Trucking execs talk about industry struggles

Trucking exec Greg Carman said the industry is tough and uncertain thanks primaritly to inconsistent business trends and costly government regulations.

Carman, the CEO of Fort Smith-based Carman Trucking, was part of a recent panel interview conduced by Talk Business Arkansas executive editor Roby Brock. Brock  hosted the discussion with three trucking executives to seek their insight on the industry, the economy and the future of transportation. The participants are:
• Butch Rice, Stallion Transportation (Beebe)
• Greg Carman, Carman Trucking CEO (Fort Smith)
• Mike McNutt, Distributed Solutions President (Hope)

The following is a transcript of the group’s Q-&-A session, which appears in the latest magazine edition of Talk Business Arkansas.
talkbusiness.net

Roby Brock: What are your general feelings of what’s happening in the economy right now?

Butch Rice: I see things as a little bit uncertain. Our customers this time of year seem to be a larger influence of freight, and right now, we just don’t seem to see it. You know the numbers are supply and demand for freight about as an equal. I just think it’s holding steady from last year actually.

Greg Carman: I’d echo what Butch said about it seems like there is a fairly good balance of truck to loads, it seems that it’s fairly much in balance. What is maddening to me is though this has been going on for about a year. I see a lot of inconsistency. One week it seems that we will have a burst of freight and then the next week in that same sector it will slow down. It doesn’t seem to be anything consistent and it’s really hard to plan. I haven’t seen that in the past cycles over the years – it would either be up or down. I don’t know if it’s because everybody has their inventory so low, they’re just playing catch up and then take a break. It’s really kind of a strange, strange time.

Mike McNutt: We are a little different from Butch and Greg, in the fact that we are probably a 65%-70% refrigerated carrier. Out of that base, the customers that we deliver to, the product is also mainly going to McDonald’s, Burger King, Hardee’s, and fast-food type facilities. What I see in that segment is consistent, strong, seems to be growing. But on our dry van – which I think primarily Butch and Greg have – they said two words that I can relate to: “uncertain” and “inconsistent.” It’s hit and miss every week in that portion of our business, other than maybe packaging and box type business, it seems to be pretty steady but everything else is one week our clients will have quite a bit of business, and then it’s like they turn the faucet off. Our customers are uncertain. I’m like Butch, I don’t think there’s a lot of growth in the economy. I think everyone is just struggling to keep their share of the pie.

Brock: Do you see people having cash flow problems? Has that improved from where we were a year or two or three years ago?

Rice: On the credit side, that is definitely loosened up, I think right now we are able to buy equipment probably about as cheap as you possibly can with the credit side and the interest rates. So that’s been a big plus for us and I think that if that continues, you know when freight does start to pick up I think you’ll see some of us smaller carries actually be able to grow some. But, you know I’m excited about their interest rates, I think that it’s about as cheap as we’ve ever seen it. I’d love to be able to take advantage of it, but right now we are with the uncertainty there we are just maintaining what we got.

Carman: Credit hasn’t been an issue yet, but cash flow is always an issue. It seems to be holding its own. You know, I’m digging down deeper into that. One of the things that I’m dealing with right now is from 2007 to 2010 the cost of my trucks has gone up from about $80,000 to $120,000 truck. A lot of that has been just increased government regulations especially in the emissions area, some of it has been just the cost of raw materials in the trucks. I’m looking at new technologies and I’m really trying hard to see what my return on the investment is. I’m just a little cynical right now. I’m not really seeing the payback on those basically unfunded government mandates.

McNutt: From a company standpoint, we love the cost of borrowing money today. I mean there’s really hardly any cost borrowing money. It gives us a great opportunity to update our fleet if we can afford to. I’m concerned on a federal or global level. At some point, when the rubber meets the road and we get a real cost of what our money is, that concerns me. What’s going to happen to the economy at the point? I see people come in to our company everyday that had small trucking companies – one, two, three trucks – that can’t go borrow money.

Brock: Let me stay with you Mike and we’ll work our way back around. You’re king for a day, you have a magic wand, you get to do one thing to really, dramatically change the trucking environment in a positive way. What would you want to see happen?

McNutt: I have two or three thoughts. As a group, we just met and were talking about a positive impact from an image perspective when you discuss onboard recorders, logging, I think that would impact our industry in a positive way. I’m scared to death about it, but with the workforce that’s out there today, and me being the owner, I would have some security with that. We are struggling with workforce right now. We have loads to haul, but we don’t have people to put in the trucks. I don’t know how to correct that because we have great wages, but they’re just leaving the marketplace. If I could wave my wand and create a bunch of drivers, it would help.

Carman: I would extend on Mike’s comments about the driver situation. I’m probably more pessimistic than the other two, so I’ve got to be careful here. I think over the years, what’s really caused me concern is just a general deterioration in work ethic. It’s basically just finding people to work. We aren’t paying low wages. We are paying high wages with $70,000 a year and decent, pretty good working conditions. I’m trying not to get political here, but when they can go and draw $325 in unemployment a week or get on disability pretty easily, I’m seeing a lot of people just drop out and do that or do nothing. It’s just getting harder and harder. Our workforce is aging. Some of the good workers are out and I don’t see some of the younger generation coming up.

Rice: Well, I’d have to say it would have to be one hell of a wand for me. I really believe that it’s just not our industry, but I think it’s every industry out there that’s struggling with our current workforce. I think the driver is becoming a very highly sought-after commodity. You know if you’ve got a good driving record, you know you’ve not been in trouble with any of your hours of service, then you know you’re a high commodity right now. I think we all three would agree that the success for our company is our drivers. We can sell all we want, we can have the best trucks out there all we want, but if you don’t have a good quality driver, you have nothing.