Are your freight costs rising?

You’re not alone. A severe shortage of truck drivers nationwide is pushing freight costs higher in all industries, and this burden is shared by all users in the supply chain. This driver shortage is mainly driven by an aging workforce, where experienced drivers are retiring without being replaced by younger millennial drivers, which has created an estimated deficit of over 50,000 drivers currently in the workforce. Unfortunately, experts are not expecting relief anytime soon, and in the next 5 years, the driver shortage is expected to climb to an industry deficit of over 100,000 drivers. As a result, freight companies are competing over truck drivers, aggressively recruiting from the same driver pool with higher pay, significant signing bonuses, and driver-friendly dispatch plans.

These challenging freight conditions have prompted widespread action in both the public and private sectors. To combat this lack of trucking capacity, companies like Uber and Tesla are developing and testing driverless trucks, retail giants are charging higher shipping prices on consumer goods, and the federal government has announced that it will support a new program to allow 18-20 year olds to driver commercial trucks across state lines.

Despite actions like these, the capacity crunch in the trucking industry is likely to compound over the next several years, and trucking users need to take action to secure capacity while minimizing their freight costs.

What We’re Doing:

To address and minimize these capacity challenges in the freight industry, we’re renegotiating our contracts with carriers to incentivize productivity in order to control the rising costs and retain good drivers. Our micro-refinery business model, with Sugaright plants located conveniently near large sugar users, allows us to reduce the use of long haul trucks, and instead, use locally based truck drivers who turn multiple loads per day. Not only does this reduce our carbon footprint, but it allows these drivers to return home each night instead of being out on the road for days and weeks at a time. This results in greater service flexibility to our customers, lower freight costs, and enables us to attract and retain safe, reliable, experienced drivers. Our unique business model allows us to provide drivers and carriers with consistent revenues and friendly driver schedules, which ultimately translates into better service and reduced freight costs to our customers.

What You Can Do:

As a result of the capacity crunch, drivers are increasingly choosing where they go, who they work for, and what schedules they run on a weekly basis. Drivers now have the opportunity to be increasingly choosy with their work schedules, and as a result, freight companies quote more competitively to accounts who can accommodate friendly delivery windows. Since driver pay is heavily reliant on productivity, accounts that ship and receive product quickly with flexible appointment windows are quoted more competitively than companies with tight delivery windows which could potentially result in driver delays and lost revenues for the carrier.

Another way to mitigate rising freight costs is to avoid spot carrier usage. Due to the lack of available drivers, most trucks are programmed on regular, consistent dispatch plans where their daily and weekly revenue is predictable and guaranteed. As a result, there is a significant shortage of spot capacity, and spot carrier coverage is only secured at a heavy premium, if at all. Shippers and receivers that emphasize advanced planning to minimize rush carrier usage can avoid the impact of these volatile surcharges that can result in anywhere between 20% to over 100% above normal negotiated rates.

As a result of these challenging conditions in the trucking industry, we’re working hard with our freight partners to incorporate innovative new carrier agreements that attract drivers and incentivize efficiency. We’re continuously thinking outside the box, approaching carriers and customers with creative new freight concepts that lock in capacity while reducing our costs to the end user. Our approach relies solely around our top priority – our customers – and the need to provide reliable, on time deliveries to our clients at competitive pricing. We thank you for your support during these challenging market conditions, and we’re confident that our collaborative new approach to our freight program will result in sustainable, competitive, and reliable service to our customers.