What Does 2020 Mean for Trucking

We are only a few weeks away from 2020 and the trucking world wants to know what's next. The answer that I've been putting out for six months is still what I'm standing by because it's the one that makes the most sense to anyone that has been doing this so closely as long as I have. We are a few months away from the market turning back in favor of the carrier and rates driving back to late 2017. We are not going to see mid-2018 rates in such a short time, but we are going to see the opportunities we had not so long ago due to the fallout of the current driver pool.

So many people constantly talk about the driver pool as if it's been running dry for years when in reality it's not even close. Today there are more CDL holders than ever before and the amount of opportunity in the industry has never been richer. The problem is the freight levels dictate the rate pricing causing it to be worth it or not. The minute the freight levels drop the number of drivers start to dry up and the industry starts it's natural shift from the shipper back to the carrier. In today's market we are seeing the number of drivers that no longer want to work for less than ideal freight levels drop from the equation causing the shift to begin.

I've sat through so many long arduous speeches from economists that want to talk about trade wars and price evaluations causing the market change but not one of them actually focus on the bottom line that is actually causing the issue. Not a single economist has said a single word about driver flux or the human element that drives someone to want to drive a truck or not, they only focus on the current market for consumers and the economy which we are already know is strong and robust. If the entire economy is booming and the purchasing of the American public is at such high levels then why is the freight market failing and the rate structure around it lagging.... that is the question I hear almost daily. The answer is actually very simple.

The driver population boomed in 2018 because the economy ad demand grew faster than the shipping community could supply trucks causing the rate structure to explode upward. When this took place there were thousands of small carriers that added 3 or 4 or 10 trucks to their fleets driving an abnormal bubble to the industry. Think of it like a mount of ants taking down a grasshopper. A single ant wouldn't have the ability to do so, but when you take that number times 100, they have the capacity to do so. When 100,000 small trucking companies added a few trucks because rates were on fire, it caused a catastrophic event that moved the capacity well above the levels of demand driving the rates down.

Since late 2018 and the huge influx of drivers, the rates dropped significantly and drove a lot of carriers out of business. The number that isn't reported on is the number of small carriers that reduced the size of their fleet by 3 or 4 or 10 since the bubble popped. This is the real measurement of what is rapidly coming. With the current rapid reduction in the driver force overnight the number of available trucks has dropped causing the freight market to start tightening back up which drives rates back to previous levels.

Currently the only thing still holding the rate levels at bay is the number of small carriers that feel like the market will shift tomorrow and their drive to fight to hold on to their new larger number of trucks they have purchased or leased. In the coming months we are going to see these smaller carriers lose the battle to hold on to their newly found larger fleets and have to fleece themselves of the equipment and drivers they added in 2018. As this continues to unfold we are going to see two things happen, first the reduction in the number of available equipment in the market driving rates back up and secondly the decision from a small percentage of these drivers to leave the industry again or join larger more robust carriers.

I've said multiple times that the time to grow was yesterday when the market was over flowing with opportunity. Today is still a good market, but the availability has dropped slightly causing the ability to grow lessen slightly. Keep in mind that your time hasn't ended it has just become more difficult and more dire if that is your objective. So many companies today are coming out of the woodwork trying to sell endless opportunities of magic beans to driver hiring and retention, but the real opportunity is the ones that know the difference between what is real and what isn't. If these companies knew what they were doing before why didn't they become the front runner during the greatest hiring boom in trucking history?

Make sure you spend your advertising money as if it was your own. Don't chase after midnight infomercials that promise to make you a millionaire for $19.95 next year, listen to your common sense and spend it where the constant opportunities have driven success in the past. If I invented a machine to turn lead into gold I would be the next Steve Jobs without question, unless my machine turned Lead into gold colored Lead, then I would just be another snake-oil salesman trying to make a buck on someone else's poor decision making. Remember the market is changing and those that know what they are doing are going to thrive and the ones that don't will see hard times ahead. Be safe and keep on trucking!