The 2018 trucking rebound offered higher volume and rates, but sustainable growth still depended on reducing turnover, using benchmarking data, developing high-performance teams, and managing tax and legal change.
KSM's Trucking Owners Business Roundtable brought industry leaders together in Indianapolis after two difficult years.
A Source for Optimism
Cleveland Research analyst Chris Johnson said volume was outpacing capacity. Carriers had reduced exposure to burdensome contracts, spot freight increased, and capacity tightened.
Key indicators included:
- Spot rates up 20% to 30% year over year
- Rising load-to-truck ratios
- Expected truckload pricing growth of 4% to 6%
The driver population remained a structural issue. Average age was approximately 55. Drivers age 65 or older represented 6.1% of the workforce, compared with 4.9% between ages 20 and 24.
LTL pricing remained stable because the market was concentrated. Rail and intermodal operators focused more on labor and profitability than service growth. E-commerce supported parcel growth and an airfreight renaissance.
The Impact of Turnover
Ray Haight used his company's reduction in turnover from 120% to 20% over two years as a case study. Workforce stability improved, operating performance strengthened, and safety improved.
He argued that carriers often fail to view retention from the driver's perspective. A company with 100% turnover cannot expect employees to believe its cultural promises.
Low CSA scores and lower insurance costs were associated with greater profitability and lower turnover. Carriers needed market-appropriate pay, a clear mission, transparency, training, and support.
“Your employees want to be treated like professionals.”
Building a High-Performance Team
Chris Henry summarized traits found in top inGauge carriers:
- Add by subtraction before layering on software or process.
- Invest in tangible and intangible assets that create differentiation.
- Make time to work on the business rather than only in it.
- Embrace meritocracy and accept ideas from every level.
The 2018 predictions included 8% to 22% organic revenue growth, gross-margin improvement up to 14%, higher driver and non-driver pay, shorter hauls, a higher driver-to-non-driver ratio, and continued retention pressure.
Tax and Legal Implications
The new tax law reduced the C-corporation rate, repealed corporate AMT, offered pass-through businesses a qualified-business-income deduction of up to 20% subject to limits, eliminated like-kind exchange treatment for personal property, and expanded bonus depreciation.
Suspension of the 2% itemized deduction created a reason for carriers to consider driver per diem programs.
Federal guidance had generally become more carrier-friendly, but state rules did not always move in the same direction. Speakers highlighted worker-classification penalties, joint-employer liability, and conflicts among state laws.
The industry entered 2018 with improving demand and more favorable federal policy, but the long-standing people and compliance challenges remained.