Moving Shipments Decline
This story appears in the Jan. 9 print edition of Transport Topics.
A downturn in long-distance moves by individuals, corporations and the military in 2016 is putting pressure on household goods movers and could spur a new round of industry consolidation and retrenchment, executives and industry officials said.
Shipments declined 5.2% in the first nine months of 2016, the worst showing since the recession in 2009, when shipments dropped 15.1%, according to a survey conducted by the American Moving & Storage Association of companies that handle an estimated 70% of interstate household goods traffic in the United States.
The drop in demand for moving, which occurred in spite of improving job prospects and a relatively healthy housing market, is forcing companies to cut back on expenses and to undertake new initiatives to generate growth.
“The industry is contracting,” said Jack Griffin, CEO of Atlas World Group in Evansville, Indiana. “We’ve had more than six years of steady growth, and we’ve done it by taking market share and now it has caught up with us.”
As an example, Griffin said, one corporate customer in the oil and gas business that once generated 500 moves a year did 50 in 2016.
Agents for Atlas Van Lines, the company’s primary operating unit, handled 75,427 moves in 2016, down almost 3% from 77,705 in 2015.
To counter the trend, Griffin said the company will invest in new technology and programs to attract new customers, such as millennials.
Atlas World Group ranks No. 39 on the Transport Topics Top 100 list of largest for-hire carriers in the United States and Canada, and Atlas Van Lines ranks No. 3 on the list of top household goods movers.
Officials from the two largest movers, UniGroup Inc., the parent of United Van Lines and Mayflower Transit, and Sirva Inc., declined to comment for this story. UniGroup and Sirva rank Nos. 17 and 20, respectively, on the for-hire TT100 list.
For many movers, the recent demise of The Kane Co., a large commercial moving company based in Elkridge, Maryland, provides an object lesson for companies struggling to maintain pricing in a weak market.
Suddath Cos. is one of several companies that have stepped in to take over some of Kane’s assets and provide service to customers affected by the Kane shutdown.
“Suddath is continually looking to expand our services either through acquisition, expansion or both,” said Brad Estrin, chief strategy officer of Suddath, based in Jacksonville, Florida. “Because household shipments are shrinking in size and corporations are tending to move fewer people, Suddath has focused energy in the non-household business sector. We help companies plan, furnish and relocate their office space.”
In November, the U.S. Census Bureau reported that the percentage of Americans moving hit an all-time low of 11.2% in 2016.
“People are still moving, just not to the same extent as they did in the past,” said David Ihrke, a statistician for the Census Bureau, which has conducted a mobility survey since 1948.
Part of the reason for the decline in moves is the availability of technology that allows people to work at home, industry executives said.
Other factors include a drop in the average size of loads and cutbacks in reimbursements by employers and government agencies for moving expenses.
Corporate and private transferee moves account for nearly 80% of the market for interstate household goods moving, with military and government moves making up the balance.
Smaller loads means that movers must put together shipments from multiple customers to fill up trailers and generate enough revenue to pay drivers and earn a profit on long-distance moves.
But many movers are developing programs to handle smaller shipments by using self-service freight containers and outsourcing the transportation of goods to general freight carriers.
American Moving & Storage Association President Scott Michael said many commercial and residential movers never fully recovered from the collapse of the latest housing boom and that business now appears to be “stabilized at a new, lower level.”
But local moves, on the other hand, appear to be growing, Michael said, and many interstate carriers are actively looking to add new services to offset the loss of long-distance business. One company, for example, is installing solar panels. Another specializes in hotel furnishings and store fixtures.
“They’re doing something beyond moving,” Michael said.
Industry revenue from local and long-distance transportation of household and office goods, warehousing and storage services, packing and distribution, logistics consulting and merchandise sales total more than $12.6 billion annually and comprises more than 7,000 companies.
Despite the current downturn in business, executives say they expect things to improve in 2017.
“I’m very optimistic,” said A.J. Schneider, executive vice president of Wheaton World Wide Moving, the Indianapolis-based parent of Wheaton Van Lines, Bekins Van Lines and Clark & Reid. “The fact that mortgage rates are up is helpful in the short term, providing an incentive to get people moving.”
The average rate on a 30-year, fixed-rate mortgage rose last week to 4.32%, according to published reports. That’s the highest level since April 2014 and well above the year’s average of 3.65%.
Schneider also believes the business-friendly policies under the administration of President- elect Donald Trump will pro- vide a boost to corporate relocations.
“When economically things get better, we’ll see more mobility,” he said.
