Trucking companies, buckling under the weight of strong freight levels, a worsening driver shortage and service problems on Union Pacific Railroad, are suffering from the tightest capacity in three years.
The lethal combination, coming at the busiest time of the year as manufacturers gear up for the holidays, is starting to affect shipping strategy.And cross-border shipments appear to be losing out as carriers make wrenching choices as to which freight to move first.
''We've been forced to switch from rail to truck to keep manufacturing,'' said Martin Franks, general traffic manager for Tamko Roofing Products Inc. in Joplin, Mo., which has seen its Dallas plant shut down at least five times due to delayed rail shipments.
But he said trucks haven't always been the answer, either.
''We've had service failures with trucks not showing up and availability of trucks not being there,'' he said.
''For the most part, we've been fortunate, we've been able to scrounge up the trucks to keep the plants going, but it is extremely costly.''
Things are particularly tough in the truckload sector, which moves trailer-sized shipments of freight. The equipment shortage has forced major carriers to turn down business, even from some of their existing customers.
That has left shippers scrambling to find trucks for their freight, some of which has sat on the loading dock for days at a time. Freight demand strong
Freight demand for truckload carriers is strong throughout the country, and international capacity is particularly tight.
''Business is extremely strong for us. We turned down half as much business last week as we actually moved,'' said Steve Russell, chief executive of Celadon Group Inc., a trucking company that specializes in shipments to and from Mexico.
While some carriers say they are winning rate increases from shippers as contracts come up for renewal, others say they are improving their revenue flow simply by being more selective in the freight they handle and by getting better utilization of their equipment.
Those shippers scrambling outside their normal base of core carriers to move their freight are paying top dollar for that privilege, and some are expecting to see truckload rates increase next year.
The capacity problem struck Mattel Inc.'s Fisher-Price Toys division late last month as it rushed to get shipments to retailers by the end of the quarter, said Theresa Dare, the company's transportation coordinator.
''It was horrendous. It was tight all over,'' she said.
Ms. Dare said she dealt with the problem by going outside her base of nine core carriers, using an additional nine carriers.
WANTED: MORE CARRIERS
As she negotiates contracts for next year, Ms. Dare said she'll probably look to broaden her base of core carriers, adding that a slight rate increase is likely.
Union Pacific's widely reported service problems are causing many shippers to look more to trucks, but they're having trouble finding help.
Beyond rejecting new business, carriers have been placed in the unusual position of telling their regular customers they can't handle additional shipments.
''We've tried to grow with our customers, and we would love to be able to take care of everybody,'' said Ron Pope, vice president of sales and marketing for Covenant Transport. ''But where we only have X amount of equipment and X-plus-10 loads available to us, you have an impossible situation. We try not to hurt anybody. If we're turning you down, you're going to be upset. You should be upset. We can't please everyone, unfortunately.''
One such customer is Blue Diamond Growers, the Sacramento, Calif., firm specializing in almonds. Covenant was one of Blue Diamond's core truckload carriers for domestic shipments until last month. That's when, just as the harvest was starting, the carrier notified Blue Diamond it couldn't handle its business any longer, leaving the company scrambling, said Jil Morley, the firm's transportation manager.
''We're paying more, but that's not important right now,'' she said. ''What's important is getting the long-awaited new crop to the customers.''
Breaks in shipper-carrier relations that bad are relatively rare. But space is tight enough to be forcing carriers to make difficult choices. International shipments sometimes lose out as those choices are made, said Paul Bergant, executive vice president of marketing at J.B. Hunt Transport Services.
''You tie your box up longer when you send it to Mexico,'' he said. ''When you have to compete for capacity, in a situation where you have more than you can handle, you want to take the path of least resistance.''
Carriers generally drop trailers heading to Mexico at the border to be handled by a Mexican carrier, and then look for full trailers to bring back from the border with them. When freight outstrips capacity, that balancing act is easier for the carriers, and more difficult for the shipper.
''We are having to say no to some Mexico business,'' said Russ Begin, director of marketing for M.S. Carriers. ''To balance the freight going through the border, it's a lot easier to say no to some business than to solicit additional business.''
Three years ago, the last time capacity was this tight, anumber of carriers rushed to buy additional equipment. What followed in 1995 was overcapacity and falling rates. Carriers say they're concerned that is a possibility this time, but many think it will be different.
DRIVER SHORTAGE WORSENS
One thing they believe is that with 5 percent unemployment nationwide, the driver shortage is worse than it was even in 1995, and that should limit the purchases of new trucks.
''A lot of companies are experiencing problems finding good quality drivers,'' said Rodger Mullen, vice president of customer service for Schneider National Inc., the nation's largest truckload carrier. It implemented a pay raise for drivers in August.
''My anticipation is it (drivers shortage) will continue to be a problem. I don't see industry being able to add a tremendous amount of capacity,'' he said.
The devaluation of the Mexican peso at the end of 1994 killed much of the export shipments to Mexico for a time, and flooded the U.S. lanes with equipment that would normally being crossing the border, said Herb Schmidt, senior vice president of sales and marketing for Contract Freighters Inc.
He doesn't believe that devaluation will happen again, and says that, while there will be the normal seasonal slowing of freight early next year, it should stay relatively strong. CFI currently is trying to add about five trucks a week because of that.
''I've never seen the demand as high as it is right now,'' Mr. Schmidt said. ''I don't think it can stop in midstream. That's always a worry (overcapacity next year). But it's not an option to sit here and do nothing, with all this need. We're going for it.''
And, while shippers benefited from the rate war that came with the overcapacity in 1995, none contacted said they are expecting a repeat of that next year.