Over the past several weeks, one of the trucking and logistics groups on LinkedIn has been capturing responses to the question, “How many loads are you turning down per week due to lack of trucks?” As of a few days ago, this question had received 448 comments. I thought it would be interesting to share some of the common themes with the readers of this blog.

Load Turndowns are Not Tracked by all Carriers

The number of load turndowns by lane per week is an important KPI. This type of data can be very helpful in allocating capacity to those lanes that represent the best opportunity for strong yields. Some companies keep detailed statistics on this metric. A number of companies are not tracking this data and only have a “ballpark” estimate of the number of loads they are not able to handle. Data should be maintained on the type of freight, the lanes, the frequency of the loads and the rate to make sure that a company is optimizing the utilization of its fleet.

Load Turndowns are a Widespread Phenomenon

Many of the respondents are reporting load turndowns. Some are able to handle all of the volume that comes their way. This seems to be the case among LTL carriers. Among the respondents reporting capacity shortages, they range from a small number to hundreds of loads turned down per month for large carriers.

One sign of tightening capacity is the increase in loads being offered by load brokers. One respondent reported a tripling in the number of loads available from this source.

Capacity problems are specific to certain Industry Sectors and Geographic Areas

There is a shortage of available flatbed equipment. Loads to Canada are a problem area due to a lack of southbound loads, a result in large part of the escalation in the value of the Canadian dollar as compared to the U.S. dollar. South Carolina and upper Pennsylvania are being reported as challenge lanes due to a lack of backhaul as well.

Capacity Shortages are being Caused by Several Factors

In many cases, Carriers are allocating their precious capacity to better paying loads. Freight rates took a beating during the recession as shippers conducted aggressive bidding. Rates have been going up as business levels have been improving. It is natural for carriers to seek to optimize their revenue per mile.

Some companies are committing to move loads and then are cancelling at the list minute as better paying loads become available. This has made the tight capacity even tighter.
A lack of capacity may be a result of the timing of some loads. The problem is more acute on certain days of the week and less so on others. The CSA program is causing an exodus of some drivers that are not able to perform at an acceptable level.

Some companies are reluctant to secure more equipment until there is more economic certainty. The recent U.S. government debt crisis and this week’s turmoil in the stock market are not breeding confidence among shippers or carriers.

Load Turndowns have an Impact on Customer Relationships

This is a very valid issue that deserves discussion. What happens when you no longer handle loads from a longstanding customer or “pull the plug” at the last minute to haul a higher paying load. What happens to that relationship when shippers begin to gain confidence in working with one or more of your competitors? As carriers face the issue of to haul or not to haul, would the best approach be to speak with the customer and open up about sub-par margins before putting a valued piece of business in jeopardy?

This week’s stock market meltdown makes the current environment even more uncertain. It encourages carriers to have accurate costing models, provide high quality service and stay close to their customer base to help retain their core accounts. It challenges carriers that have been holding back on adding equipment to revisit this issue. It begs the question as to whether some selected equipment buys may help protect some loyal, better paying accounts.

The wild gyrations in the stock market and the continuing bad economic news, particularly on U.S. unemployment and housing prices, make one wonder if we are coming out of a Great Recession, are experiencing a continuation of 2008-2009 or relapsing into another recession. Kenneth Rogoff, the esteemed Harvard Professor of Economics and Public Policy wrote in a recent paper that “the phrase ‘Great Recession’ creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold. That is why, throughout this downturn, forecasters and analysts who have tried to make analogies to past post-war US recessions have gotten it so wrong. Moreover, too many policymakers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts . . .

A more accurate, if less reassuring, term for the ongoing crisis is the ‘Second Great Contraction.’ This was based on . . . (the) diagnosis of the crisis as a typical deep financial crisis, not a typical deep recession. The first “Great Contraction” of course, was the Great Depression . .. The contraction applies not only to output and employment, as in a normal recession, but to debt and credit, and the deleveraging that typically takes many years to complete. . .

In a conventional recession, the resumption of growth implies a reasonably brisk return to normalcy. The economy not only regains its lost ground, but, within a year, it typically catches up to its rising long-run trend.

The aftermath of a typical deep financial crisis is something completely different . . . it typically takes an economy more than four years just to reach the same per capita income level that it had attained at its pre-crisis peak. So far, across a broad range of macroeconomic variables, including output, employment, debt, housing prices, and even equity, our quantitative benchmarks based on previous deep post-war financial crises have proved far more accurate than conventional recession logic.”

If Mr. Rogoff’s analysis is correct, it would explain why so many economic indicators appear to be stuck in neutral. It suggests that truckers should be very caustious about investing in plant and equipment at a time when consumers are keeping their wallets in their pockets and the prospects for economic improvement seem so dim. The “Second Great Contraction” may take years to turn itself around. For job seekers or even for people employed in the trucking industry, it also highlights the need to be flexible and to create options.

I was particulary struck by an article written by Barbara Moses, the organizational career consultant that appears in today’s Toronto Globe & Mail. In the article she outlines strategies to “revamp your career path.” She cites two examples of people who are known for re-invention, Madonna and Victoria Backham. She then makes the point that “neither of these so-called career re-inventors really re-inventeed herself. Rather, in their different ways, they both renewed themsleves by building on things that were already part of who they are ”

Her point is that making a radical transformation is expensive. Moreover, you can end up starting at the bottom of the corporate ladder. “The alternative is to think of yourself as having a portfolio of skills and experiences. You can liberate significant opportunities by reconfiguring the mix of skills and abilities to use more of some, and less of others, in new and different ways . . . Think of your skills as Lego pieces that can be reworked into new shapes. Your job and job title are simply vehicles through which you express a wide range of capabilities.”

In Transportation there are lots of opportunities for renewal. For transportation sales personnel there are positions in shipper organizations in transportation or traffic management. Transportation executives can find careers in education, government and in consulting. It also pays to supplement your current skills and knowledge through continuing education.

If Mr. Rogoff is right, it is going to take time to pull out of the current economic malaise. This is a great opportunity to upgrade or add new skills. It is also a good time to creatively mix, match and leverage your current skills in new ways to create new employment opportunities.

This week Canadians lost an exceptional leader and citizen with the sad passing of Jack Layton, the head of the New Democratic Party (NDP), the official opposition party. The outpouring of grief across Canada and the fact that a state funeral, a rarity in Canada, was held in his honour, is indicative of the impact that Jack had on people across the country.’

Unfortunately I never got to meet Jack Layton but I saw him speak on television many times. I listened to the messages that he communicated and to his approach to politics and life. Here are some of the lessons I learned from observing Jack.

Despite the fact that we had differing political views and I did not support many of his positions, I had an enormous respect for his passion, his honesty and his concern for underprivileged Canadians. Jack was a man of convictions and ideals who reached across partisan lines to work pragmatically and for the public good. He fought for homeless people, abused women and for native Canadians who were mistreated over many years. These constituencies do not represent large or powerful groups of voters but they were important to Jack. The homeless were so important to him that he wrote a book on the topic. While never leader of the country, he was able to effect change that helped these groups of citizens. He listened and cared about the people of this country, particularly of lesser means, and did everything in his power to improve their lives.

The fact that he was a Toronto-based Anglophone politician (who spoke very good French), who was able to win 59 seats in Quebec in the last election, is absolutely amazing. One of the most lasting images of Jack during his last election campaign was of him wearing a Montreal Canadiens jersey while hoisting a mug of beer in a pub in Quebec. While many politicians are viewed in the same class as used car salesmen, people respected Jack’s genuineness and sincerity. Fighting Cancer and recovering from hip surgery, he fought a wonderful election campaign. Jack was one of the boys, a fighter, who captured the hearts, minds and votes of Quebecers and many other Canadians.

I also greatly admired his optimism and sense of higher purpose. He ran in various elections and lost several times. But that did not deter Jack. He picked himself off the floor, learned his lessons and fought another day. Often times he won. What was remarkable about Jack’s career is that in each of the last several elections, the number of seats held by the NDP increased culminating in Jack becoming the first ever NDP leader to be the head of the official opposition party, a significant achievement.

What can trucking company executives learn from Jack? A lot. Company CEOs must serve three groups of constituents - - - investors, customers and employees. Jack understood this as a political leader. He worked hard in all three areas. The outpouring of affection for Jack from all groups is a reflection of how successful he was in meeting the needs of all of his stakeholders.

A number of trucking company executives don’t get it. I recall going to a trucking company Christmas Party several years ago. I was the only executive in attendance. The room was filled with truck drivers and clerical personnel who worked hard on behalf of their company all year long. The fact that no other executive showed up sent a loud message about how little the contributions of these people were valued. With hours of service regulations, CSA requirements, speed limiters, fines for late deliveries, crumbling roads and bridges, the truck driver’s job seems to get tougher all the time. How many trucking company executives truly value the work of their drivers and let them know how much they mean to their companies.

So many trucking company leaders sit in their offices much of the day as their sales teams slog it out trying to retain customers and add new ones. Tight capacity and intense competition make these jobs very challenging. There is so much that trucking company leaders can do to demonstrate support for their team and genuine interest in their customers by being out on the front lines on a regular basis.

Jack Layton got it. Let’s hope his leadership abilities, his communication skills, his empathy for people, his sincerity and his optimism will be a source of inspiration to everyone whom he touched during his lifetime.