Trucking Capacity in Decline
In 2013 more than 5,000 motor carrier companies parked their trucks and closed the door. It is estimated that thousands more may fall to the same fate this year. Over 400,000 trucks have been taken off the road in recent years as a result of these closures. Some blame fuel prices, labor prices, costs of new regulations, decreased driver hours, insurance costs and host of other contributing factors. Daily there are about 8,000 fewer trucks than are needed to move freight in the US. This shortage is across the board, while some segments, like flatbed have taken the losses in higher proportion than the tanker truck fleets. The result is the same: Overall capacity no longer can meet demand and industry experts expect it to get worse.
Paramount Freight has been watching this issue closely. This week’s blog will look at the causes of the current shortage of trucking capacity and what we are doing to keep our customers freight moving on time.
It is no secret that baby boomers, born from the early 40’s to the early 60’s make up the largest numbers of class A drivers. This demographic has begun approaching retirement age. These veteran drivers are hanging their CB radios up in record numbers. Help-wanted ads in local newspapers are dominated by the 800- numbers of trucking companies looking for CDL holders. On the Internet, anyone who visits a few trucking-related pages soon will find banner ads by driver-desperate carriers appearing next to a favorite cat video. The quarterly earnings reports of publicly traded trucking companies caution investors about the high cost and potential dangers of the growing driver shortage. This alone may be the largest contributing factor to the declining numbers of carriers. Recruiting and maintaining drivers to operate the fleets.
Bob Costello of the ATA said ” While the industry is not replacing trucks, other factors are also contributing to future trucking capacity crunch problems, among them reduction in productivity due to electronic logging devices, fewer qualified drivers and increased demand for trucks and less supply. The driver situation could become a big problem.” Costello continues “Turnover is a good reflection of the driver market and it is getting close to hitting 100% in large truckload fleets. The turnover rate in LTL is currently 15% while it’s at 82% for small truckload carriers. There are a lot of costs associated with that amount of turnover.”
Decreased Equipment Investment
Economic pressures have forced equipment shortages too, adding to shrinking production capacity. Many carriers held onto tractors and trailers longer than they normally would because they could not afford to replace them. Carriers who have survived the economic conditions are now needed to replace aging equipment. For carriers who are in a position to replace older equipment, the increased demand for new tractors and trailers has created additional problems. Increased demand for tractors and trailers have pushed prices up and rigs are taking longer than expected for delivery. Aging equipment comes with ever increasing maintenance costs to keep wheels on the road.
Compliance, Safety, Accountability (CSA) rules went into effect in December of 2010. The CSA was designed to make the roads safer by accurately tracking trucking company performance. Not only did the CSA track carrier data but also tracked the performance of individual drivers. These regulations came with costs to the carriers who were forced to adequately maintain and report the collected data. Additionally the New Hours of Service Rules, specifically the new 34-hour restart provision has added to the capacity crunch by taking drivers off the road. The new HOS rules have an impact on shippers, including increased prices, particularly those who rely on early morning deliveries. The new 30-minute driver rest break is proving to have a significant impact on productivity. There remains a possible safety risk by drivers who feel compelled to make up for lost time after the mandated mid-shift pause. LTL Carriers with tight scheduled routes with multiple deliveries will feel these effects more than long haul and over-the-road operators.
A trucking capacity crunch is palpable and is a drain on shippers’ who are tasked with not only being efficient, having to save money, but also get freight to their customers on time. Paramount Freight Systems is working hand in hand with our customers to deal with the industry capacity issues. We have found that when the customer better understands our limits and we better understand their needs, we can work to find a solution that moves freight on time. Building relationships with our shippers allows us to deliver great service in spite of the obstacles of regulations, driver shortages and other capacity issues. Trucking companies and shippers who work together will find profitable results in the midst of tough times in the industry.
Paramount Freight Systems understands that today’s trucking industry is constantly changing. We pride ourselves in our relationships with shippers. If you are looking for shipping solutions we would love to hear from you. You can contact us here on our website. Driver’s if you are looking for a 100% Owner Operators and Lease Purchasers Fleet where your time on the road is profitable, we are seeking additional drivers to lease on with us. Call us at 1-800-799-5144 if you are ready to join a fleet where the customer is #1 and your time is valued. Like us on Facebook and follow us on Twitter to stay up-to-date on driver and shipping news.