Price drops and employment laws causing tough times for trucking companies
For trucking companies working in transportation, fortunes should be looking good: the global economy, while beset by uncertainties over the US-China trade war and Brexit in the EU, is strong in the area of e-commerce, meaning that more people than ever are depending on the transportation of products ordered online, including from overseas. These big developments in online shopping make it a busy time for trucking companies. With many people around the world preferring to do their online shopping on foreign sites, it offers a healthy source of productivity and business for trucking companies.
Industry challenges for trucking companies
But it hasn’t been all plain sailing for trucking companies recently. Alarming recent news saw the Celadon Group, a major supplier of truckload services across North America, file for bankruptcy, sparking the further revelation that trucking companies in 2019 have failed at nearly three times the rate of 2018. This has meant around 24,000 trucks being removed from the roads, denting capacity at a time when things have never been more busy.
Adding to the decline of other big names such as New England Motor Freight, HVH Transportation, Falcon Transport and LME, the collapse of Celadon Group has shone the spotlight on the plunge in spot market prices, which has damaged companies working in this field as opposed to the contract market. The overall level of spot pricing has fallen since 2018, which has been contributed to by higher trade tariffs and some slowdown being experienced in particular industries – house and automotive being two of them.
Another regulatory development causing some headaches for trucking companies in California are new laws forcing them to reclassify the independent contractors who work for them. The rise of the gig economy has been well documented over the past decade and has been particularly showcased by Uber. While companies enjoy the flexible workforce and the avoidance of providing employee benefits such as sick leave and paid holidays, many workers are left with the uncertainty over their working hours and the basic employment rights enjoyed by many permanent employees.
A new law is changing all that in California, with Assembly Bill 5 being signed in September to ensure the bar for what defines an independent contractor falls so low that they are practically considered to be permanent employees. While this is good news for those workers and for campaigners in support of more ethical working practices, it carries a hefty bill for trucking companies who will have to fund the new employee benefits. New Jersey is another state that is also considering implementing a similar rule.
Meanwhile, again in the US, a new national compliance ruling has come into effect from the Federal Motor Carrier Safety Administration, which states that all trucking companies must be fitted with an electronic tagging device. It is supposed to increase safety for drivers and security for customers, by allowing for better tracking of trucks in transit, but adoption rates by trucking companies have been low and observers have suggested that trucking companies have underestimated the transition period that is likely with the new software.
While trucking companies have been putting it off apparently to the last minute, they have failed to take the time and cost into consideration – and there have been early indications of connectivity issues, while problems with software and hardware are inevitable with the establishment of new technology, meaning there is likely to be a further phase of trial and error while the new logging system beds in.
Flexibility of service remains key for trucking companies
But the core element of the service of trucking companies is flexibility, with customers coming from a wide range of industries and requiring a bespoke transportation service. Many trucking companies employ specialist customer-facing teams whose job is to closely match the aspect of their service with the specific needs of the customer, including the nature of the transportation vehicle and the best shipping option.
Many trucking companies offer specialty containers, expedited services and state-of-the-art tracking technology to ensure customers receive a combination of security and tailored transport conditions for their goods. This includes temperature-controlled trucks that use technology such as a compressor, condenser and evaporator to maintain a stable temperature inside the container, keeping goods protected from the outside environment.
Other trucking companies offer a shipping service that is not only additionally protective to transported goods, but also ethical towards their drivers. The practice of providing two drivers in the same vehicle, and allowing them to swap midway through a journey, not only speeds up transportation – as the truck essentially doesn’t need to stop to allow the driver a break – but helps boost the mental health wellbeing of truck drivers by giving them some company on long journeys. This has been a topical recent issue and will be seen by many as a welcome move.
