The 2019 trucking market was not a repeat of the 2018 peak; carriers faced normalized freight demand, tougher recruiting, rising insurance exposure, and the need for more disciplined operating decisions.
“This is a frustrating time in trucking; a confusing time. Last year we were at record highs, record production, and record driver shortage. This year is the opposite.” — Craig Fuller
Industry leaders met at the Trucking Owners and Leaders Roundtable in Nashville on July 25, 2019, to discuss the market and practical responses.
Driver Recruiting and Retention
Brand Outcomes President Chad Hendricks approached driver recruiting as a marketing and branding problem. Carriers compete with similar equipment and job offers, so they must show what is genuinely different about their company.
Large carriers were spending hundreds of thousands of dollars on advertising without always improving retention. Recruiters needed better training to control conversations, answer driver questions, and sell the business.
Hendricks warned that “family culture” is not automatically attractive. Companies should understand candidates' experiences and define a driver profile that matches the actual job. A short review can reveal whether the candidate fits the company or should be driving at all.
Current drivers can also recruit through referral programs that use trusted personal relationships and positive employee experience.
Maximizing Margins and Business Strategy
A panel of David Gibbs, Susan Kirkpatrick, and Stephen Voorhees agreed that 2019 brought lower volume, softer revenue, and more competition, although they differed on whether it constituted a recession.
The shift in freight leverage required carriers to distinguish relational customers from transactional ones. The panel also discussed IMO 2020 and the possibility that low-sulfur marine-fuel rules would increase competition for diesel.
Hiring 18-year-old drivers was considered as a response to the aging workforce, but performance, insurance, and actual interest among young people remained concerns.
Transportation Risk Finance
Insurance panelists focused on liabilities that were consuming a growing share of carrier profit. Medical costs continued to rise, aging drivers could affect health and premiums, and risk profiles had become more precise.
Carriers could not simply reduce coverage because the potential loss remained. Smaller fleets with narrow margins were especially burdened by excess insurance.
Technology such as video and efficiency software was identified as a possible way to reduce exposure.
Transportation Industry Economic Outlook
FreightWaves Chief Economist Ibrahiim Bayaan said the general economy had grown around 3.2% year over year since 2016 and might slow to about 2% while remaining positive.
Trucking conditions were weaker. Manufacturing and imports were down, while the 45,000 trucking jobs added since the recession had expanded capacity before demand flattened. Pricing was vulnerable, and part of the industry appeared overextended.
Craig Fuller later called the situation a freight recession rather than an economic recession. Pricing, volume, and truck orders had declined for more than two consecutive quarters, while the extraordinary 2018 comparison made 2019 look even worse.
Per Diem Plans and Compliance
The Tax Cuts and Jobs Act eliminated drivers' miscellaneous itemized deduction for per diem, increasing carrier interest in employer plans.
Under an accountable plan, employees receive money for expenses and substantiate them without personal tax consequences. Under a non-accountable plan, payments are taxable compensation regardless of use.
A properly structured per diem plan could put more non-taxable cash in a driver's pocket and reduce employer FICA and potential workers' compensation expense. Any amount above the $66 nightly maximum had to be treated as W-2 wages.
The roundtable's combined message was that carriers could not rely on the exceptional 2018 market. Recruiting, customer strategy, insurance, tax compliance, and capacity all required renewed discipline in a more normal and more difficult environment.