As 2019 quickly approaches, here are five things you should be aware of in the trucking industry for the upcoming year.
According to the American Trucking Associations, the industry is short nearly 63,000 drivers with that number expanding to over 270,000 for the entire Class 8 truck market according to FTR Transportation Intelligence.(1,2) Capacity tightened this year with enforcement of the ELD mandate in April and is expected to worsen by 2020 when carriers must comply with the online driver drug testing database.(3) Within the next 10 years, the industry is expected to be short 890,000 drivers.(4)
It's no secret that trucking costs are rising, but there are several factors causing the increases. The biggest ones are fuel, labor, pay, equipment, and healthcare, all of which have seen jumps in recent years. Because all of these areas are climbing when it comes to costs, some companies are really struggling to stay afloat. It's hurting businesses, the trucking industry as a whole, and the people who rely on having their goods shipped across the city or across the country. No matter how far a truck needs to travel, it has to be cost effective for it to do so or it won't be going anywhere.
The American Trucking Association (ATA) recently released its projections for the industry, stating it to be strong for at least the next 18 months. The chief economist at the ATA, Bob Costello, noted that three major factors have come together to provide a solid future for the freight industry: strong online sales growth, low unemployment and booming housing starts. In fact, Costello told a group of investors via a conference call that not since 2010, when the country was recovering from the recession, have these factors come together to provide a concrete environment.
Freight rates continue their climb north in a year that has already shown a 28% increase in trucking spot quotes from Jan. 1st through March 23rd, according to a Bloomberg report. But the higher prices in freight transportation (and ultimately consumer goods) should not be unexpected. The northeast, for example, was embraced with three Nor’easters within the first two weeks of March, with seven of those states getting hammered with over 20 inches of snow, shutting down roads and hampering businesses.
Driver Shortage: Driver capacity is at its lowest since 2005, with a ratio of one truck being available for every 12 loads so far this year, according to DAT Solutions. (1) With the ELD mandate taking effect last month, drivers retiring and the struggle to recruit the younger generation, as well as government regulations such as hours-of-service, the American Trucking Associates reported that the industry will need nearly 900,000 additional drivers to satisfy demand. (2) This capacity crunch has caused many shippers to either delay shipments or pay more to get their freight moved.
Natural disasters, driver shortage, a growing economy, higher input costs, increasing pay for qualified drivers…all factors contributing to the highest spot quotes the industry has seen in over two years with van rates on the truckload spot quote market reaching a national average of $1.94 per mile and reefer rates increasing from $2.19 to $2.22 per mile week-over-week, according to DAT Trendlines.