Truckload rates are still in decline due to weak demand, thus benefiting shippers who are putting pressure on carriers, freight brokers and third-party logistics providers (3PLs) the Wall Street Journal reported recently. The rest of 2016 promises more of the same as the industrial economy remains in contraction and consumer demand is projected to remain sluggish. It seems trucking companies will have to make an extra effort to obtain maximum efficiency to remain competitive during these stagnant economic times. The best fleets survived challenging market conditions in recent years and will have to return to those lean times once again.
Between March 2011 and March 2014, diesel prices hovered around $4.00 a gallon. It was during this time that fuel efficiency and route optimization rocketed to the forefront of carrier concerns. The wise saying, “necessity is the mother of invention,” was once again proven true as a renewed focus on aerodynamics redirected the design of trucks and trailers. New after-market products were created and brought to market expeditiously – promising better fuel economy during one of the longest periods of high fuel prices. Trailer skirts, trailer tails and aerodynamic wheel covers started appearing on the interstates as carriers invested in these new fuel efficient products to offset the rise in fuel costs.
It was also during these lean times that carriers also improved their loaded/empty mile ratios. No longer could they afford to transport a customer’s load to the consignee and return empty. Carriers had to focus on keeping their trucks loaded as much as possible. “Sail boat fuel” does not pay very well; it costs around $1 a mile to move an empty truck.
What more can fleets do to survive these lean times? Carriers can use freight brokers to book return trips to where their customers are. Sometimes, this is not possible and a triangular traffic pattern is the next best option. An example of this triangle could be Houston to Atlanta, Atlanta to Nashville and Nashville to Houston. This triangular lane is efficient and keeps the fleet loaded and returns to Houston where their primary outbound lanes originate. Route optimization software can further reduce costs and improve productivity for fleets, especially with an irregular route as mentioned here. This software uses powerful algorithms to enhance decision support and operational execution.
In conclusion, the rest of 2016 promises to be weak, especially with a presidential election in the balance. During these challenging times, fleets and owner-operators alike must continue to operate efficiently. Even though fuel costs are relatively cheap – so are the freight rates.