The big trucks travelling down the highways contribute a large portion to a country’s economy. Goods produced by manufacturers are delivered by a trucking company across the country. However, the profitable trucking industry also faces several challenges from high labor costs, excessive regulation, significant toll increases and insurance costs.
New England Motor Freight (NEMF) that reported total annual revenue of $402 million in 2017 declared bankruptcy. The reason is high labor costs and other associated costs in the industry. The company specializes in less-than-truckload hauling where multiple shippers are allowed to share the truck space for their shipments.
The announcement of NEMF was surprising for industry insiders because the trucking industry grew at a fast pace in 2018. According to analysts, NEMF cannot attribute its challenges to the market; there are other pitfalls being faced by the trucking industry. One of the main issues that drove NEMF to bankruptcy is the unionized driver’s pool and their onerous demands. The other reason is the contract with large shippers like Amazon.
According to analysts, Amazon contracts are pretty demanding. The company’s growth was so fast that it can suck more than the capacity that a trucking company has planned to make available to them. Amazon was one of the top five customers of NEMF and represented less than 6% of the total revenue.
Amazon delivered more than one billion packages during the Christmas holiday alone which is supposed to be a boon for the trucking industry. However, even if there are lots of Amazon packages that have to be delivered, they are not high-revenue parcels that the trucking industry prefers to handle.
In fact, UPS and FedEx have limited the amount of Amazon parcels that will deliver because the profit margins are much lower even with the huge number of parcels. According to Helane Becker, managing director of Cowen, servicing the customer deliveries of Amazon is very cost intensive.
If you are going to send parcels, there is a trucking company that offers the most cost effective prices and guarantees fast delivery. There is no parcel too big or too small for freight carriers. There are trucks designed to handle over-sized and overweight shipments.