Internal and external events have dramatically affected the nature of transportation in the US. In 2018, these events have contributed to an increase in freight rates of up to 40% specifically in the truckload and specialty load market.
One contributing factor has been the institution of required electronic logs (ELD) for all drivers in the for hire transportation market by the DOT in December of 2017. The resultant in this DOT safety directive has been a reduction in number of miles a driver can log daily. As most drivers are paid by some formulation of miles driven, transportation companies have been forced to raise their pay per mile to drivers.
A second factor is a dramatic reduction in the number of qualified drivers available in the US. Reasons cited for this situation along with a booming economy which has increased employment opportunities includes Baby Boomer retirements in the industry along with a general lack of interest by the Millennial Generation in pursuing a driving career. The end result has been an intense competition between transportation organizations both public and private to attract drivers in this shrinking market. As one would expect this has led to dramatic increase in pay packages which is passed on to the end users.
IFCO purchases finished products for our customers throughout the country so it has been impacted by this situation in its pricing. We strive to coordinate and control our transportation spend through a program of consolidation with our carrier partners as well as utilization of our small private fleet to keep costs as low as possible to our customers. Our private fleet is operated in a manner which is compliant with hours of service and safety mandates as required by the DOT.
We at IFCO are intent in providing our customers with timely supply of materials as required at the best possible price given the current difficult transportation market situation.