Issue link: https://read.dmtmag.com/i/112433
rates. If the supply of trucks is greater than the demand, the economic leverage moves to the shipper. The carrier can ask for a larger rate, but if there is an economic substitute (another carrier willing to pull the freight at the shipper���s current rate) the carrier will lose the business and additional revenue. Another economic substitute will come into play in the equation as well. Intermodal freight continues to grow at an annual rate of approximately ���ve percent. If the carrier raises rates, the shipper may shift some of their business to the rails. Increasing rates is a large gamble for the carrier and could sever relations for both parties. Believe it or not the trucking rates are like a fragile scale tipping back and forth depending on the status of the economy. So, what are the results if the current hours of service proposal is approved in July, 2013? One caveat is the economy. If the economy continues to grow its GDP (Gross Domestic Product) at a three percent rate, the carrier will have the ability to increase its rates. The rate increase however, would be marginal to say the least. Some dedicated and ���xed routes may have to be modi���ed due to the new hours of service. The carrier may have to set up a relay in order to abide by the new ruling. If carriers can raise rates, the driver may see a small raise as well. This will hopefully help the driver recover some of their lost wages. The one word that has been describing our economy over the past few years is uncertainty. Even though the GDP continues to grow; the growth is weak. Some other analysts are predicting a mediocre freight year in 2013. As always, carriers need to focus on improving their pro���tability through improved technology. Technology is developing quickly in the trucking industry. In this error of uncertainty, all carriers need to focus on reducing costs and improving pro���tability. Let���s all keep our ���ngers crossed and hope for stronger economic conditions in the latter part of 2013. OO C O A S T- T O - C O A S T TEAMS COME SEE US AT THE MID AMERICA TRUCK SHOW Booth #64012 Enter our 80 Years Rocks Giveaway for your chance to win a travel guitar. Must be owner operator or company team driver to enter the giveaway. OW OPE NER RAT OR Top 100%Pay FSC Being 80 Years Old Rocks With a foundation of financial stability, innovation, and dedication to drivers, Watkins has been providing strong, stable careers since 1932. Apply today! DriveForWatkins.com (888) 928-4955 Doug McElhaney is the Supply Chain/Logistics Instructor at Chattahoochee Technical College. EMail him at dmcelhaney@chattahoocheetech.edu. MARCH 2013 OO 0313_text.indd 55 / OWNER OPERATOR/ 55 / / 2/6/13 2:41 PM