What NEMF’s Bankruptcy Can Teach Us: Small Carriers Are the Answer
3 minute read
New England Motor Freight’s February 11th announcement of bankruptcy sent shockwaves through the transportation industry. An LTL carrier based in Elizabeth, New Jersey, NEMF served the Northeast and Mid-Atlantic area with over 40 terminals. How does this story pertain to small carriers?
What happened to this LTL giant?
Vincent Colistra, a senior managing director for Phoenix Management Services and chief restructuring officer for the company “unsustainable rises in overhead,” as well as, underperforming contracts, and a severe driver shortage as factors in the company’s decision to file Chapter 11 and cease operations.
What can we learn from this story?
Listen, trucking is a volatile industry. 2018 was a great year–a booming economy, ELD regulations, and the tight driver market led to decreased capacity and record rate increases. This bankruptcy should be a stark reminder to all of us that as purchasers of trucking services, it’s important we treat our carriers well. That we treat them as true partners.
Carriers are the lifeblood of this industry. According to the American Trucking Associations, trucks move a whopping 71% of all the nation’s freight by weight. When you add to that the 7.5 million people employed in jobs directly related to trucking and at least 3.5 million truck drivers, you see that the trucking industry is at the heart of the US economy.
Here at AM Transport, our core group of carriers are at the heart of our business. We’ve spent 30 years getting to know and partner with the best small carriers in the business. Why is this important?
Let’s take a look at the NEMF bankruptcy again. The severity of the driver shortage was listed as one of the reasons NEMF went out of business. We hear about the driver shortage and the cost to the transportation all the time. Here’s what we don’t hear about all the time.
Small carriers are NOT experiencing a driver shortage.
In fact, according to the Federal Motor Carrier Safety Administration, the number of small carriers with small fleets of one to six trucks has skyrocketed, rising 69.3 percent by May of 2018. William Cassidy, writing for the Journal of Commerce argues that these figures illustrate that “there’s no driver shortage for trucking companies with one to six trucks, which increased their driver pool by 69% from 2012 to 2018. Carriers with seven to 20 trucks increased their number of drivers by 37%”
How do shippers find these small carriers?
It can be a problem for a company to find small carriers. Often they don’t have a huge online presence. They are hauling freight, not posting on FB or updating their websites.
But if you find a small broker who partners with small carriers, you will be in luck.
Here at AM Transport, we are proud of our long-term relationships with small carriers. These relationships offer our shippers capacity they will never find with larger carriers where the driver shortage keeps them in constant flux.