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Explaining the Increase in Car Shipping Costs (Podcast)

Explaining the Increase in Car Shipping Costs (Podcast)

Domenic Hooven, Account Manager at Preowned Auto Logistics, talks with John Maher about car shipping costs. He explains the factors that increased shipping costs in 2021, and he makes predictions about 2022.

John Maher: Hi, I’m John Maher. I’m here today with Domenic Hooven, Account Manager at Preowned Auto Logistics, a car shipping and auto transport and logistics company in Massachusetts. And our topic today is the increase in car shipping costs. Welcome, Domenic.

Domenic Hooven: Hey, John. Appreciate you having me on. I’m excited to talk about the things that are going on right now in the trucking industry and specifically, the auto shipping industry and hopefully, clarify some things for some folks that are going on right now.

What Factors Affect Shipping Costs?

John: Absolutely. Yeah. So what are some of the factors that have impacted the car shipping costs this year, which seem to have gone up a little bit recently?

Domenic: Yeah. So there’s a few different factors that are kind of working against the auto shipping industry right now. First and foremost, I feel like everyone’s mind automatically goes to the gas prices. Now, where that holds true, it’s not the only factor affecting the industry as a whole right now. Yes, the gas price affects the price of shipping a vehicle, especially when you’re spanning many miles. In our case, it’s Massachusetts to Florida.

But another really big factor is the shortage of truck drivers nationwide. I mean, I’m sure if you see the news, they can’t get truck drivers to bring cargo out of the ports. Well, we’re certainly not immune to those issues in the car shipping industry as well.

I was reading somewhere that the U.S. has a quarter million driver shortage. So there’s, right off the bat, the supply of drivers is down and the demand is high. So right then and there, the price is going to increase. And there’s a lot more people shipping their vehicles right now. That’s another factor. We’ve seen so much more volume than in years past. And these drivers, they’re going to go where the money is. They’re going to fill their load and get as much as they can for it on that load. It’s really a price competitive market, but to receive the best service in this industry and get things moved promptly, unfortunately, it’s much more expensive than it was in the past.

How Are Gas Prices Right Now?

John: Right. Right. So obviously, like you said, the increase in gas prices is one thing. The driver shortage, where you have to pay drivers more, maybe, in order to get somebody to move the cars, that’s another factor. Let’s talk about each one of those things a little bit more.

In terms of gas prices, and I looked the other day and nationwide, we’re in the middle of December of 2021 here, when we’re talking, and the gas price is now up to about $3.34 a gallon on average in the United States. I know that you generally deal mostly with shipping from the Northeast down to Florida and back. Is that about the same average gas price on the East Coast or is it even more?

Domenic: Oh, yeah. I mean, personally, when I go to the pump, I see high threes or even low fours. We certainly haven’t seen a hike in gas like this in quite some time. And obviously, we have customers that have us ship their car year after year and they see the price of gas increase by a certain percentage. But other external factors have made us increase our price by even a larger percentage, because it’s all these things stacked on top of each other.

And they don’t see the correlation, other than the gas prices. So it’s certainly one of those things, but I wouldn’t even say it’s the biggest issue. I would lean more towards the shortage of drivers and availability causing the price to go up more so than gas. But yeah, it certainly does have a bearing on us getting cars shipped as well.

What Is Causing the Driver Shortage?

John: Right. Yeah. And like you said, it’s a direct thing that people can obviously see. Okay, if the price of gas goes up, you’re going to have to make that money back somehow. So you have to increase the price of the car shipping, because it’s just a certain number of miles. It’s a certain number of gallons of gas that the truck is using. And you’re going to have to pass that on to the consumers. So that’s an obvious one. Talk a little bit more about that driver shortage. And where do you think that that’s coming from? Did it happen because of COVID? Or are there other factors that are leading to that driver shortage?

Domenic: Yeah. We were getting things moved very quickly at the beginning of the pandemic, for some reason. It seemed like it was almost flipped. It felt like the market for drivers was very saturated. There were a lot of drivers. Things were getting moved quickly and cheaply. And now, for whatever reason, maybe drivers saw that the market was too competitive and they got out of hauling cars or they may have gone into hauling some other sort of freight, that may hold true.

All I can say is that I can see kind of this flip, where it’s definitely more difficult to find a driver to keep in our network, keep their truck full and have them work with us consistently without venturing out and try to find onesie-twosie here just to make an extra buck or two.

We like to establish relationships with drivers so that we can keep their trucks full. But sometimes, they see it more beneficial to go and to have five different pickups, five different drop offs. So in the past, we were able to get drivers at a great price, because they like the convenience of the one-pick, one-drop. Now, we’re seeing a little bit of a change on how the market is working right now.

Other Causes for the Increase in Car Shipping Costs

John: Okay. And then you mentioned also that more cars are being shipped now. I think there’s probably a few factors. I mean, a lot of people are buying cars online now. I think that’s probably a major industry shift. And then, a lot more people are working remotely now as well. And so maybe that sort of figures into it as well.

Then there’s also a lot of people getting older and retiring. Maybe they’re moving and trying to save some money by relocating to different places, whether it’s moving from the North down to the South, or from the East Coast to the Southwest or something like that. Do you agree with all of those things? And are there other reasons that you think that there’s been a big increase in the number of cars that are being shipped?

Domenic: Yeah. Well, speaking from personal experience, just as there’s a shortage of truck drivers, there’s also a shortage of cars. And I’ve had so many new customers that I’ve spoken to that have never shipped a car before. The common practice was for them to go down to Florida and rent a car for the three months that they’re there.

And if they can even get a rental car, it’s more expensive than shipping their own vehicle down. So we’re seeing this whole thing… people finding new avenues of traveling seasonally, they’re seeing car shipping as a more viable option than renting a car now. That also has an effect on why more people are shipping vehicles.

Like you said, to your point about the people working remotely now, again, based on personal experience, I know a few people that reached out to me to move their car, because they said, “I work remotely. I can live wherever I want now.” And then we have folks reaching out to us, it’s corporate relocation, in some cases, but we’re seeing less of that and more of people just living where they want to now, because they’re not really restricted to where they have to be for their job.

John: Right. Why not live in Southern California or something like that, where the weather’s nice all the time, instead of in the Northeast where we get snow in the winter, etc.? A lot more people are doing that.

Domenic: Yeah. Yeah, for sure.

How Can People Reduce Car Shipping Costs?

John: So what are some ways, given that the price of shipping a car has increased this year, if people still want to ship a car, but they are trying to kind of cut costs as much as possible, what are some ways that they might be able to get the best deal or reduce their car shipping costs?

Domenic: So I would say the best way to reduce costs is to use our terminals. I think that is a great way to reduce costs. So I know it’s very convenient for folks to have their cars picked up at their residence and then sent to their residence in Florida. And that’s just speaking about that example, because we ship a lot of cars from Massachusetts to Florida. So I think the most vital option is to have a home base, like we do. We get folks to drop their cars off here. And then they’re flexible as far as picking it up at a terminal down in Florida. So it does provide convenience for drivers. Like I said earlier, it’s the one-pick, one-drop or one-pick, couple of drops. And typically, we’re able to get the cars shipped cheaper for that. And then we can pass those savings on to our customers.

But that’s not always the best choice for our customers. Sometimes they need door-to-door service. But I think that’s a great way to cut down on cost is to utilize those terminals. And, in our case, they’re here in Massachusetts and in Florida. But just in general, finding some sort of terminal anywhere can save money, where you say you’re shipping from Massachusetts to California, we’re trying to expand our terminal network, also. Finding any way we possibly can to make shipping a car more economical for our customers.

Can You Save Money With Open Transport?

John: Right. And then obviously, there’s your choice of how you want to ship your car, whether it’s on an open carrier or in a closed transport. Do you see some people maybe choosing that open carrier more often, now, because it’s a little less expensive than doing the closed transport?

Domenic: Oh, yeah. Yeah. And we talked about how drivers are few and far between. For closed carriers, that holds true even more so. They’re requiring a premium to get a vehicle shipped, because there’s even less of a supply for enclosed carriers. So that gap between shipping a car open and enclosed has widened pretty significantly from last year to this year alone.

Some people, they’re very particular about their vehicle and they have the money and they’re willing to invest it in shipping it enclosed and that’s great. We’re more than happy to help them with that. But I recommend that for Mercedes, Audi’s, or very nice cars, but we also ship plenty of those cars open with no issues. So I tend to steer my customers towards shipping open just if they have a time constraint and they want it moved quickly. I usually advise my customers that it’s going to move quicker on an open carrier and it’s less expensive.

Are Car Shipping Costs Going to Increase in 2022?

John: So in terms of car shipping costs, do you anticipate anything changing in 2022? Do you see where things are going?

Domenic: I hope so. I really hope it’s going to change. Where we can see an immediate change will probably be the gas prices. But time will tell as far as the shortage of drivers. Availability of drivers is really everything. I think it’s the single most driving factor of the price.

So I truly believe that I think the gas prices will get better, so we might see some sort of upside next year. But as far as the shortage, I guess, only time will tell. I’m optimistic, though. I think this industry is forever growing. And we’re going to find ways to make things more economical for our customers.

Contact PAL About Shipping Your Vehicle

John: All right. Well, that’s really great information, Domenic. Thanks again for speaking with me today.

Domenic: Of course. Thanks for having me on, John. Appreciate it.

John: And for more information, or to request a quote for your auto shipping needs, visit the website at PreownedAutoLogistics.com or call 877-542-1955. (silence)