Are Smaller Carrier Trucks Being Parked?
With the holiday season quickly approaching, one of the busiest times of the year for all businesses, there is some concern in the trucking industry as smaller carriers are beginning to park their trucks. What does this really mean and how does it impact your business?
Are Smaller Carrier Trucks Being Parked?
One hot topic at the American Trucking Associations’ Management Conference and Exhibition was small carriers planning to park their trucks for the fourth quarter. There are several different reasons for this, most of which we will cover later, but it is indeed true. Many small carriers are planning on parking their trucks.
While this may seem counterintuitive considering the fourth quarter is often one of the busiest times of the year, smaller carriers are simply having a difficult time meeting rising costs. Grant Goodale, the co-founder of the digital brokerage Convey, has regular contact with the smaller and medium-sized fleets apart from Convey’s network of carriers. “The spot markets are really tight and almost everybody is taking every bit of work they can,” Goodale said. “Despite the fact that consumer spending is at an all-time high, you’re not seeing lots of freight entering the market.”
Why Are Costs Rising?
A big reason smaller carriers are having a difficult time with rising prices is due to the diesel market. The average retail price is up around 50 cents per gallon since the start of October. These price hikes are also a reason why many independent owner-operators are choosing to become employed drivers so they don’t have to deal with the rising price of diesel.
Combine the price hike with surprisingly low demand and lower rates and it simply isn’t feasible for smaller carriers to operate at their maximum number. “We are not seeing rates keep pace with costs and that is definitely squeezing small carriers,” Goodale said. “Add in the fact that demand is not spiking along with costs, and it’s a scenario for a tough quarter.”
Why Does This Hurt Smaller Carriers?
Rising diesel costs disproportionately affect smaller carriers, as they don’t have the means to fight back against rising costs as larger carriers do. For example, many large carriers have their own fuel cards, making it easier for them to handle the rise in diesel prices. Larger carriers are also in a better position to negotiate their prices with distributors.
That’s not to say large carriers aren’t affected by higher diesel prices. Fuel prices were the number one concern for carriers on the annual ATRI report, making it the first time diesel prices entered the top 10 since 2013.
How Does This Affect Your Business?
Rising diesel prices and the consequences felt throughout the trucking industry only add to the uncertainty of your business’s time-critical shipping needs. As the entire shipping industry continues to rebound from the pandemic, uncertainty has never been higher. Businesses that used smaller carrier trucks for transportation may need to find someone else this holiday season.
With smaller carrier trucks being parked for the fourth quarter, it’s not unlikely that the larger carriers who remain increase their prices. This is important to consider when it comes to budgeting. With so much uncertainty in the air, it’s best to overestimate your budget than underestimate it when it comes to shipping.
We Can Help
If you don’t want to deal with the hassle and headache of time-critical logistics, our team at Trifecta Transport is here to help. We can deal with the uncertainty of the trucking industry so you don’t have to. Reach out to us today to find out how we can help you with your logistic needs!
