Intermodal Trucking Today
There is much to be said about the turbulence created by the recent economic downturn and the years that preceded this recession. Prior to 2007, the intermodal trucking industry experienced major growth paving the way for almost anyone to enter. Loose regulations and increased truck capacity allowed for a high volume of goods to be shipped and purchased by the credit rich consumer. The recession hit the brakes on free flowing credit and the volume of freight moving throughout the world.
This new economic outlook will change how we operate against the barriers effecting our industry today. Three areas that continue to absorb much energy at Universal Transportation include safety, equipment, and capacity. All three areas are related and will have a significant impact on how we run our business. Fortunately we are staffed with an experienced group to maintain a high level of service as we navigate our way through this new environment.
Maintaining a safe fleet of trucks is a key factor when sharing the roads with the general public. In addition, we are faced with new regulations (CSA 2010 – csa2010.fmcsa.dot.gov) that is about to change the game for drivers and trucking companies operating in the U.S. UTS has taken these new regulations very seriously by upgrading our safety department and contracting with consultants (Midwestcompliance.com) to guide us through these changes.
Our efforts to increase the level of safety in our fleet will ultimately cost us drivers at a time when we need them the most. However, we’ve decided to make safety a priority in the wake of these changing regulations and in part to our responsibility in sharing the roads with other motorists.
Maintaining good equipment can be a challenge for any trucking company. The intermodal trucking section of the industry makes it especially difficult because truckers typically share the usage of chassis with other companies. We (truckers) bare the responsibility of inspecting the equipment before using but are also dependent on vendors managing the chassis fleets to maintain a healthy supply of good-order units for usage. Currently, large market rail ramps (i.e Chicago) are under-supplied which increases a driver’s turn-time (sometimes up to 4 hours) resulting in lost wages. Typically a driver is left with the option of waiting without pay or hauling inadequate equipment.
Our solution for the problem at UTS is to increase the awareness and education for our drivers on performing a proper pre-trip inspection and the effects of receiving violations for poor equipment. This is the most effective way to prevent against hauling unsafe equipment. We cannot control the chassis supply nor the mechanics who repair the chassis so our focus will remain on education. At some point, if this situation does not improve I expect detention charges for waiting at the rail to come into play.
One of the hottest topics being discussed in our industry is the truck capacity issue created form the recent recession. Shipping demand has increased in 2010 while the supply of power units has been depleted creating our biggest challenge and possibly our best opportunity in the near future. I’m convinced that we (Universal Transportation Services) could increase our revenue by another 30% if we had the truck power. This ratio should begin to shift at some point but will not go away.
Over 200,000 trucks have been taken off the road over the last 2 years with more to follow in the wake of CSA 2010. In order to attract drivers we have raised our compensation, instituted a healthy sign-on bonus, and offer other incentives for drivers based on drivers safety scores. Our investments in technology and experienced dispatch personnel makes UTS an attractive company to contract with but we continue to fall short of the truck count needed to handle the current volume of freight.
Although the truck shortage handicaps us from reaching revenue goals it has helped to increase rates for hauling freight. In order to sustain a manageable volume of freight over the past two years we were forced to reduce trucking rates between 10% and 20%. We are now seeing some of those rates returning close to pre-recession levels. Should the capacity issue persist I expect to see this trend continue and present some opportunities for the trucking industry in the future.
I do think the safety, equipment, and capacity issues are interrelated and will hopefully provide opportunities if managed correctly. Five years ago we ran the risk of our contracted drivers starting their own trucking company and competing with us. It was easy for them to get financing and they could fly below the radar with DOT regulations. Today the barriers to entering our industry have increased and survival by operating without focus on changing regulations will result in failure. Our focus on safety and our commitment to a high level of service will help navigate us through the changing regulations, equipment, and capacity issues facing our industry today.
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