It’s true that 2015 has been a year of opportunities for trucking. But just as we’re talking about an industry hitting the $700 billion revenue target, headwinds remain.
Freight demand is higher than ever, yet trucking is facing challenges on several fronts. Increased recruiting expenses, truck purchase and maintenance costs, regulatory burdens, and lost productivity are all stressing forces on fleets. Today we’re going to take a closer look at each area trucking needs to focus on as we move into the latter half of the year.
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Recruiting New People
We’ve been talking about it nearly non-stop, and there’s a reason why. The truck driver shortage is real. According to the most recent numbers from the American Trucking Association (ATA), the nation needs roughly 96,000 truck drivers per year, just to keep up with demand.
If these continue as they are now, expect that number to swell to 240,000 by 2022. While there are a number of factors contributing to the shortage, overall it remains a vexing problem.
Budgets for fleet recruiting departments have also risen. As the employment situation begins to get direr, carriers are increasing their sign-on bonuses and mileage pay as they struggle to put truck drivers in a cab.
Regulatory Burdens
Fiscal pressures are increased when regulations tighten. Fleets have had to deal with a number of changes in the Hours-of-Service (HOS) model. Each change brings a shift in productivity and an adjustment to the schedule.
Several other regulatory changes might also further constrain trucking. The Environmental Protection Agency (EPA) and National Highway Transportation Safety Administration (NHTSA) are set to release new standards aimed at reducing fuel consumption in Class 8 trucks by 29 percent, between the 2014 and 2018 model years.
This change could result in the cost of buying and maintaining a new rig increasing exponentially. As things get more complicated under the hood, expect them to get more complicated in the wallet.
Lost Productivity
As HOS and other regulations have worked their way through the system, driver and asset productivity have fallen. After all, fleets must view both their equipment and their truck drivers’ time as perishable commodities.
Although HOS has been placed on ice by a Republican Congress, like any high-investment, low-margin machine, big rigs and trailers need to be kept in continual productive motion. In order to keep the bottom line from feeling any negative impacts, fleet managers are segmenting their drivers’ time.
Another major productivity problem is in wait time. As shippers get squeezed due to a lack of capacity, truck drivers often find themselves spending a disproportionate amount of time waiting at loading docks.
Rail Problems
Trucking isn’t the only industry grappling with a rapid increase in freight volumes. Service recovery on the rail lines has also stalled. Intermodal, carload, and grain movements have all seen year-over-year growth in the double digits.
While some may be quick to think the problem lies in the rail itself, this isn’t so. Railroads continued to see heavy investment through the recession, and today the investment activity going into maintaining the system is still at record levels.
The problem with railroads is one trucking is quite familiar with. There simply aren’t enough crew members out there to fill an employment void. Additionally, new EPA regulations mean there will be only one locomotive manufacturer until 2017, which could squeeze supply.
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Capacity Crisis
The fact is, the market is at a capacity tipping point. The strength of demand doesn’t look to ease anytime soon. At best, seasonal peaks and/or unknown events could cause series of capacity crises.
Furthermore, contract rates are moving up. Total shipping costs are expected to rise further in 2016. To add insult to injury, another set of regulations is likely to hit in 2016, which could further muddy the picture.
It’s no secret that despite strong gains, trucking has some challenges to face. How well it’s able to meet those challenges depends on the actions of a number of people, from fleet managers to politicians. What the future holds is anybody’s guess.
from Quick Transport Solutions Trucking Blog http://ift.tt/1k6mZrd
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