Your Customers, Large and Small
Discussions, presentations and analyses of the trucking industry tend to treat the industry as one thing. That’s understandable; imagine trying to talk about all the varied industries that own commercial vehicles, not to mention varying sizes of fleets within each of those industries.
And, of course, there are regional variations. For example, consider the opportunities discussed in last month’s column that are available for truck owners and the companies that service their equipment due to hydraulic fracturing.
Each parts and service location really serves a niche market that’s defined by class of vehicle, applications — linehaul, construction, refuse, utility, etc. — and fleet sizes that are most common in that area.
And size does matter, though perhaps not as much as you might think. Consider Class 8 over-the-road transportation, undoubtedly the segment with the greatest gap between large and small players.
Each month, Randall-Reilly surveys senior executives of for-hire trucking companies that own at least 10 power units concerning market conditions. In the most recent MarketPulse survey, the 151 responses were split almost precisely between carriers with 10 to 99 trucks and those with 100 or more trucks.
As you would expect, there are differences between the two groups, but for the most part they are experiencing much the same things in their businesses. Half of senior executives at all for-hire carriers said business conditions were unchanged month to month, and 22 percent said things were better. Nearly 75 percent said business would be better or much better in six months, adjusting for seasonality.
Trucking companies are remarkably similar — and not.
Surprisingly, there was hardly any difference in these responses based on fleet size. Among those owning fewer than 100 trucks, 50.6 percent said conditions were the same. Exactly 50 percent of the 100-plus group said November and December were the same. And 22.1 percent of smaller carriers and 21.7 percent of larger carriers said conditions were better or much better in December.
There was somewhat greater variation about expectations for business conditions in six months. Nearly 8 percent of smaller carriers expect conditions to be worse in six months, while fewer than 3 percent of larger carriers expect worsening business.
Optimism was rampant for both groups with about 75 percent of smaller carries saying they thought business would be better or much better compared to about 74 percent of larger carriers.
Plans for fleet changes exposed greater differences. About half of both smaller and larger carriers plan to increase the size of their fleets during the next six months, but nearly 38 percent of larger carriers plan to replace aging equipment while fewer than 24 percent of smaller carriers plan to do so.
Among smaller carriers, 22 percent plan no change in their fleets over the next six months, while fewer than 7 percent of larger carriers plan no changes.
What really distinguishes smaller and larger carriers, though, are the challenges they face. For example, while driver availability is the top concern for smaller carriers as well as larger ones, there’s a 25-point gap between the groups; 54 percent of larger carriers rank it as their No. 1 worry, but only 29 percent of smaller carriers do so.
On the other hand, smaller carriers are more concerned about freight pricing with 22 percent ranking it as No. 1 compared to only 7 percent of larger carriers. Smaller carriers also are more concerned about cash flow and fuel costs.
Owner-operators and very small fleets surely are even more concerned about cash flow, freight pricing and fuel costs.
Perhaps it’s obvious, but parts and service providers should never forget that all truck owners are not alike. Understanding what worries them — even those things not directly related to the truck itself — is important.
Avery Vise is executive director, trucking research and analysis for Randall-Reilly Business Media and Information.