So a US mover came up to me and told me my rates were going up by 10%. And the trick is – it wasn’t just directed at All Points Relocation Canada. It was everyone. Across the board. Yes, I have never even spoken with a Van Line directly (All Points works with agents), but this Van Line wasn’t even trusting its agents to deliver the message – your rates are going up by 10%. This is only in the United States and it is only in the summer heavy transit months, but still 10% is a big move. And, it goes further. If the Van Line determines that the majority of your business is in those summer months, next year the rates will go up again. Another major Van Line sent rates up by 8.5% all year round. No negotiation.
Why is this happening in the United States?
This is happening due to driver shortages and because movers feel that they have hit rock bottom when it comes to relocation prices versus their costs to deliver the services, especially when it comes to the cost of that ever dwindling number of drivers. They are having a harder and harder time getting drivers to accept relocation work over other types of driving tasks. All Points has warned about avoiding peak moving dates in the past. So, in response to the question – is the Van Line out of touch – not really, when it comes to the knowledge of their own cost structure and the demand for a lower supply of qualified drivers.
Could they be in touch and out of touch at the same?
Most definitely. With cost cutting still a strong theme amongst many corporations, companies are looking for any way to save a dollar, and this rate hike flies in the face of that. In addition, moves just became way more expensive in the United States due to the Trump tax changes which now considers the movement of household goods to be a taxable benefit (this will create the need for large gross-up costs). Finally, it also flies in the face of corporate movement to lump sums, which put the cost saving function directly into the hands of the employee. One mover once told me, “There will always be a mover that quotes lower.” Well, why is this? Because there will always be a mover who has a truck loan payment coming due next week and it is better to bring in very low margin work in this week, compared to no work at all. So, when it comes to these sorts of cost pressures, it does appear that the US Van Lines in question may be out of touch with the buyer’s side of the market.
Just because someone is always willing to quote lower, should you go with them?
All Points Relocation Canada wants to make clear that it could be that the less expensive mover is excellent – maybe he is just not as good at marketing or does not have enough repeat business (relocation company or corporate sales) – and he has a truck loan payment coming due. But, it could also be that the less expensive mover is not good at what he does and is dishonest in his dealings. Even if you just relocate 1-2 people per year or 20+ people per year, you should look at moves more like an insurance policy than a commodity. You want to ensure that this move has the highest percentage likelihood of going smoothly, with little to no damage, with a high level of customer service and timeliness (more on timeliness below). The best way to do that is to either form a relationship with a mover yourself or to trust the network management skills of a relocation company, like All Points Relocation Canada. This way, something is less likely to go wrong and if it does there is the highest likelihood of a good rectification. And trust me, problems do arise, and working with a mover where there is no relationship is virtually impossible. Anecdote: All Points Relocation Canada once had a relocation where our network mover could not get the spread dates of delivery tightly down to 1-2 days which the transferee wanted. In this case, he was moving with his elderly mother and I can’t blame him for not wanting her to stay in a hotel for up to 8 days. So, he went out and found a mover who committed to 1-2 days spread dates around the required dates. He went with this mover and we worked with that mover to pay it directly. The move estimate was even 20% less than our network mover’s quote. What’s to lose? Well the price went up during the process four times, to the point where the cost was roughly the same as that of our original network mover quote. Then there was substantial damage to which the mover would not agree to a suitable insurance payout. It turns out that the mover was not a good mover and we had no leverage to resolve the problem so the transferee was left with a very bad move experience. Again – think of moving household goods as insurance rather than a commodity.
So if a driver shortage is driving this price increase what about spread dates?
People should start managing expectations now, because if there is a driver squeeze that is causing a price increase, the next thing to be affected is spread dates – the guarantee timeline of delivery from a moving company. We have already seen spread dates grow and become more inflexible, but we should expect more of this in future. Electronic logbooks effective now in the United States will also result in increased spread dates.
So, what will happen in Canada?
Those two Van Lines with the big increases have made them in the United States which is an incredibly mobile market, but companies should expect small increases in Canada as well. We are not immune to the driver shortage problem, it is just less acute.
So, are they out of touch or in touch?
They can be both. Two simultaneous movements are clashing: a) a price increase due to driver shortage on the part of the US Van Lines and b) cost control requirements on the part of companies PLUS the fact that there is always a mover who will move for less. This makes for quite the clash. We will see which side wins, but in large regard some companies will go with their tried and true relationships and other companies will leave this call up to their transferee, who will choose the cheapest mover and as we said, there is always one with a truck loan payment due around the corner. The question is will these Van Lines lose business due to their rate hikes and if they do, do they even care, because they have enough business to begin with.