If you take a poll of many fleets, you will find them saying 2018 was their best year ever. But you must look closer into the numbers to find there is a difference between how larger and smaller carriers are doing. Not all motor carrier are created equal in the current environment.
How are Small- to Mid-Size Fleets Doing?
A new research survey is shining a light on this very question. Whether it is a struggle to find qualified truck drivers, higher fuel and equipment costs, ELD implementation, or other regulations, small trucking companies of 1 – 100 trucks have not done as well as those operating 100+ vehicles.
Nearly three-quarters of small trucking companies surveyed reported that increasing costs – with insurance, maintenance, and fuel being the top three – were eating into profit margins. Even more, smaller fleets are reporting that unsustainable pricing being charged by larger competitors is squeezing them out of business.
Large motor carriers have been better able to manage the truck driver shortage and capacity crunch that crippled the transportation sector in 2017. Large fleets have also made it through price increases that small- to mid-size carriers could not compete with.
As a result, smaller carriers feel that they can’t negotiate prices, terms and conditions without risking losing a client. Nearly 40% of all small trucking companies surveyed stated they accept contracts as-is to avoid losing that contract. This has hamstrung their ability to turn a profit in a tight marketplace.
Small trucking companies with fewer than 5 rigs listed their key challenges as:
- Increasing business costs
- Government regulations
- Unsustainable pricing
- Finding good truck drivers
But for trucking companies with 5 – 100 trucks, finding good truck drivers was the number one concern with nearly two-thirds of the vote. Interestingly, retaining good truck drivers was third on the list. It becomes obvious that keeping experienced, professional truck drivers in the cabs of 5 – 100 trucks is far harder than finding truck drivers for just a few.
Another interesting finding highlighted nearly two-thirds of fleets with 5 – 100 trucks giving pay raises to retain their truck drivers, compared with only a third of fleets with 5 or less trucks. No matter what truck grouping a company fell under, few had a firm grasp on what it costs them when they lose a truck driver, with 16% going so far as to say it did not cost them anything. The majority simply said they did not know.
Where technology is concerned, nearly half of all respondents said the electronic logging device would have the biggest impact on the trucking industry within the next three years. Rounding out the top three were route optimization and predictive maintenance.
These answers also populated the top spots on what investments fleets anticipated making within the next 12 – 24 months. The number one vote-getter was predictive maintenance, with route optimization and fleet management systems and software coming in second and third. The primary motivating factor for adopting a lot of these new technologies stems from a desire to reduce costs.
Alaskan Trucking is Different
If there is one place where moving freight around creates a nearly intractable logistical challenge, it is Alaska. Challenges posed by geography and weather create nightmare load-hauling scenarios. At the same time, almost everything Alaskans need or consume comes from somewhere else. Of course, you can get some of the best fish on the planet in Alaska, but everyday items generally come from somewhere else.
With an ocean and Canada between them and the rest of the country, and only 2.4 miles between Russia and the United States, Alaskans face unique challenges. Truck drivers operating in Alaska also face unique challenges. Imagine that it is a 44-hour, 2,260-mile ride from Seattle to Anchorage. By sea, that could take 3- to 4-days.
Barges regularly sail from the port of Seattle/Tacoma and on into Anchorage, otherwise, to get something there in a hurry, it must be flown in or go by steamship. Still, trucks are not a bad proposition. With a team of truck drivers, they can generally make it from Seattle to Anchorage within two days.
Consider, however, that that is just to Anchorage. Almost half the state’s residents live there, and while it is not the state’s capital, it certainly is its commercial hub. And it represents just a small part of a very big state.
Alaska is actually nearly half the size of the entire United States and is twice the size of Texas. From east to west, the sate spans 2,261 miles, which is nearly the east/west span of the lower 48. Alaska also has more miles of coastline than every other state, combined. With such a large size, getting things from Anchorage to other parts of Alaska poses a unique challenge.
While the summer months in Alaska provide barge service, usually from May to September, when winter arrives the water freezes over and barge service stops. Fortunately, a decent highway network exists in the eastern half of Alaska. Major centers like Anchorage, Valdez and Fairbanks are well-connected to other areas in the state. There is also a freight rail corridor that runs north-south between Anchorage and Fairbanks.
The extensive road and rail network only snakes across the eastern part of the state. And trucks and trains can only go so far. To get things farther, remote areas are only accessible by boat or plane. In fact, did you know that there are more airports and landing strips in Alaska per capita than any other state, by a wide margin? There are literally hundreds of small commercial and charter services operating all over Alaska.
There are even situations where planes have had to fly trucks! In those cases, tanks and the chassis must be broken apart, put on skids, then loaded on a C130 transport plane. Of course, this adds considerable cost to the vehicle, but in situations where remote municipalities need utility trucks, this may be the only way to get the vehicles into those communities.
For Trucking Companies Working in Alaska
Tractor size and weight regulations are fairly progressive in Alaska. While the state does not have a mandated gross vehicle weight, it does limit weight by axle groupings. A tandem axle group can run up to 38,000 pounds and a four-axle group can bear up to 50,000 pounds. Certain routes can also accommodate long combination vehicles with a length up to 120 feet depending on the time of year.
Trucks and trains play a big role during the warmer months, when goods are trucked north to Prudhoe Bay and then placed on the barges, provided they are still sailing. Once a barge sails north, it usually stays up there until the next thaw. If a product isn’t into the dock by September 3rd, it will miss its chance until the following spring.
Transport costs are simply a fact of life in Alaska. By the time one gallon of milk reaches a remote village in the north or west of the state, it could skyrocket from $3.00 to over $10.00. The same goes for truck parts and other equipment. As such, you can likely imagine who the big player in Alaska is: Amazon Prime. Most of the small courier services that deliver goods by plane count Amazon as one of the biggest parts of their business after ferrying passengers to different places.
Still, everything from fuel to food is moved by truck wherever possible. Moving good by trucks, even from the United States, can often be far cheaper than going by boat or plane, especially if you are moving large goods. Yet, even though transportation services are in high demand in Alaska, trucking companies there are not without the same share of problems others deal with in the lower 48.
There is a shortage of qualified CDL truck drivers the same as anywhere else. In fact, the problem is even more acute in Alaska, given to how remote the state is. The unemployment rate is Alaska is also quite low. From jobs in the skilled trades, construction, pipeline work, and more, finding truck drivers is no easy tasks.
Operating a big rig in Alaska also requires a certain skill set. Many roads are rural and windy. During the cold months, travel is especially precarious. Truck drivers running loads in Alaska must take great care to ensure they get their shipment where it is supposed to go safely and securely.
As a result, trucking companies in Alaska have been offering big pay raises and sign-on bonuses. They are doing everything they can to attract and retain the right people. If the economy continues to improve, these problems will only become more acute.