Carriers who pursue volume-only goal in competition are dampening good rate environment

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Updated Sep 5, 2014

Stuart Sutton, President and Founder of the Sylectus transportation management software company, which in addition to TMS services offers an expedited load board as well as a customer-service platform that enables competing carriers to draw on each others’ resources, sees a capacity/demand situation in trucking today that should be positive for freight rates. The problem, he said, speaking at the Expedite Expo at the Roberts Convention Centre in Wilmington, Ohio, June 26, is that some major players in trucking he declined to name continue to opt for volume-only goals in their competive strategy that ultimately “hurt everyone,” he said. “Say I’m a big company and I drop rates by 5 percent.” While shippers will be happy about that and migrate their freight to that carrier to some degree, ultimately if the market doesn’t have an excess of volume, in it, other carriers follow.

“It’s unfortunate,” he said, “but everybody seems to want to compete this way. And who gets hurt? Drivers, small businesses, people all throughout the industry.”

All the same, he doesn’t see a big decline in rates or freight volume on the horizon — the economic outlook for trucking services is fairly steady. Sutton projected stability, slow growth over the next six months, in a presentation of data culled now for many years from a group of carriers in the Sylectus system.

Among the most potentially significant of findings from the data in recent times has been a disconnect between historically closely concurrent rises and falls in trucking capacity and the Dow Jones Industrial Average. Capacity has been level or falling over the course of 2013, Sutton noted, while the Dow has been on a steady upward trend. He’s not sure yet which indicator may be leading the other, as it were, but was hopeful that the disconnect was further evidence of carrier pricing leverage.

“If I continue to see capacity go down, that should drive rates up,” he said, blaming the capacity problems on a dearth of new drivers coming into the industry.

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Two years prior to the 2008 recession, according to Sylectus data, the average age of drivers was 48 for women, 46 for men. Post recession, among those same carriers, ages were 51 for women, 48.5 for men.