Generally speaking, the trucking industry seems to be humming along at a brisk pace right now, with healthy freight volumes leading to strong truck order activity and even reports that rate increases are being successfully passed along, or soon will be. The laws of supply and demand are clearly on the side of those with the trucks and drivers to move freight.
I dialed in to the most recent State of Freight Webinar hosted by industry forecaster FTR. These Webinars are always time well spent. During last week’s Webinar, FTR president Eric Starks said there are three things fleet managers need to be watching: the economy; freight volumes; and the re-regulation of the trucking industry. They’re all interconnected.
The US economy is doing well. Even though GDP growth, at 2.3% (for the final sales component), has been modest, it is being outpaced by the goods-producing sector, which is growing at a robust 6% and contributing to strong freight demand. Spot market rates have leveled off after a period of strong growth, and this is usually followed by increases to contract rates, Eric added. “I think we’re in that point right now. The spot market is settling down and contract rates are starting to move higher,” he said.
FTR continues to sound alarms about the regulatory drag brought on by the re-regulation of the trucking industry. “There are a large number of regulations coming into play that we anticipate to happen between 2016 and 2018,” Eric said. “We’re seeing a major run-up within this environment that would suggest it will be very difficult to hire drivers, or we’ll see losses in productivity within the industry so they’re going to have to hire new drivers. It’s going to be a problem for some time.”
To this end, he said greater collaboration between shippers and carriers is needed to free up capacity. “Shippers are going to have to work with truck carriers to create more capacity, to free up drivers and equipment,” Starks said. “That’s the real area where we could see some productivity enhancements.” You can read a full report from this Webinar here, or visit FTRintel.com for information on the State of Freight Webinars and FTR’s upcoming conference, which will explore each of these issues in far more detail.
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at email@example.com or follow him on Twitter at @JamesMenzies. All posts by James Menzies