We see this cycle occur every few years – rates go up, fuel goes down, drivers are smiling and raking in the profits. Then things flip flop, and now we’re in the trough of the cycle, with $5.20+ per gallon diesel, $2.20 per mile rates, and companies being cannibalized to survive.
When rates are in the tank, fuel is overpriced, and everyone is drowning in freight, these are ideas drivers should be thinking about
The biggest mistake I always hear is that drivers blow their profits during the boom of the freight cycle on needless things. New cars, houses, flashy items that don’t help.
Your company and your trucks are your bread winner, and taking care of them first is what puts food on your tables and the tables of those working for you.
Drivers should have had plenty saved from the last couple of years, when fuel was cheap and rates were over $5.00 per mile. If you managed your operating costs well, you should have made building a war chest for the upcoming crash a major priority.
Now that rates have fallen, owners have to be very picky about what freight to pull. Mega-carriers will be “whaling,” sucking up the loads like a blue whale, in order to stay profitable.
Small companies need a different game plan than the mega-carriers
You could say smaller companies that ate at the buffet table the last couple of years are now on the post-Thanksgiving diet. Running lean and exercising good business acumen are what will separate the financially minded business owners from the ones that follow the “get rich quick” wave of sharks that are now cannibalizing each other.
Making sure to look over the load boards thoroughly before commenting on a load is very important. Taking a very attractive load only to find yourself in no man’s land can break a company in this market.
Relying on credit cards and bank loans is a moronic idea as well. With the Federal Reserve raising interest rates, you might find yourself falling into a debt trap and being forced to file for bankruptcy if you overextend your company.
The freight cycle ebbs and flows every three to five years, with owner-operators cycling through their cannibalistic routine about every seven years. Unfortunately, we hit that rare occurrence when everything falls during the same time period.
Staying wise to the news and adapting to the market climate are some of the most important things a driver and company owner can do.