Loadings growth slowing, rates on the decline: FTR

BLOOMINGTON, Ind. – Trucking rates are expected to decrease about 7% this year, primarily driven by the spot market, with contract rates flat to down 1%.

That’s the projection from industry forecaster FTR, which held a State of Freight webinar focused on key issues in transportation June 13. Avery Vise, vice-president of trucking, said the trucking market is softening, with significantly lower loadings growth this year and into 2020 than seen in 2017-2018.

Loadings were up 3.4% in 2018, which is expected to pull back to an increase of 1.6% this year, Vise said. The dry van outlook is flat, while refrigerated and bulk loadings should offset some of that weakness.

“Most of the economic indicators tied to freight are slowing,” Vise said.

Truck utilization is weakening, but remains higher than the historical average.

“The trend is for softer utilization for the rest of the year,” said Vise.

The webinar explored three regulatory issues that will affect trucking. First, was the full transition to electronic logging devices (ELDs) in the U.S. in mid-December 2019. Fleets using automatic on-board recording devices (AOBRDs) were grandfathered in until 2019 when the ELD mandate was passed in 2017. But Vise isn’t expecting a major impact as the grandfather period comes to an end.

“The productivity hit we had and the disruption we had was almost certainly greater a year ago than what we will see from this,” he said, adding most AOBRDs will be updated to meet the ELD standard through software updates, and not hardware replacements.

An FTR analysis shows there are still carriers not complying with the ELD mandate, as there are about 500 violations a week reported by the Federal Motor Carrier Safety Administration (FMCSA).

“We shouldn’t kid ourselves that ELDs totally eliminated non-compliance with hours-of-service rules,” he said.

Another regulation to watch for, is the drug-and-alcohol clearinghouse coming into effect in January, 2020. It will track drivers who have failed, or refused to take, drug tests. But Vise doesn’t expect it to strip a lot of labor from the market, as fewer than 1% of drug tests are currently failed.

An FTR analysis predicted only about 14,000 drivers will be taken off the roads through the clearinghouse. That is, however, unless carriers are currently not disclosing failed tests.

“We are assuming employers are fully complying with the regulations today,” said Vise. “Rules require motor carriers to disclose positive test results or refusals to prospective future employers when asked in background checks. To the extent that isn’t happening, the clearinghouse would correct that and there could be a much bigger impact.”

That said, the increasingly widespread legalization of marijuana at the state level could have an impact on drug test failure rates, Vise noted.

“It could become a serious issue for trucking, but is not directly related to the clearinghouse,” he said.

Another regulatory issue that could affect trucking capacity and labor is the move towards mandatory training for entry-level drivers, something that’s been widely rolled out in Canada in recent months. The U.S. is looking to create standards by next February. But again, Vise isn’t expecting a huge impact.

“The rules frankly aren’t that stringent for new training and the FMCSA estimates the vast majority of CDL training programs right now could qualify,” he said. FTR anticipates the training requirements to have a “negligible impact on the driver supply.”

Reforms to U.S. hours-of-service are in the works, and they will have an impact on fleets and drivers. Four areas are under consideration: a slightly longer workday for shorthaul operators; elimination of the mandatory 30-minute break; more flexibility in adverse driving conditions; and restoring full flexibility to how drivers manage their sleeper berth time. But it’ll be quite some time before these changes are in effect, Vise warned.

“Every hours-of-service rule we’ve had since 2003 has been challenged in court, and several have actually been blocked, so this could take quite a while,” he concluded.

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James Menzies is editorial director of Today's Trucking and TruckNews.com. He has been covering the Canadian trucking industry for more than 24 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

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