What is going on with Transportation Business. Part 1.

As you all know, freight market has it's ups downs, it moves in circles of usually four years. However, what we experienced last 6 months, feels unique. I call that : COVID Post-partum. Each player on the market can feel that on its own level.

Shippers- consumers do not spend as much as they did before due to inflation and high interest rates;the stores are stocked up; and finally, political instability, less Government spending and economic stimulus.

Trucking Companies and Carriers- a lot less freight on the market, competition between each other, huge decrease in rates, higher overhead expenses, diesel prices, shortage of new equipment , I can continue until tomorrow.....

Brokers- competition between each other, due to shortage of freight and some other insignificant factors that might decreased their revenues.

Now as you see from above, Shippers and Truckers are at most disadvantage now. As in all businesses, the middle man has less risks, less expenses and less worries about the market. However, they do have a unique talent of bringing both sides (shippers and truckers) to the business table, most of them are professional and fair, honest and reliable , and being honest here we all need them to have smooth logistics operations. But the point I'm trying to show here, there is bad blood among the brokers and truckers. I ll try to explain it in a simple manner.

2022 was year of truckers. Rates were skyrocketing. Shippers were selling their products, brokers were making their cut, truckers were moving the freight, even though inflation and interest rate are start going up. The war in Ukraine made it worse, diesel prices hit the highest point, shortages of equipment and here it is-New players start entering the market. Now, as the freight volume starts to decrease, these new players (brokers and truckers) become unstable. Truckers bought very expensive used equipment to enter the market, new brokers have less financial burden, but cannot compete with big firms, so what do they all do....play a dirty game. New truckers are trying to undercut each other to survive and eventually going bankrupt, new brokers are cutting the rates to truckers, claiming that there are to many trucks on the market compare to freight, some of them take 30-40% of what the shipper pays them. I understand the laws of demand/supply, but hold on a second, why are they digging their own grave? Yes, in short run, they can hide in it, but in the long run, they won't be able to come out of it.

The strongest survives the weaker "dies".

Bad blood will eventually disappear, until then, we all continue to work with each other and expect the worst, hope for the best!

Food for thought: Do you think the upcoming elections will effect the trucking industry?