As 2022 comes to an end, TruckNews.com reached out to several trucking industry executives to ask about the biggest challenge their fleets will face in the coming year, and how they plan to address these issues.
In this installment, Erb Group of Companies president and CEO Wendell Erb offers his insights.
Q1: What is the single greatest challenge that your business will face in 2023?
With the slowing of the economy we are seeing, how far down will it go and how long will it last? Several factors are in play. People — I really do not see a quick solution to our people shortages. Equipment — while equipment is trickling in, it is still not fulfilling replacement schedules and the prices are exponentially higher than previous years. Diesel — everything indicates there is no short-term relief in fuel prices over the winter.
While large carriers have good fuel surcharge programs to offset the high cost, smaller carriers are at the mercy of 3PLs who usually pay an “all-in” freight rate. When base rates are dropping and fuel price is increasing, the profit margin on small carriers is absorbing the squeeze and can become unprofitable very quickly.
Given the people, equipment and fuel costs, I really do not see much room for carriers to give up margin in a slower time. The big wild card here is Driver Inc. When freight was plentiful, all carriers had enough freight to move. As things slow, it sure would be nice to have a 20% cost advantage over your competitors, which is about what Driver Inc. has.
The big question is, when is the federal government going to get serious about enforcing labor and tax laws on Driver Inc. carriers? The rest of us carriers continue to endure increasing costs to comply with labor laws while Driver Inc. continues to skirt their obligations. It sure would be nice to compete for freight on a level playing field.