There are many factors which affect the freight industry. Labor costs, load availability, available truck utilization, and diesel prices are among them. While there are still supply chain obstacles present, experts say we have already seen the worst of them. Companies nationwide kicked into high gear to keep up with the demand for freight haulers last year. The catalyst was the start of the COVID-19 pandemic, but nearly three years later, there is a shift in the market.
We are seeing an uptick in paid company drivers and a decline in owner operators and smaller carriers. December 2022 marked the sharpest decline in any month on record aside from December 2005 in the wake of Hurricane Katrina. Freight rates are dropping alongside load availability, and it’s hard for smaller businesses to keep up with the large carrier companies. As a result, many drivers are taking the, “if you can’t beat ‘em, join ‘em” approach opting for more stable work and a steady pay.
All signs point toward rates continuing to fall, and available truck utilization is one of the key barometers. According to FTR Transportation Intelligence, they find available truck utilization by dividing the number of available loads by the number of trucks. The value is currently sitting at the 10-year average of 91% but was on a declining trend to finish 2022. With less loads to go around, smaller companies find it even more difficult to keep up.
Paired with the previously stated factors is the high cost of diesel. Diesel prices are 90 cents higher on average than this time last year. That additional 90 cents certainly adds up for business owners, and many are wondering when prices will come back down. While many additional factors impact the cost of diesel such as the war in Ukraine or COVID lockdowns in China, it is important to stay focused on what a business can control. At Guttman Energy, we are helping carrier businesses across the country with our Guttman Energy Fuel Card. With no fees or contracts, it is the perfect card for businesses looking to keep up with the industry giants. To learn more, contact me at (724) 268-3225 or mdenver@guttmanenergy.com!
