Tank truck business improving, but driver shortage continues
Aug 1, 2002 12:00 PM, By Charles Wilson and Mary Davis
RECENT reports show that the US economy grew by 6.1 percent during the first quarter of 2002, and growth for the rest of the year should be around 3.5 percent. Tank truck carriers are among the industry sectors that have benefited from the economic upswing.
In fact, many carriers say they are running at close to capacity and are turning down loads. That's the upside. The downside is that no one seems sure if the business activity will last, and carriers are concerned that they won't be able to find enough new drivers to handle further business growth.
Chemical carriers contacted by Modern Bulk Transporter report single- and double-digit increases in business since January 2002. “We have been very busy for the last three months and are 20 percent ahead of last year overall,” says Steve Rush, president of Carbon Express, Wharton, New Jersey. “This increase in activity is due primarily to some new business and some campaigns by some of our shippers that are the exception.”
At Service Transport Company, Houston, Texas, the fleet is completely booked up some days, and long-time customers are asking for more trucks, according to Dennis Herrington, vice-president of quality assurance. Reasons for the surge in activity include new distribution strategies from existing customers, a number of new customers, and overflow from other tank truck carriers. In August, Service Transport will publish its first general rate increase (a single digit rise) since 1999.
Paul DeFalco, president of Linden Bulk Transportation Co, Linden, New Jersey, says he is seeing a moderate pickup in activity. “We're turning down some loads, and we are meeting with customers who hadn't approached us in the past, including 3PLs,” he says. “We're doing more business with other carriers than we ever did in the past. We believe the activity will carry through the rest of the year.”
“Business has picked up a little bit, but I'm not sure what the future holds,” says Bob Schurer, president of Transport Service Co, Hinsdale, Illinois. “Business had been down since July of 2000.” He suggested that increased activity at the mid-year point may have been a result of chemical shippers raising the prices of their products on July 1. Other carriers agree that this may have been a factor. Chemical users may have been doing some prebuying to beat the price increases.
Gary Slay, Slay Transportation Co, St Louis, Missouri, says his company's business picked up in the 10 to 12 weeks leading up to July. “We see it throughout our operations,” he added.
The good news is tempered on several fronts. The driver shortage is coming back with a vengeance. Schurer describes the driver situation as “critical.” He estimates Transport Service needs to add an additional 25 drivers to its current 450 pool.
Herrington says Service Transport could put more trucks on the road, if it had more drivers. “We've still got equipment parked, and we're turning down loads each week due to a lack of drivers,” he says.
Insurance rate increases remain a serious drain on carrier profitability. At Transport Service Co, insurance premiums rose 170 percent, according to Schurer. Part of that increase was because the company had a four-year policy to be renewed.
Rush also worries about further insurance increases. “Our insurance renewed last December and we took a slight increase,” he says. “We are worried about the next one for sure. Several competitors have advised us that they have been hit very hard. I do foresee in the event that we, too, are hit hard the necessity for an insurance surcharge.”
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