In The News

Top Trends to Watch in Expedited Trucking

By Sean M. Lyden - Staff Writer
Posted Jul 20th 2021 5:35PM

As the U.S. economy transitions to a post-pandemic footing, what does this mean for expedited trucking? What does the prospect of the PRO (Protecting the Right to Organize) Act mean for the industry? What is the current state of the expedite market? And what can we expect in the coming months and years?

I recently spoke with John Elliott, chief executive officer for Load One LLC, to get his outlook.

EO: How would you describe the current expedited freight market?

John Elliott: The market is strong. Assuming the stock market doesn't crash, or the pandemic doesn't roar back, I'm pretty comfortable that we’ll see a solid year to two years here. There are a lot of growth opportunities.

But you also have a labor shortage in this country right now that has affected logistics companies. It's hard even to find operational staff, let alone drivers. And so with [freight] demand up, nobody seems to be able to respond to it fully. I've never seen more hiring signs out than I've seen right now, and places simply can't staff.

And the biggest hold back on growth is drivers. Without a doubt, this limits our expansion. We continue to grow, but the single thing that holds us back the most is having enough drivers and owner-operators.

What do you see driving this growth?

We see some pent-up demand from the pandemic, and consumer spending is up, as the people have been getting their stimulus checks.

But, honestly, a lot of the [economic] fundamentals do not make sense to me right now. You have a housing market that’s way up. You have the cost of construction going through the roof. I don't understand how any of that correlates or how people buy more homes during a pandemic.

I don't know if there is a good explanation for what this market is doing. It’s great, on the one hand. But it also scares me because the fundamentals just don't line up. I worry we might have a strong correction coming at some point.

When you say a “strong correction coming at some point,’ what do you mean?

It's hard to say precisely. The stock market just doesn't seem to make a lot of sense.

I couldn't even predict it right now. How long can the housing market stay red hot? I don't understand how it should be red hot at all right now. And unemployment doesn't make sense when the demand is so high. There are too many government things going on right now that are messing with what I'll call the natural forces on the market.

A bill pending in the US Congress called the PRO Act - Protecting the Right to Organize Act - would change how 1099 contractors are classified - from independent contractors to W2 employees. If it passes in its current form, how would the PRO Act impact the expedited trucking market?

It would devastate the industry. It would completely destroy the expedite model because the expedite model is primarily owner-operator.

Walk me through how you see it would destroy the expedite model from your perspective.

They want to eliminate the independent contractor. And, in the expedite world, about 95% of the vans and straight trucks out there - and a decent percentage of the tractors - are owner-operators.

Companies like us would have to restructure completely. And I don't even know what that would look like exactly. So, you own the truck, but yet you would have to become my employee. Do I lease the truck or what? There's really not a good answer for it.

But I don't think the PRO Act has much of a chance to get through the Senate. Several things included in the infrastructure bill - that the PRO Act was tucked into - will not allow the bill in its current form to go through reconciliation. They would have to meet the standard threshold to pass Congress and the Senate, and I don’t see them making that threshold to get it through the Senate.

If you're a fleet owner, should you be looking at buying more trucks?

If you can put drivers in them, then, yes, absolutely. The demand is there. But I think it's hard to get the equipment right now.

What advice do you have on how expediters can make the most of the opportunities in this market?

I think there's money to be made as much or more than ever for the owner-operator or fleet owner. I think it's just aligning yourself with the right carrier who's got a diverse freight base.

I'm biased a little because [Load One is] a percentage carrier where we pay by percentage. Demand is strong; our rates are up. So, owners and drivers who work for percentage carriers will be winning right now versus ones on contract mileage.

Now, if the market swings hard the opposite way, you can argue the opposite. So there are pros and cons of per-mile rate and a percentage rate. But the way the market is and how I think most of the experts are forecasting the market for the next, say 12 to 18 to 24 months, it should be a win for the percentage rate.

And you should have a good tax advisor. And that’s because I watch how sometimes owners will keep their trucks too long. They don't always understand the fundamentals of depreciation versus cash flow and some of those things - and how all that impacts the actual cost of ownership of a vehicle. Sometimes a paid off-truck is not essentially the cheapest truck you could have.

As in any market, make sure you keep good records, look at the data, and make smart business choices.