law of supply and demand, a decrease in owner-operators means an increase in their rates. It stands to reason that the competitors who fall will be those who cut rates, operate unsafely and generally give the industry a bad image.

    Times are tough. But the same sound business principles that helped you withstand high fuel prices – watching costs, operating safely and providing good customer service – will sustain you through this battle.

    In the words of President Bush: “America is successful because of the hard work, creativity and enterprise of our people. These were the true strengths of our economy before Sept. 11, and they are our strengths today.”

    No one exemplifies those strengths more completely than our nation’s owner-operators

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