TORONTO, Ont. — Expectations are building for a strong and profitable trucking environment in 2018. Freight volumes are strengthening, rates are improving, and the U.S. and Canadian economies continue to grow.
Business inventories are better balanced than last year, and the U.S. electronic logging device (ELD) mandate is expected to remove capacity from the marketplace.
All these indicators point towards a strong year for the trucking industry.
Freight demand strengthening
U.S. for-hire truck tonnage increased 3.3% in October, and was up 9.9% year-over-year, according to the For-Hire Truck Tonnage Index from the American Trucking Associations (ATA).
That marked the largest year-over-year increase since December 2013, ATA reports. Year-to-date through 10 months, the index is up 3.1% compared to the same period last year.
Truck tonnage in September declined a revised 1.9% from the previous month.
“Continued improvement in truck tonnage reflects a much stronger freight market,” said ATA chief economist Bob Costello. “This strength is the result of several factors, including consumption, factory output, construction and improved inventory levels throughout the supply chain. Additionally, the 6.7% rise in tonnage over the last four months suggests to me that retailers are expecting a good holiday spending season.”
TransCore Link Logistics reported 57% year-over-year growth in spot market load volumes posted in the month of October. When compared to the previous nine months, October was well above the average annual growth rate of 43%.
Compared to the previous month, load volumes went up 3%. October also marked the fifth consecutive month of record-setting load volumes, TransCore reported.
How about rates?
Tightening capacity is putting upward pressure on rates, and carriers are beginning to successfully ramp up pricing. Publicly traded Titanium Transportation Group told analysts on a conference call to discuss Q3 earnings, that shippers are beginning to accept increases.
“(Shippers) are very aware the industry is looking for increases today,” said chief operating officer Marilyn Daniel, noting the cost of obtaining quality drivers is increasing. She noted a 5-10% increase in rates could be seen next year. This could also benefit drivers. Titanium announced a pay increase for its company drivers and owner-operators.
The coming electronic logging device (ELD) mandate in the U.S., set to take effect Dec. 18, could remove capacity and put more upward pressure on rates, CEO Ted Daniel added, as some fleets will have trouble adapting.
“It’s not the cost of the ELD per se,” he explained. “It’s more in terms of your ability to plan alongside shippers, to be a real partner with shippers. We have been going through that learning curve over the last one or two years.”
ELDs and weed
The trucking industry in 2018 will have to adjust to two major regulations – the U.S. electronic logging device mandate, and the legalization of marijuana in Canada, slated to hit next July.
The Ontario Trucking Association (OTA) has raised concerns about how pot legalization will affect the trucking industry. It is calling for a zero-tolerance approach to enforcement for truck drivers.
“Ontario truck drivers have an exemplary safety record and are statistically far less likely to be driving while impaired than all other vehicle drivers – and we’d like to keep it that way,” said OTA president Stephen Laskowski. “Legalization will carry greater risks for motor carriers and we are asking for the necessary tools to mitigate that risk.”
OTA endorses a strict approach that ensures all six classes of commercial driver’s licences and G class drivers operating commercial vehicles are included in a zero-tolerance policy. OTA also asked the government to follow the U.S. approach of not differentiating between recreational and medical use of marijuana among drivers.
“If the true goal is public safety for all road users then it shouldn’t matter whether it’s being used for recreational or medicinal purposes,” said Laskowski.
“Commercial drivers are already held to the highest standards of safety and this shouldn’t be any different. It is imperative employers be allowed to apply workplace measures that will mitigate additional safety risks to employees and the public that legalized marijuana could bring. It is essential Ontario and Canada provide employers legislative and regulatory backing for being proactive and doing the right thing.”
The Canadian Trucking Alliance (CTA), meanwhile, is calling for greater accountability of doctors prescribing medical marijuana licences.
In a letter to Health Canada, CTA argued the government should not make exceptions for commercial truck drivers using medicinal marijuana while on the job and suggested there should be more oversight on the medical community for prescribing the drug to workers in safety sensitive positions.
“As we understand it, many prescribing physicians are unaware of what their patients do for a living,” said Laskowski. “In turn, some people who are medically authorized to use marijuana might believe this somehow exempts them from impaired driving laws. Obviously in the case of safety sensitive work, such as trucking which shares its workplace with the motoring public, this can be of serious concern.”
As for ELDs, as of press time it was still unclear when Canada will adopt a mandate requiring their use. David Carruth, CEO at One For Freight, said during a webinar hosted by Omnitracs, that Canada shouldn’t drag its feet.
“All of the data is there for us to make the right decision,” he said. “All the case studies have been done…My question is, why would we not want to do this and do this sooner rather than later?”
He also said the only resistance will come from “companies that do not have a commitment to safety, and do not have a commitment to overall compliance.”
But Laskowski said Canada will not likely have fully implemented an ELD mandate of its own until the end of 2019. The proposed rule first has to be published in Canada Gazette 1, which Laskowski said will hopefully be before the end of the year. Then, a 60-day comment period will likely take place, followed by another three to five months of reviewing those comments. The final rule is likely to be published in Canada Gazette 2, sometime in mid-2018 “optimistically,” noted Laskowski, with hard enforcement unlikely to begin before late 2019.
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