A light at the end of the tunnel for struggling carriers?
March 7, 2023
Near the beginning of the first fiscal quarter of 2022, the outlook for small carrier operations looked dire. Line haul rates were declining sharply while fuel prices reached astronomical new highs. Many were forced to take a hard look at the financial viability of their businesses in light of these staggering economic difficulties. Entering the first quarter of 2023, has the picture improved for carriers?
“From [June 2022] to November, we struggled mightily,” says Billy Barstow of Barstow Transportation, a Florida-based carrier specializing in refrigerated freight. “We lost continuously for four or five months straight. Luckily we had a good year before that and were able to absorb some of that.”
Given the relative prosperity of the pandemic era, many carriers were unprepared for the sudden slowdown of business that occurred in 2022. Barstow’s experience during this time was typical of the hardship being felt across the industry.
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“November was a bloodbath,” he says. “Any carrier would tell you the same thing.”
Facing diminished profitability, Barstow and his team took a hard look at the books. They discovered that the business was running more or less the same as it always had, except for one key expense that was wreaking havoc on the budget: fuel. October of 2022 alone saw a $60,000 increase in fuel expenditure compared to the same time a year prior.
Thanks to their nest egg from previous years’ profits, Barstow Transportation weathered months of outrageous fuel costs until prices finally normalized. The company has returned to profitability despite new economic challenges.
Fuel prices may have stabilized, but staggering equipment costs continue to plague carriers. Barstow replaces each Peterbilt truck in his fleet every 4 years to avoid maintenance costs on aging equipment. With the quoted price for each truck higher by tens of thousands of dollars compared to his last round of purchases, Barstow and carriers like him are facing yet another runaway expense. On the bright side, recent months-long lead times for new equipment orders have finally subsided, putting new trucks within reach for those willing to pay the inflated sticker price.
Higher freight rates in recent months have helped operations like Barstow’s offset the impact of continuing expenses. Even so, the volatility of today’s market is unlike anything he has experienced in his decades of experience as a carrier.
“2019 was rough and we struggled a little bit. But this is sustained, and it’s out of our control,” Barstow says of the current situation in the industry. “It’s really frustrating, because you can do everything you possibly can do to make yourself better, but you just cannot control fuel prices.”
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Could alternative fuels such as biodiesel offer any relief for the modern carrier? With no guarantee that alternative fuels will be widely available, the risk of investing in an alternative-equipped fleet may outweigh the reward. For now, carriers are at the mercy of the price at the usual diesel pump.
With summer produce shipping season just over the horizon, Barstow is hopeful that the coming months will be profitable for his business. By maintaining fair rates with customers through peak season, he hopes he can count on them to return the favor when lean times inevitably return. It’s this kind of give and take that helps an operation survive economic challenges in the long run.
Recent times have seen unprecedented hardships for carriers across the country. Though it’s hard to say if there’s a light at the end of the tunnel, conditions seem to be slowly improving. In any case, carriers who work with trusted industry partners will always have a firmer footing than those that choose to go it alone. For a 3PL partner you can depend on in good times and bad, trust the transport pros at Triple T. Contact us today to learn more about our services for carriers.