The trucking industry has experienced a wave of ups and downs during the last two years, but despite that, one freight company has been weathering the storm.
According to the American Trucking Association (ATA), 71% of all freight tonnage in the U.S. moves by trucks. If the trucking industry experiences a downturn, the freight industry follows.
ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index increased by 6.6% in 2018. In 2019, the American Trucking Association’s advanced seasonally adjusted For-Hire Truck Tonnage Index increased only 3.3%.
Brian Bennett, CEO of Fifth Wheel Freight, said there has been a 14-month recession in the freight industry, but despite that, the company registered 43% growth last year.
How does that happen? Bennett credits Fifth Wheel’s diversification.
“Our company is very well diversified,” he said. “We are in the food and beverage, nursery, industrial, manufacturing, steel, metals, plastics and automotive sectors. We have a very diversified book of business, intentionally, to try to protect us from downturns like this.”
Bennett said the firm has about 1,200 clients, with the majority of them in the Midwest. The freight company delivers products and goods nationally and internationally, including to Mexico and Canada.
With the increase in growth in 2018 and the decline in growth in 2019, Bennett said overall the two years were a push.
“2018 was an anomaly in the trucking industry; it was an excellent year,” he said. “You had taxes that helped major corporations, which allowed those companies to reinvest. In 2019, we had a freight recession as a result of the surge in volume from the year before. So, 2019 was somewhat misleading. We had 14 consecutive months of negative growth because 2018 was so stellar. They essentially balanced each other out.”
The growth in 2018 arose from a series of events, including the escalating tariffs between the U.S. and China, and between the U.S., Mexico and Canada on a variety of imports such as food products, steel and aluminum. It resulted in an upturn in the freight industry because goods were cheaper for buyers, which caused deliveries to soar.
“In 2018, volumes surged because businesses were stocking up inventory ahead of the tariffs,” he said. “These companies were increasing their inventory levels as much as possible because they were getting, essentially, discounted prices ahead of the 2019 tariffs. This resulted in a depletion of these inventory levels in 2019, which led to volumes decreasing. You saw a little bit of a business shift between the two years.”
Coming into this year, Bennett said Fifth Wheel was on pace to do between $90 million and $95 million in business. COVID-19 will pull that expectation down, he said.
“We have been in a freight recession for well over a year and we have still been able to scale and grow our business and add jobs while fighting these challenges,” he said. “COVID-19 is on a different level, but due to our diversification and not relying on one sector, we’ve been able to push through new challenges over the last 14 months and we’ve positioned ourselves to weather this storm, as well.”
Bennett said growth is measured by opportunities the company can provide to customers.
“We try to bring opportunities to West Michigan,” he said. “We started in Lansing and moved to West Michigan — Grand Rapids — a few years ago with the mindset of growth and opportunities for the people who represent West Michigan. That is how we gauge our business first and foremost, by the opportunities we are able to offer. We gauge the growth of our company in two ways. One, we want to create opportunities and, two, we want to see the continued growth in market share. If those two line up, then we are doing pretty well.”