Recently, there’s been a lot of media coverage regarding the speed limit on commercial trucks. There is a comment period open right now with the FMCSA to leave your opinions and thoughts on the subject. But if you decide to actually comment, make sure you answer the questions that the FMCSA asked.
For those of you who don't know, comments that do not relate directly to the questions in the proposal will be disregarded. The particular questions that are asked actually have nothing to do with whether to have or not have a speed limit. The questions that are being asked are actually on how to do a speed limiter. The comment period that addressed whether to have or not to have, a speed limiter question was posted I believe sometime in the year 2016.
Beyond commenting and being involved with issues such as the speed limiter and how it affects our industry, I want to address all of the comments that I have been reading on various forums and social media platforms. Many of the comments are about the “mega carriers” and how they are just out to get the little guy. To that, I say “Of course they are! That's just business.” It's no different in any other industry where the object is to do better than your competition.
All this brings me back to a question that was asked of me at a forum during the Mid America Truck Show in Louisville, KY many many years ago. This was a transportation summit and I was invited to be on the panel which included two major mega carriers, one other carrier with about 1200 power units, and a person from Transport Topics Magazine. During this summit, all the large carriers were getting all the questions. I felt as though I was just sitting there until a question was finally directed to me. The question was, “How does a small two truck company compete with mega carriers?”. I was glad to have been finally asked a question! However, I was not pleased that the question made it sound like smaller trucking operations could not compete with large trucking operations. I paused for a second and said: “You asked the wrong question. The question should have been... how can the big carriers compete with a small carrier such as myself?”. Next, I added “I don't have a terminal to pay for, the overhead of management, rookies tearing up my equipment, I’m able to give better customer service, get better fuel mileage, longer equipment life, and because of my better service, generally my services are able to command a higher rate of compensation”. Finally, my answer to this question was: “Sure...the mega carriers get big discounts on their trucks, trailers, insurance, fuel, tires, and many other items. But, they need all that if they want to compete with a small carrier such as my own”.
With the comments I was reading on all the forums and social media platforms, placing small operators as victims of the mega carriers, I remembered an old figure that I read many years ago from the FMCSA statistics. It stated that 97.3% of the carriers on the road today have fewer than 20 trucks. I also remember reading the pace reports in one of the trucking magazines that listed the top 100 carriers. What stuck with me at the time, was that there was one major carrier that was the “punching bag” for everyone in regards to who was cutting the rates. As it turned out, this particular carrier had the highest revenue per mile of any of the carriers listed in this publication. At the same time, they also had one of the lowest profit margins. Their profit margin was a measly 2%. My thought at the time was, “If I can't compete with that, I need to be in a different business”.
All this had me do some research as to who really is the “big dog” in the trucking industry. According to the Bureau of Transportation Statistics, there were just shy of 2.8 million registered tractors in the United States in the year 2021. In Transport Topics, they reported the top 10 largest for-hire fleets excluding UPS, FEDEX, and Ryder only operated 131,328 tractors combined. This should put some perspective that, collectively, the small carriers are a much larger piece of the trucking population than the mega carriers.
Interestingly enough, I remember while at the National Association of Small Trucking Companies in Nashville, TN, many of their members were not pleased with the lower turnover rate that some of the mega carriers were trending towards. As it turns out, many of these small trucking companies cannot get insurance on an inexperienced driver at a reasonable rate. So, what they had been doing for years, was recruiting drivers that were trained by the mega carriers.
The bottom line is that my hardest and most difficult competition comes from other small trucking companies that are able and willing to give high-quality service. If all I had to compete with was mega carriers, my life would be much simpler. Of course, the mega carriers and the mega shippers work together very well. Over most of my career, I have chosen not to compete with them in this field. Since 1996, the majority of my business was procured through having my own customers, and very rarely using a broker. I developed routes and connected the dots so that I could bounce back and forth between my customers and serve them well. My favorite shippers were usually ones who shipped less than ten loads per day. These smaller customers typically valued the superior service that a small carrier offered. In closing, know your business and your competition, and don't end up in the victim role as it is hard to move forward successfully if in your mind, there is already defeat.
Speaking of competition, one of the numbers I came across in these reports I was looking at, indicated that in 1996, which was the year I got my own operating authority, there were 1,424,131 tractors registered in the United States, and in 2019 there were 2,758,682. That my friends, is a lot of competition! So keep your pencils sharp, and move forward profitably into the future.