Los Santos Insider | Trucking Turmoil: Economic Headwinds Slam Industry

[Jolagh]

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Trucking Turmoil: Economic Headwinds Slam Industry

 

Written by Hank Miller, April 2024

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Members of the public often ignore the brightly coloured sprinter vans and lorries which scurry around our great state.  Going to and from the port at all times of the day and night, sometimes at great speed.  However what is often underappreciated is that trucking companies are the backbone of our economy and whilst undervalued, without them, businesses would cease to trade. In the last three years the industry has undergone massive change from at it’s peak heavy competition and a large pool of drivers to where it is currently, in which there is a lack of competition, tight profit margins and a small driver pool.I sat down with the two major trucking companies in the state to discuss the valuable work that they are conducting and ‘chewed the fat’ over the current state of the industry.

 

I sat down with self confessed logistics expert Steve Hasington, who is currently the director of Senora Logistics, based in Sandy Shores.  He has worked in the industry since 2019 as he reminisced about the industry back then.  

 

‘Three years ago, we must've had well— five or six companies at any time.I was running Bluewater Logistics, and we must've been the biggest, if not on par with the largest at the time. And there were always several companies going that we were competing with.  Kazanov, IMEX, Palmas, Rock Solid Logistics, DELTA Logistics, APEX. It was great fun, you'd see various coloured trucks coming and going through the port. Running a large HR team was a blast and we had a constant supply of new drivers.

 

However since the end of last year, trucking companies have been working in a somewhat different environment, largely due to tight profit margins and ever increasing startup costs stifling the market.  Many perceive the industry as being a bit of a cash cow, especially when you have big corporate businesses such as IMEX dominating the market down at the port.  However the lack of competition in the market is not by chance and this is largely due to a race to the bottom in terms of the amount of commission trucking companies take per delivery.  Back in 2019-2020 all of the logistics businesses agreed on a standard rate of commission that the drivers would receive.  Meaning that companies could make a reasonable profit, whilst at the same time, drivers had a choice about what type of company they could join.  However, as Steve described, it wasn’t long before commissions for drivers started to increase, resulting in tightening the profit margin, with trucking businesses going out of business soon after.

 

‘Back in 2019 actually, all of the executives of the trucking companies got together and we all agreed to match down to 80% commission. So we'd get 20$ per box. It worked for about a month, we had record profits, really rewarded the team with bonuses and it was amazing. Then, one of the competitors jumped back to the original 95% and we began to lose drivers to them. It's /huge/ for the drivers, so that was the end of that. People think that we sort of "sit back" and make millions, and it's just not the case.

 

(Pictured: Senora Logistics HQ)

 

However, lack of profit is just one of the elements which is resulting in reduced competition.  High start-up costs are further compounding the issue, putting off much fresh blood into the industry who could potentially offer innovative new services, or offer alternatives from a large corporate business.  Why does any of this matter?  Lack of competition, leads to complacency and to lack of choice for both drivers and for businesses.  This uncertainty within the business is making recruitment an increasingly challenging issue, this was echoed by both IMEX and Senora.  Logistics appears to be very much a numbers game when it comes to resourcing and lack of consistently open businesses within Los Santos, is resulting in fluctuating demand for deliveries.

 

We struggle at times with no deliveries on the system at all.  It's always had it's ups and downs over the years but this year has been the worst I've seen.I think lack of business in Los Santos - there's just a lack of it completely..

 

This was echoed by IMEX’s chief pilot, James Mclennan.  He indicated that the industry took a hit at the back end of 2023, however he was optimistic about the future as he felt that business was starting to pick up, both from the traditional trucking side of the business but also on their relatively new aviation business deftly labeled ‘IMEX Air’.

 

The driver shortage came in very suddenly.  I think people are just largely becoming disillusioned. However we've got more people out at the moment with a convoy out delivering to our clients.

 

Recruitment remains a challenge that the logistics industry as a whole face and a story which is not unfamiliar to IMEX Air.  With pilots being notoriously difficult to recruit, as was experienced at the infancy of the aviation side of the business.  However things are starting to change with IMEX Air is now seeing a couple of new recruits a month.  Some external, but mainly from inhouse recruits who are looking to swap four wheels for being up in the sky.

 

(Pictured: IMEX Logistics HQ)

 

Overall, I would say that the mood in the industry is cautiously optimistic after going through a turbulent period, which has impacted choice and competition in the industry.  With Senora opting for the more traditional approach of advertising themselves as a family business to attract new drivers and an increasing HR department to support the hiring process and IMEX continuing to grow their aviation division, whilst they continue their natural growth path following their success in the industry.  I will however leave his question for the government, where is the choice for businesses and drivers when it comes to what company they want to be supplied by? Or, which company a driver wants to drive for?  It could be argued that should the government be supporting the sector,  to encourage new startups across the industry, to promote competition, which can only be good for the consumer.

 

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Edited April 11, 2024 by Jolagh
Fixed some inaccuracies.

[Onumbra]

Name: Xerxes55

Comment: Good article. You should have also included some videos on how these truckers influence our traffic "economy".

[Jordan447]

Name: FactChecker69

Comment: Steve Hastingson is not the Director of Senora Logistics that would be a Marina Sanchez, Steve is the Operations Director, sadly there is a difference here, But good article non the less!

[Anders]

Name: rurur

Comment: rental truck drivers the cancer of all