Current Concerns of the Industry

There are many threats to the well-being of today's trucking companies. In addition to the ongoing issue of achieving profitability, companies are dealing with driver shortages, worker retention issues, and continuing economic woes. In the first nine months of 2008, over 2,500 trucking companies failed or went out of business. This represents 127,000 trucks, or 6.5% of industry capacity, no longer available in the marketplace. In this uncertain economy, such a reduction might seem appropriate. However, when the economy comes back, and it will, there will be a shortage of both drivers and capacity. Companies must prepare to deal with that when the time comes.

The demands of industry regulations concerning engine and fuel emissions, a downward spiraling economy, taxes and governmental regulations, and a continuing need to stem the outbound flow of drivers are testing the management skills of even the best run companies. And, for the last quarter century, the trucking industry has performed far below the earnings and ROI levels of other capital-intensive industries. Some companies have failed without knowing what went wrong. Other companies have survived but don't know why. Companies must learn how to examine their performances, jettison their negative management strategies, and capitalize on their positive strategies. This is especially true for the small-to mid-size carriers. Because these companies have not been as responsive to the market, they have allowed larger companies with more proactive stances, greater resources, and more management depth to use smart strategies, which widen the gap between them.

Industry Trends

The merger of Swift and MS Carriers, in 2001, was the first major example of two entities becoming one giant company. Since that time, the industry has seen that trend continue. In a marketplace where even the largest companies are failing or being absorbed by bigger companies, it becomes more important for the small-to mid-size carriers to make a change to survive. Unprepared or unfocused companies will continue to disappear. Lacking the necessary resources to compete on all fronts with their larger competitors, small companies will find it necessary to focus on specific segments of the industry, rather than attempting to provide comprehensive services. Narrowing the focus will identify which industry segment is most appropriate and most profitable. Managing assets and information to service that market segment will allow companies to be viable and profitable.

Survival of small companies will require:

* Recognition and development of niche market strategies
* Greater understanding and implementation of technology
* Better utilization and management of human resources
* Development of focus on profitability
* Increased productivity per truck

Small companies are not the only ones at risk. Many medium-size companies have the same inherent problems. These companies lack understanding of basic marketing principles, are unfamiliar with niche marketing, and do not know how to utilize advanced information technology to manage an organization's resources. Additionally, these companies do not have management teams to guide them on a new course. Hiring and retaining knowledgeable, talented managers, using available technology and equipment, and maximizing effective utilization of assets will make success possible. Employing good marketing strategies will also be key.