Trucking entered 2019 with momentum from an exceptional 2018, but carriers needed to prepare for slower demand while maintaining discipline in profitability, recruiting, execution, financing, and compliance.
The 20th Annual Trucking Owners and Leaders Roundtable brought industry leaders together in Indianapolis on Feb. 5, 2019.
Through an Analyst's Eyes
Stephens analyst Brad Delco expected some correction after robust 2018 demand. Trade and tariff uncertainty was making freight patterns less predictable, and inventory had begun to outpace sales.
He identified several signals:
- Housing starts were slowing.
- U.S. auto sales were flattening.
- Monthly tonnage had declined 5.6% from its October 2018 peak.
- New-truck orders were falling from record levels.
E-commerce and consumer sales remained strong, but freight demand was slowing for the first time in several years. Driver supply remained tight, with low unemployment, an aging workforce, and pay still lagging other vocational jobs despite increases.
TCA Profitability Program Primer
Chris Henry reviewed the TCA Profitability Program's processes, KPIs, and 2018 Top 20 predictions. Results included 8% to 22% organic revenue growth, gross-margin improvement as high as 14%, payroll increases, and persistent driver-retention challenges.
Going forward, higher driver wages and maintenance spending were expected to pressure gross margin. Automation could reduce administrative overhead, while virtual terminals could change fixed-overhead structures.
Marketing and Advertising for Drivers
A recruiting panel agreed that carriers needed to differentiate themselves rather than look like interchangeable employers.
Recruiting is a sales function. Carriers should thank drivers, explain growth opportunities, align expectations for home time and equipment, and continue selling the company after the hire.
The panel also called for a process to listen, act, and respond to driver feedback. Competition for talent comes not only from other carriers but from other industries.
Bridging the Knowing-Doing Gap
Carrier executives discussed moving known priorities into action. Their recommendations included:
- Develop a mission, vision, and values that guide decisions.
- Shift employees from reporting problems to solving them proactively.
- Create ownership of processes with controls, KPIs, and follow-through.
- Focus on measures that matter, including revenue per truck, customer value, and driver and customer experience.
The Lending Environment
Lenders believed the 2019 market was slowing but said capital remained available. Strong 2018 performance and active M&A still favored borrowers, with more buyers than sellers.
Carriers were investing in technology and data to improve efficiency. Banks wanted full relationships and credible companies able to explain their story and make a clear case for capital.
The Legal Landscape
Legal speakers expected little major federal legislation, somewhat lighter federal enforcement, and more aggressive state enforcement. Fair Labor Standards Act class actions had reached a record level in 2018.
They also discussed arbitration agreements, class-action law, and owner-operator contracts.
Accounting and State Taxes
State tax begins with nexus—the connection that allows a state to impose its laws on a company. Each state interprets nexus differently, creating risk for multistate carriers.
Trucking faces conflicting state laws, complex compliance, changing due-diligence obligations, and potential officer responsibility. The roundtable's overall message was that a still-healthy market did not remove the need for careful preparation.