Efficiency Is Key as Freight Carriers Wait for Market Uptick
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As carriers await an upturn in the freight environment, executives say they continue to seek efficiencies and prepare their fleets for when the tipping point comes.
“We don’t see a lot changing for our revenue side [in the next six months]. It’s about seeing where you can eke out growth,” Hill Bros. Transportation Chief Financial Officer Rob Sauer told attendees of the 2024 FTR Transportation Conference Sept. 10 in Indianapolis.
“I don’t think anyone is growing their bottom line at the moment. We’re just trying to make money,” Jordan Carriers Vice President Doug Jordan said during the same panel.
“We’re seeing a lot of carriers struggling,” Schneider National Chief Commercial Officer Erin Van Zeeland said during a keynote address at the conference. “You control what you can control.”
Schneider ranks No. 9 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 7 among truckload/dedicated carriers.
Van Zeeland
Over the past two years, Schneider’s irregular route truckload business employed fewer drivers and managed how much third-party capacity it has brought on board, Van Zeeland said. “It’s really important to drive down costs,” she added.
The executive noted that it was ironic that she had spent much of her career growing Schneider’s third-party logistics operations but in the last 18 months had been optimizing them. The carrier currently has 20,000 carriers under contract, compared with 63,000 carriers 18 months ago, she said.
Schneider is still preparing for an upturn. “When we have surges, we don’t have trouble meeting our needs,” she said. “We are not concerned about our ability to respond.”
Carriers must be ready for the turnaround, Jordan said, adding that the flatbed specialist was ensuring it had the right employees and was minimizing driver turnover in anticipation of increased business.
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Natchez, Miss.-based Jordan Carriers, which has about 800 trucks, added personnel as part of these efforts in the past six months, he said.
Big M Transportation — also based in Mississippi — is preparing for the upturn by increasing its equipment count and updating its transportation management system, said Chief Sales & Marketing Officer Lawrence Massengill.
The company, which operates about 300 tractors, does not have extensive growth plans but is focusing on optimization instead, he said.
Massengill said he was not expecting much change in the market through the end of the current year, but things may start to improve in the first and second quarters of 2025.
Vise
FTR Vice President of Trucking Avery Vise concurs. He told conference attendees to expect truckload spot rates to rise 6.5-7% in 2025. The acceleration will come after truckload spot rates increase about 1% overall in 2024, he added.
Rate increases are likely to come as goods demand continues to grow slowly, topping seasonal expectations, according to Cass Information Systems. The shipments component of the Cass Freight Index rose 1% month over month in August, after a 3% increase in July, it said Sept. 16.
Shipments declined by 1.9% year over year in August after a 1.1% year-on-year drop in July, Cass said, noting these were the smallest declines in 18 months.
However, carrier optimism should be somewhat tempered in response to such figures, because shippers say they too are becoming more efficient, the FTR conference heard.
“We are getting back to the efficiencies we had pre-COVID,” Nestle Purina Senior Director of Supply Chain Travis Krous told attendees, with the pet food specialist shipping the same amount of freight with fewer trucks.
TT's Seth Clevenger and Mike Senatore dive into the details behind the 2024 Top 100 Private Carriers list. Tune in above or by going to RoadSigns.ttnews.com.
Home Depot Senior Manager Transportation, Carrier Relations and Sourcing Ron Guzzi concurred, saying the building and home improvement supplies giant was also back at pre-COVID efficiency levels.
In addition, Guzzi said, the company paused bidding on its next annual contract because it wants to see where the dust settles in the less-than-truckload space, particularly as prominent carriers explore their “new toys.”
Before Yellow Corp. filed for bankruptcy protection Aug. 7, 2023, the Richmond, Va.-based company was the No. 2-ranked carrier for Home Depot.
More than 150 former Yellow terminals and a large proportion of its 12,700 tractors and 42,000 trailers found new owners during court-sanctioned auctions, as erstwhile rivals snapped up the best of the assets on offer.
LTL rates are expected to increase 1.6% in 2024 after the market spent the latter part of 2023 absorbing freight previously shipped by Yellow, Vise told conference attendees. FTR is forecasting a 2% increase in 2025.
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