There’s no two ways about it: The current market is unsustainable for small carriers. Low rates and high costs spell trouble for any business in any industry, but with the traditionally tight margins associated with operating a motor carrier business, the current climate has many trucking companies operating on a razor’s edge.
While it’s likely we’re at the bottom of the current freight market cycle, carriers are still operating in survival mode. To get to the light at the end of the tunnel, the focus should be on cost controls and operational efficiency.
Click here to access “Freight Focus,” our annual report reviewing 2023 and looking ahead to 2024
Manage expenses
The biggest expense is diesel. While larger carriers enjoy some protections thanks to fuel surcharge programs that share some of the cost burden with their shipper customers, small carriers and owner-operators doing business on the spot market negotiate “all-in” rates on a transactional basis. This leaves them more exposed to spikes in diesel prices.
Tackling fuel costs is twofold. The first is to address the expense on the front end, such as enrolling in fuel card programs that provide discounts at the pump. The second is to make those fuel dollars stretch. That includes driver habits (fuel-efficient speeds, eliminating idling, etc), route optimizations, and reduced deadhead miles.
Invest wisely
A deep understanding of operating costs will prove critical for carriers in 2024. It’ll also inform where to make strategic investments, such as preventative maintenance and technology that increases efficiency while expanding opportunity. For example, the Profit Estimator tool in DAT One allows carriers to find loads tailored to their business based on their operating costs, so they can choose to haul freight that yields the best return.
This also requires a broader understanding of the macroeconomic and regulatory factors that drive demand. Tools like the Market Conditions map in DAT One gives a quick view of truckload supply and demand, while carriers can educate themselves through numerous online outlets.
Armed with information, carriers can also venture into new markets and align with strategic partners to help them come out of the down market with a more resilient business that can thrive in any portion of the freight cycle.
