Today, as companies operate in a world filled with big unknowns, all eyes are on transportation networks and supply chains. Given that 73% of goods in the United States are moved by commercial trucks, companies have a steep hill to climb to keep their products moving and customers satisfied. It’s no secret that transportation is a cyclical business driven by supply and demand.
But, today’s market is at the far end of that cycle. Active truck utilization remains over 95% (91% indicates a balanced market) pushing freight rates to all-time highs—greater than $3/mile, with spot rates up 23%.
Persistent issues like the driver shortage, capacity problems, and changing regulations are exacerbated by the demand for quicker deliveries, snarls in new truck production, nuclear verdicts, and the recovery from the global pandemic.
Both FreightWaves’ SONAR and FTR’s Trucking Conditions Index (TCI) agree that high freight demand will not disappear anytime soon, even with the expected seasonal slowdowns. Freight volumes will still be elevated compared to historical levels. And, tender rejections will remain around 26%. Equipment manufacturer delays are estimated to continue through 2023— and therefore won’t be able to ease the pressure on the capacity front.
These aren’t the first major obstacles—and certainly won’t be the last—but this new environment has prompted many businesses to reimagine their transportation management approaches to keep service levels high and costs low. Operating a fleet of trucks requires a huge investment of time and resources.
Trucks and trailers must be procured and maintained, and an expert staff of qualified drivers, mechanics, and administrators must be managed. Regulatory changes must be monitored to ensure compliance with vehicle standards and driver behaviors. And, companies must be prepared to handle breakdowns, staffing emergencies, and fluctuations in fuel prices.
For business owners, the alternative to owning your own trucks is fleet outsourcing, an option that more and more businesses are choosing. Outsourcing is a way to improve your management perspective. In today’s environment, the total cost of operating a fleet is more than even large businesses want to manage. And, those costs often exceed what companies know about, because many of the costs of maintaining a fleet are not apparent.
While outsourcing transportation might not be a viable solution for every company with goods to deliver, businesses of every size are recognizing and reaping the benefits of letting experts manage their fleets. Even outsourcing portions of fleet management—whether titling and registration services or routine maintenance—can result in significant savings in money, time, and trouble.
This lets business owners spend less time on transportation issues, allowing them to focus more time and energy on their products, sales, and customers. In other words, by letting the experts—in transportation and outside of it—focus on what they do best, everybody wins.