In this post, we discuss the massive post-covid changes to the trucking business with Tony Lovallo who has been running his own freight company since 2010. Tony’s insights provide a 360 look into the shipping business & consumer patterns with important economic implications.
Q&A with Tony Lovallo, President of Connecticut Carriers Inc.
How has the profit profile for small truckers changed post-covid? What were the drivers to these changes?
We thrived in 2020 & 2021 during the covid lockdown and it seemed like the economy was still fairly strong in spite of the public health challenges. All our trucks were running at full capacity during that time and were profitable. Since April 2022, we have not been able to come close to charging the rates that we did then. It seems like these changes are mainly due to larger trucking companies who can afford to run at lower price points.
How have volume trends changed post-covid?
There still seems to be plenty of freight, but many shippers are combining loads with lanes to be more cost-efficient. We primarily focus on full truck loads for the majority of the year except for our last 2 months when we handle LTL for FedEx. Shippers are paying less even though our costs have increased, and we never determined the percentage the brokers are taking off the top.
Were you surprised by FedEx’s weak quarterly results given that they gained share from Yellow & UPS? To what do you attribute the current volume declines?
I’m not surprised about the big guys not making as much profit because there seems to be less demand for home deliveries. In any case, volume declines have been less impactful on small truckers because they are more cost-effective for shippers in that they receive less payments for their loads post-covid.
What happened to Yellow?
Yellow certainly had more competition than perhaps they had recognized. Companies like ABF, A.DuiePyle and Old Dominion all do a great job with service, covering all 48 states. Since Yellow had combined with Roadway years back, it looked like they never really picked-up a sufficiently large percentage of the market even though they had combined forces.
What are your thoughts about the Teamster deal with UPS?
I’m glad they got it done. That still will not improve UPS’ service levels because, in my opinion, UPS does not put a strong emphasis on quality control in terms of their package handling. I have delivered right next to UPS trucks for three decades, and their freight has its definite share of damages.