Vitran Competition
Now Viewing Vitran's competition in: Trucking (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
What territory or region does the company cover? - Service regionalization has caused the steady erosion of the traditional "greater than 1,500 miles" length of freight haul. Regionalization is due primarily to trends such as just-in-time inventory practices, distributed warehousing, and new longer length-of-haul by regional and parcel carriers.
Who are the company's major customers? - A carrier's major customer is a shipper: a company seeking to have its goods transported by truck. A key link between carrier and shipper are third-party intermediaries like freight forwarders, freight brokers, and logistics providers.
How does the company find new business? - A network of agents and shippers handle marketing and sales. Internet sales are increasingly standard in the trucking industry.
How does the carrier determine prices? - Prices depend on the type of good shipped, the route taken, and the total distance traveled. Truck load (TL) shipments are quoted in dollar per mile, while less-than-truckload (LTL) freight rates are calculated based on weight, distance, and type of freight.
Has the company raised rates recently? - Rate increases are often difficult because of very strong competition. Fuel surcharges can cover a portion of increased diesel costs, but some shippers refuse to pay them or take their business to other carrier.
Competitive Landscape
Demand is driven by consumer spending and manufacturing output. The profitability of individual companies depends on efficient operations. Large companies have advantages in account relationships, bulk fuel purchasing, fleet size, and access to drivers. Small operations can compete effectively by providing quick turnaround, serving a local market, or transporting unusually sized goods. Average annual revenue per employee is $135,000.
Business Challenges
CRITICAL ISSUES
Demand Tied to Economic Cycles - Profitability in the trucking industry is closely tied to the overall health of the national economy, which varies from year to year. Drops in construction spending, consumer confidence, and industrial production can negatively impact trucking profits. During the early 2000s recession, US manufacturing production dropped 5 percent and imports of manufactured goods fell 4 percent.
Vulnerable to Fuel Prices - Fuel costs are rivaling labor as the trucking industry's highest operating cost. Diesel fuel typically accounts for 20 to 25 percent of revenues. Some companies buy fuel in bulk, hedge on fuel prices, or charge shippers fuel surcharges. JB Hunt, a large truck load carrier, relies on contracts for 80 percent of its fuel purchases. Carriers can sometimes get locked into expensive contracts when the price of fuel drops.
Industries Where Vitran Competes
- Transportation Services
- Trucking
- Less-Than-Truckload Carriers(primary)
- Specialty Trucking
- Logistics Services
- Supply Chain Management Services
- Trucking
