Truckload Fleets See ‘Terrific’ Market, Burdened by Driver Shortage

This story appears in the March 16 print edition of Transport Topics.

KISSIMMEE, Fla. — After years of waiting, good times are widespread among truckload fleets, which are being held back only by a driver shortage, executives said.

That was the unanimous message from dozens of top fleet managers who spoke last week to Transport Topics during the Truckload Carriers Association’s annual meeting here.

“Everything that you ever wanted for years — it’s happened,” said Tom Kretsinger Jr., president of American Central Transport, based in Liberty, Missouri. “The economy is good. Rates are going up. Fuel is down — that’s always good. It’s good except for drivers — and that’s a problem for everyone.”

“The market is terrific,” said Don Daseke, CEO of Addison, Texas-based Daseke Cos. “Virtually all our trucks are full,” he said of the company, which runs 2,600 trucks and seven flatbed fleets around the country.

“Drivers are absolutely the challenge, first, second and third,” said Daseke, whose company ranks No. 59 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. “We spend a lot of management time on recruiting and even more on retention.”

John Larkin, of investment firm Stifel, Nicolaus & Co., told attendees that “very exciting” times are ahead but with two large conditions.

“If carriers can provide sufficient capacity, the future looks very bright, provided the U.S. government can get out of the way and let us do our jobs,” Larkin said.

He also suggested favorable market conditions could continue for three more years because of demand for new vehicles and other factors.

Shepard Dunn, CEO of Bestway Express in Vincennes, Indiana, said the hunt for drivers is a constant.

“If I could hire 50 more drivers, I could put them in a truck tomorrow,” to meet growing demand for vehicle components his company carries, he said. “Business is strong, and everyone here says it is pretty strong.”

Other top truckload executives shared similar stories:

n “The dream is coming to realization,” said Barry Pottle, who heads Pottle’s Transportation, a Hermon, Maine, carrier, referring to freight and rate levels.

n Tommy Hodges, CEO of Titan Transfer and a former American Trucking Associations chairman, illustrated the strong market by saying that shippers are casting a much wider net looking for carriers. He stressed the need for the industry to address aging driver demographics and find new ways to attract them.

“We’ve tried everything,” he said of the Shelbyville, Tennessee-based carrier. “You just can’t throw money at the problem.”

n Randy Vernon of Shelbyville, Tennessee-based Big G Express put it this way: “It’s good to be us. We are still bullish.”

n Bob Peterson, CEO of Tulsa, Oklahoma-based Melton Truck Lines, said, “Our business is very good. The economy is better, and the weather is a little better than last year.”

n “Demand has been really good — we’re excited,” said Dennis Dellinger, president of Cargo Transporters Inc. in Claremont, North Carolina, who said the driver situation has become more critical and will stretch fleets when demand picks up further in the strong economy.

New TCA Chairman Keith Tuttle said business is very strong, reinforcing comments by immediate past chairman Dunn and others that business growth is being held back only by the lack of drivers.

The privately held fleets’ comments meshed with upbeat reports from two publicly traded carriers. Chattanooga, Tennessee-based Covenant Transportation Group Inc., which is expected to report its first profitable first quarter in 11 years; and Landstar System Inc., of Jacksonville, Florida, whose rates and freight shipments are up 7% this quarter.

“Our business is very strong,” said Brian Fielkow, president of Houston-based Jetco Delivery.

His company isn’t being hurt by the drop in oil exploration activity, he said, despite its location, because Jetco has focused on a broad range of business.

Several fleet executives said they were watching the oil-field situation closely.

Melton Lines’ Peterson said his flatbed fleet has lost only a little business.

Daseke and Kretsinger said that former oil-field drivers are showing up among their driver corps as they come back to the truckload business.

Thom Albrecht of BB&T Capital Markets cautioned that many oil-field drivers who were making $100,000 a year may be reluctant to return to truckload sector, where pay can be half that amount.

As for rates, they continue be favorable, though for competitive reasons, fleet executives did not precisely gauge how much they are increasing.

“The reality is that costs are going up from driver pay in-creases,” said Daseke, who chose the word “significant” to describe rate increases.

Albrecht said rates are up at least 5% overall for truckload freight.

“The carrier tone [about pricing] was very optimistic, while shippers were wary and apprehensive, to the point that shippers said 4% to 6% rate increase projections may be too low,” Albrecht wrote.

Larkin gauged the increase at 3% to 5% in his remarks.

The strong outlook is causing a re-examination of opportunities, Pottle said, as fleets review lower-profit freight they could shed.

However, some smaller carriers are afraid to walk away from lower-rate freight.

“They don’t understand that the freight is going to move,” Pottle said, costing them a potential opportunity to boost profits.