Trax Technologies

What Davis Express's Closure Tells Us About Transportation Resilience

Key Takeaways

  • The trucking industry continues to face unprecedented economic pressures, with operating costs reaching a record high of $2.27 per mile
  • Proactive carrier risk assessment is essential for preventing supply chain disruptions
  • Transportation spend data provides early warning indicators of potential carrier instability
  • Building resilience requires enhanced visibility and comprehensive contingency planning
  • Strategic transportation spend management can transform market volatility into competitive advantage

The recent announcement of Davis Express's closure after 44 years in business serves as a stark reminder of the fragility within today's transportation networks. This Florida-based refrigerated trucking company, with 160 trucks and 140 drivers, joins a growing list of carriers that have succumbed to what industry experts now call the "Great Freight Recession." While Davis Express has stated they aren't filing for bankruptcy, their exit from the market represents a concerning trend that supply chain leaders can't afford to ignore.

The Current State of Trucking Economics

The trucking industry faces unprecedented economic pressures. According to the American Transportation Research Institute's most recent operational costs report, the average marginal cost per mile has increased by 21.2% between 2020 and 2023, with fuel and labor being the largest contributors. Meanwhile, spot rates have fallen by nearly 15% from their pandemic-era peaks, creating an unsustainable economic equation for many carriers.

Risk Management in Carrier Selection

The Davis Express shutdown, while not unexpected given industry conditions, highlights the critical need for supply chain leaders to implement robust risk management protocols in carrier selection. According to the American Transportation Research Institute's 2024 report, marginal costs rose 6.6% to $1.716 per mile when excluding fuel costs, despite being in a freight recession. This economic pressure means carriers are operating on razor-thin margins, with many sectors seeing operating margins cut in half compared to previous years.

Supply chain leaders should implement a structured approach to evaluating carrier financial health. This includes monitoring key performance indicators like on-time delivery rates, service consistency, and invoice accuracy. Additionally, diversifying your carrier portfolio across different sizes and specialties provides natural resilience against single-point vulnerabilities.

Data's Role in Anticipating Disruption

Transportation spend data serves as an early warning system for potential disruptions. ATRI's analysis revealed that driver turnover increased by 5 percentage points in the truckload sector during 2023, and deadhead mileage rose to an average of 16.3% for all non-tank operations. These operational inefficiencies often precede financial distress, making them valuable indicators for proactive risk management.

Leveraging freight data management solutions allows enterprises to consolidate disparate information streams and identify subtle patterns that might otherwise go unnoticed. By normalizing and analyzing this data, supply chain leaders can detect early signs of carrier instability and take appropriate action before disruptions occur.

Building Resilience Through Visibility

Enhanced visibility is crucial for building supply chain resilience. In 2023, the freight market experienced significant challenges, with the marginal costs of trucking reaching a new high of $2.270 per mile. This economic pressure makes it essential for shippers to maintain comprehensive visibility across their transportation networks.

Organizations with advanced visibility capabilities demonstrate superior performance during disruptions. These companies can quickly identify alternative carriers, optimize routing, and manage expectations with customers and stakeholders.

The Path Forward for Shippers

As Davis Express and others exit the market, proactive shippers are implementing comprehensive contingency plans. According to Trucking Dive, increased costs for trucking came as driver wages rose but not as sharply as in previous years, while equipment payments for trucks and trailers rose significantly at 8.8%. Trucking Dive These rising costs require a strategic approach to transportation spend management.

The MIT Center for Transportation & Logistics recommends developing scenario-based planning frameworks that balance cost control with risk management. This approach enables organizations to maintain operational stability while adapting to market changes.

Turning Disruption into Strategic Advantage

The current freight market challenges present an opportunity for forward-thinking supply chain leaders to reevaluate their transportation strategies. While immediate responses should focus on maintaining continuity, long-term planning should incorporate lessons learned from this disruption cycle.

Ready to transform transportation volatility into a strategic advantage? Contact Trax for a consultation on how our Transportation Spend Management solutions can help you build resilience while optimizing costs in today's challenging freight environment.