Which type of carrier is better equipped to deal with economic slowdowns and recessions? Big or small? That was the main question posed at a fleet panel at Truck News’ Surface Transportation Summit.
As reported by Truck News, Wes Armour, president and CEO of Armour Transportation Systems, says the diversity of a large fleet, which has more resources and variety of customers, can help it adjust to declines in freight volumes.
However, Mark Bylsma, president of Spring Creek Carriers, says smaller fleets tend to be more nimble and able to adapt more quickly to changing customer needs.
Armour said his company didn’t suffer much from the downturn in the first two quarters of 2015, thanks to its diversity. “We looked at 2015 as being a very positive year,” he said, with the exception of winter weather-related issues.
Bylsma said his company “held our own” through early 2015.
Looking ahead, both Armour and Bylsma are fairly confident about the Canadian economy in 2016. Bylsma noted that in 2014, manufacturing GDP outperformed real GDP growth, which was the key to healthy freight volumes. That reversed in 2015 but with the weak Canadian dollar, Bylsma is expecting manufacturing to strengthen, which should translate into stronger freight demand.
Armour is encouraged shippers are seeming to place more value of late on building relationships with their carriers than putting their freight up for bid.
We’re finding now small and large shippers are sitting down with us and saying ‘I can’t afford much of an increase,’ and we get creative. Many times they end up with no increase … because the shipper was flexible…we really look for savings rather than rate increases but in tenders you don’t have that opportunity.”
While Bylsma and Armour agreed capacity isn’t tight at the moment, they both expect that to change as the industry continues to face a dearth of qualified drivers. Shippers that secure long-term agreements with their carriers will be the ones that have trucks available to haul their freight when the economy picks up steam, Armour pointed out.
“If things get really tight, you’re going to stay and deal with the customers that treated you right and did contracts with you long-term,” he said.