0

Saturation and gas prices squeeze trucking market

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Bahamian trucking company owner yesterday said he would have been forced out of business if not for clients who understood his prices must rise to combat higher fuel costs.

Justin Knowles, owner/operator of Just in Time Trucking, told Tribune Business that industry profit margins are typically thin with companies making only 15 percent at best. Operators, especially independent ones, have in recent months felt the ever-tightening squeeze from higher fuel prices that have represented a “very big jump, and any sort of profits there are gone. I actually have to dig into my pockets now to make a living,” Mr Knowles said.

“The guys with one, maybe two trucks, for them it’s not a big deal with the fuel prices. Any time you get past four trucks and up, that’s when the percentage gap closes or your profit margins become minimal. Once you get past a certain amount of vehicles, the profit margins then start to increase again, and once you get to the two to three-truck margin, your profit shrinks to anywhere between 5 percent to 10 percent.”

Larger trucking companies enjoy economies of scale and greater efficiencies, as they are able to spread their costs over a larger number of vehicles, while maintenance and down-time for individual trucks becomes less of an issue. However, a smaller trucking company with three or four vehicles feels an immediate chill from one being taken off-road. As a result, individuals who have one or two trucks have “no incentive to grow in the market for truckers”.

Mr Knowles added: “Right now, and honestly and truly, as a trucker that has been in this industry for all of my life going on to 17 years, the market is totally over-saturated. It’s not about loyalty and it’s more about the bang for the buck or the quickest person that could get it to my job site. They don’t care if it’s damaged, they don’t care about any of that stuff. They just want it at their job site.”

This has resulted in independent truckers flocking to the Arawak Cay port on a daily basis as they compete for loads. “The port has its regulations to get in and out of the facility, and as long as you adhere to the regulations then there is never an issue,” Mr Knowles said.

“If gasoline goes up to $9 a gallon then The Bahamas is in problems because, don’t forget, any part of freight movement has to be moved by a truck. If it comes on a boat or comes in a plane, it has to go on a vehicle or truck to get to the consumer. As truckers we get pinched all the time, but at some point and time we have to stand up for ourselves and do what we have to do.”

Comments

ThisIsOurs 1 year, 7 months ago

"If gasoline goes up to $9 a gallon then The Bahamas is in problems"

Why should gasoline go up to $9? Gas prices have been on a steady decline in the US for almost 2months now, down almost 60c (why wasn't this mentioned in the story about gas prices?) but theres no pressure on the dealers to adjust prices They was quick enough to adjust when prices went up.

0

Sign in to comment