The freight expediting world of cargo vans (including “Sprinter vans) has always been competitive. One of the biggest reasons this segment of the transportation industry has always been competitive is its low barrier to entry. Almost anybody can go out and purchase a Cargo Van for less than $10,000 and quickly become a “competitor” to companies such as BH Xpress, Load One, ArcBest, and other that have been in the industry for years and have well established protocols, systems, and procedures.
Below is a report generated from one of the largest loadboards for expedited freight, showing the number of Cargo Van and Sprinter Van loads posted on their loadboard for 2022, with November being estimated to adjust for the rest of the month, as this article is being published on November 16th.
This is not a total number of loads in the entire cargo van freight expediting market, as it is only the representation of one loadboard, however we can safely assume that the trend is a fair representation of the entire market.
The average number of loads in Q1 of 2022 (Jan, Feb, Mar) was nearly 8,000 per month, while the average number of loads in the past 3 months (Sep, Oct, Nov) has decreased to around 6,800 per month.
Loss loads = Lower prices
Less loads = lower prices is a simple supply and demand problem. With fewer loads (demand) available, carriers (supply) become more competitive to book each load. This means that prices drop. Competition on the “premium loads” goes up and carriers resort to booking the “less ideal” loads in order to keep paying drivers the rates they are used to.
The above image shows the data for truckload shipments, which is different than the expedited freight the rest of the article speaks about. While the vehicle types are different, the trends tend to be similar between the two. The above image shows that the amount of loads posted in October 2022 compared to October 2021 has decreased by more than 50%. If we company week to week data, we see a nearly 10% drop from Oct 31-Nov 6 to Nov 7-Nov 13.
We see that there are 47% fewer loads per truck that is posted from October 2021 to October 2022.
What’s ahead? BHX’s plan…
Unfortunately, experts predict that the downwards trend will continue for the next 3-6 months, with most experts saying that the bottom of the down trend will be after Q1 of 2023 (March 2023). While these things cannot be forecasted with 100% certainty, we should “prepare for worst and hope for the best”
Our plan is simple.
- Strengthen our relationships with our customers to ensure that we remain at the top of the “preferred carrier” list.
- Constant communication with our drivers to ensure they are aware of what is going on in the industry and are not surprised by the rates dropping or waiting time going up.
- Focus on the big picture rather than overly evaluating each load. What we mean by this is “be willing to lose the battle in order to win the war”. If we need to drop our rates by $.05 per mile from the “ideal rates” we would like to book, we will explore doing that in order to avoid having our drivers sit idly without a load for multiple days.
- Continue to evaluate our data to ensure that we are bidding the best prices on each lane, to make sure that we are not leaving any money on the table on certain lanes while quoting unrealistic prices on other lanes.
- Make sure we are sufficiently staffed in the office to be able to quickly respond to every opportunity to book our drivers on the best load available and to assist our drivers with anything they need help with while hauling that freight.
- Continue to optimize our systems. We believe that the “human touch” can never be replaced by a computer, but we also believe that in today’s day and age, companies should use technology as a tool to assist its dispatchers and drivers. BHX has invested hundreds of thousands of dollars into our own preparatory app which aims to give our drivers more control over where they go, when they return home, how much they charge on loads, and so much more. The app allows our drivers to be as hands on or as hands off as they prefer, while still giving them unlimited control over the work loads that we book for them.
The above is a brief explanation of just a small portion of the control BHX gives its drivers. Drivers can specify the length of loads they want to be booked on, the minimum pay, and so much more.
Tough times may be ahead. There is a lot of uncertainty in the world and instability ranging from wars to chip shortages. Fuel prices going up as rates go down is a nightmare scenario for truck drivers. “When the times get tough, the tough get going” . While these times are tough and unpleasant, we must move ahead. The key is to optimize the systems, to ensure the staff is working at 100% capacity, and that relationships with the best customers are solid. With all of the above being done, if the rates still have to drop by 5-10% in order for us to continue to run, then so be it. It is either that or shutting down and looking for a different job, and while many drivers may resort to that, we think it is not necessary. As the weak leave the market, it will create space for those who remain to get back to normal rates. BHX has always been resilient through times like this and found ways to come out on top. We thank our drivers for their hard work and trust. Our entire office staff understands the situation and necessity to maximize our efforts. We are dedicated to providing our customers with the most reliable and friendly service on the market. We remain dedicated to providing our drivers with the best prices and most friendly service on the market.