Loaded and Rolling: Diesel technician demand remains extreme

Diesel technician demand remains extreme

The demand for skilled technicians to keep shops and maintenance terminals running continues to challenge recruiters due to high demand. A major source of lost utilization for fleets on the road is getting their vehicles repaired in a timely manner. A lack of technicians continues to plague shops, creating extra downtime and work order backlogs.

One issue is the lack of schools. Brent Jenkins, campus president at Lincoln Tech Indianapolis, told the Commercial Carrier Journal, “There’s not a lot of schools that teach diesel. Companies are trying to pull people straight out of high school into the workforce. Some of them have had minimal skills they picked up on the farm or with a family member.”

This technician shortage has been years in the making. Adding to the angst is that tractors are becoming more complicated. Sandeep Kar, chief strategy officer at Noregon, told FreightWaves last year that “another ticking time bomb that is equally important and can have a cascading impact on all corners of our industry is technician shortage. Trucks, buses, trailers and other commercial vehicles and their subsystems are increasingly getting sensorized.”

Kar added, “The level of distributed electronics in these vehicles is increasing at a rapid pace and this is further exacerbating the technician shortage issue, given the fact that the industry is facing a severe shortage of skilled technicians that can service and maintain these senso-laden commercial vehicles.”

Small Fleet & Owner-Operator Summit keynote with OOIDA EVP

FreightWaves on Wednesday hosted the Small Fleet & Owner-Operator Summit with Lewie Pugh, executive vice president of the Owner-Operator Independent Drivers Association, as the keynote speaker. A central theme of the discussion revolved around how owner-operators can survive and thrive in competition with larger carriers.

Pugh said lack of size can be an advantage if smaller carriers and owner-operators focus on white-glove service, noting, “I learned if the receiver had a problem — maybe they needed a seal fixed — I would fix it, even though it wasn’t technically part of my job, and the little extra made the receivers happy. And it made the shipper very happy because they wouldn’t have to send their employees out there to do it.”

One part of the interview I found interesting was the path to becoming an owner-operator. Pugh advised, “The key is to take your time and pay your dues, and after a year or two, maybe consider making a switch to a private fleet, or to becoming an owner-operator. But remember: It’s one thing to be a truck driver, it can be quite another thing to own your own business.”

This type of driver matriculation from starting at a large carrier, then transitioning to a smaller one, becoming independent or moving to a private fleet explains some of the driver retention issues large fleets have. Large enterprise-level fleets provide loan assistance and sponsored CDL schools compared to smaller fleets that typically require years of driving experience before hiring new drivers.

Market update: March trailer orders plummet, pent-up demand remains

Preliminary data on U.S. trailer orders released by ACT Research for March suggests that while monthly orders plunged, pent-up demand remains strong. March preliminary trailer orders fell 33% month over month from 25,800 units to 16,800. Year-over-year declines were greater, with a decline of 55.7% from 37,900 to 16,800 units.

Jennifer McNealy, director of CV Market Research and Publications at ACT Research, said in the report, “Despite March’s drop in orders, we believe demand remains healthy and we’re seeing improved, albeit still somewhat challenged, build data. While we are still waiting for March data, February’s backlog-to-build ratio, a proxy for industry demand strength, was 8.5 months, significantly higher than the historical average. That means fleets needing trailers will need to maintain their patience.”

For trailer makers and sellers, the past two years were a boon in spite of production headwinds. David Giesen, vice president of sales at Stoughton Trailers, said, “In the last two years it was gangbusters. Anything you could build, you could sell. We were probably missing demand by a half or a third of what the whole market wanted for trailers. We just could not keep up post-pandemic. And now it’s shifting to kind of more of a normal market.”

FreightWaves SONAR spotlight: Spot-to-contract-rate spread widens

Summary: The spread between contract and spot rates continues to widen. The RATES index measures the difference between FreightWaves’ National Truckload Index (Linehaul Only – NTIL) and the Van Contract Rate Per Mile Initial Report Index (VCRPM1). The current reading shows a gulf of 92 cents per mile in favor of contracted freight rates. One important area to watch will be the extent to which contracted rates will decline, as shippers weigh the benefits and risks associated with pushing down rates so far that it will drive too many carriers out of the marketplace, creating service issues if truckload demand increases.

The current consensus based on the data suggests that there remains an overabundance of truckload capacity, but given the wide gulf in spot to contract rates, carriers more exposed to spot market transactions are at higher risk of going out of business. Contracted freight access for smaller carriers frequently comes in the form of either an agreement with a smaller shipper or using a freight broker to dedicate capacity for a contracted 3PL lane. For market carriers that operate solely on the spot market, conditions continue to deteriorate, as their pricing leverage for last-minute shipments or load falloffs is blunted by competition from small and large carriers attempting to fill in load balance deficits.