The last couple of years have seen tremendous demand for drivers, trucks, and trailers. Consumers with money in their pockets from COVID relief payments looked for ways to spend it. With travel curtailed and entertainment venues limited, they looked to buy “stuff”. Companies making and selling “stuff” struggled to ramp up production and ship out their products amidst a tight labor market, which led to wage growth. The consistent element of the economy throughout was the need for the trucking industry to get products to consumers.
“When would we peak? And then after that peak, what would we see? And I think we’re finding that out today,” Crete Carrier President and C.O.O. Tim Aschoff recently discussed the state of the economy and the outlook for the trucking industry on The Dave Nemo Show, on Sirius XM.
Aschoff says signs of inflation began about a year ago, as labor shortages led to tight supplies of raw materials and finished products. Now a variety of factors are contributing to inflation levels not seen in decades.
“In talking to our customers, we knew along the way that inflation was still coming because they had not increased prices as much as they needed to, just to offset the increased costs of inflation and commodities. And even talking to customers over the last three weeks, there are more price increases coming. So, inflation has hit us. And it’s not over.”
Increased costs for diesel fuel may have the most noticeable impact on the trucking industry. But Aschoff says changes in consumer spending patterns are rippling through the economy.
“People are tightening their belts. And then at the same time, we are seeing a shift a little bit to people getting out. We were locked up for COVID for so long. Now we’re going out for experiences, for food, entertainment, and travel. And a lot of that creates less freight. So, we are seeing this shift in demand out there.”
But even under those circumstances, demand remains steady from the contracted customers in the consumer goods sector which make up a large portion of the Crete Carrier and Shaffer trucking customer base.
Aschoff says high fuel prices pose a challenge, but Crete Carrier, Shaffer Trucking and Hunt Transportation always strive to be as fuel efficient as possible, with the help of their drivers.
“We haven’t had to do much different. Just really sharpened our pencil. Making sure we’re purchasing fuel at the best possible price we can, limiting our out-of-route and limiting our deadhead miles. And I want to give a shout out to our drivers for managing where they’re purchasing fuel and idle time. We’re just helping the team understand the impact of what’s going on with the fuel prices and how they can make a difference in managing our costs. And then, giving a reward back to our drivers as we do through profit sharing and higher pay.
You can listen to the full conversation on our Soundcloud page.
“There are more price increases coming. So inflation has hit us. And it’s not over.”
Crete Carrier Corporation COO Tim Aschoff