DALLAS, Texas –The demise of some 5,823 US trucking companies and the voluntary parking of equipment by surviving fleets has created an opportunity for the industry going forward.
But it’s far from clear sailing, as there are more issues facing the industry than ever before, according to Tommy Hodges, chairman of the American Trucking Associations and trucking company Titan Transfer, who was speaking at the first annual Commercial Vehicle Outlook Conference.
Hodges said trucking bankruptcies removed more than 200,000 trucks from the system during the recession and fleets with more than 100 trucks parked, on average, 9.1% of their power units. That means about a million loads every week must find a new way to market.
“In one week’s time, there are more than one million loads across the land that have to be redistributed to the rest of the carriers,” Hodges said.
“We took so much capacity out of the marketplace that one million loads a week have to find a new way to get where they’re going.”
Hodges lauded the owners of surviving trucking companies for parking equipment during the downturn rather than hauling at a loss.
“One thing (the recession) did do is, if you are a trucker and haven’t changed your mindset about the value of an empty truck, then you’re behind the curve,” he said. “The value of an empty truck is going up exponentially. Shippers understand capacity and they understand freight on their dock that’s not moving.”
The industry is not yet in the clear though, Hodges warned, pointing to a number of important issues such as: cap-and-trade legislation; size and weight reform; an EOBR mandate; CSA 2010; highway reauthorization; political changes; hours-of-service changes; and a massive impending driver shortage.
“There are more balls in the air that will dramatically affect our industry than at any point I’ve ever seen,” he warned.
Hodges said a new cap-and-trade Bill has been introduced which could add 47 cents per gallon to the cost of producing diesel fuel. “It’s a dangerous, dangerous thing,” Hodges said of the legislation.
Hodges said sizes and weights are the most divisive issue facing the industry and he stressed pro- ductivity gains must be achieved.
“We have got to be broad-minded enough to understand that we’re going to have to address productivity issues or the American way of life is going to change,” he said. “We will have markets that will be underserved and when I say underserved, I mean they won’t have the things they’re accustomed to having on shelves when they go shopping.”
As for electronic on-board recorders, Hodges said “Get ready for them, they’re coming.” He said that once required, EOBRs may add about $1,750 to the cost of a new truck.
On CSA 2010, Hodges said drivers will hold all the cards. “I have another name for this, I call it the Free Agency for Drivers Bill,” said Hodges. “It’s going to play out in two major arenas. First is a driver who knows he’s got a good record, knows how to abide by the rules and knows his value to my company, he’ll say ‘look at my score, you’re going to pay me 50 cents/mile or I’ll go over to XYZ and they will.’ And the insurance company is going to have access to this information through you and if you have drivers in your system that don’t meet their standards, they’re not going to buy your risk.”
Hodges pointed out CSA 2010 is already effectively underway, because carriers operating in the US are already being scored.
“If you’re not working on your seven BASICS today, then get ready for an intervention tomorrow,” he warned.
Hodges also warned of political changes in Washington, referring to US President Barack Obama as an “urban president” who may not be in tune with transportation needs beyond public transit.
Hodges also seemed resigned to the fact US hours-of-service rules will change in the coming months.
“The hours-of-service rewrite is a political football and it will have nothing to do with good science,” he predicted. “It’s a political football that is going to get passed over our heads. There’s a good possibility we will lose one to two hours of driving time and there’s a strong possibility we’ll lose the 34-hour restart.” (Lobby groups are pushing for a 48-hour restart, Hodges said).
That could hammer truck productivity by 18-19%, Hodges pointed out.
“We’re going to have to buy 18-19% more trucks if they were to take two hours off, it’s a huge deal.”