Subscribe to our free, weekly email newsletter!

2011 State of Logistics: Truckload

Tight capacity, more regulation, major concerns
By John D. Schulz, Contributing Editor
July 01, 2011

The truckload (TL) sector, which supplies some 95 percent of capacity in the $403 billion for-hire intercity trucking industry, is enjoying a renaissance after three years of financial doldrums.

Profitability is up at the major truckload carriers. When analysts consider top TL carriers among the publicly held operations, names like Swift Transportation, Werner Enterprises, U.S. Xpress, J.B. Hunt, Knight Transportation, and Celadon Group often top their recommendations.

“The overall health of the truckload sector has improved year over year,” says Mark Rourke, president of truckload services for privately held Schneider National. “We’re continuing to expand our regional truckload business footprint as well as bring new transportation solutions to the marketplace.”

As the latest data shows, the TL carriers have enjoyed a higher weighted-average operating margin for the most recent quarters than their colleagues in the less-than-truckload sector. Overall, TL carriers have enjoyed a 4.5 percent average increase in margins in the first quarter of 2011, compared with a 2.3 percent decline among LTL carriers surveyed by SJ Consulting, a leading trucking analyst firm.

Visit the 2011 Quest for Quatlity Winners


home page

“Why is that? They all use the same trucks. They all pay the same for fuel. They all use the same drivers,” remarks Satish Jindel, principal of the firm. The answer lies in the nimbleness of the non-union TL carriers. They’re able to shed capacity faster than LTL carriers, which often have complex hub-and-spoke terminal networks requiring significantly more overhead than TL carriers, which go point-to-point with their loads.

But even with those inherent advantages, many TL carriers are concerned about possible threats to capacity and costs of doing business.

An increase in container ship transloading also could affect domestic capacity, according to some intermodal experts and analysts. A global container shortage is causing some ocean carriers to transload an increasing percentage of their shipments at the ports of Long Beach and Los Angeles.

This, in turn, is causing a spike in long-haul, over-the-road freight demand for TL carriers out of Southern California. This would in turn put further pressure on capacity, which is excellent for major players in the TL market such as Hunt, Swift, and Celadon, but could have an adverse effect on overall TL capacity, executives say privately.

Then there’s the unclear regulatory environment for trucking. The Obama administration, through its Federal Motor Carrier Safety Administration, is proposing what could be a double whammy through stricter enforcement of driver standards and a potential reduction of driving hours for those drivers who do survive the tougher government scrutiny.
The government’s Compliance, Safety, Accountability (CSA) program could disqualify as many as 150,000 drivers. Potentially, a one-hour reduction in driving limits could exacerbate capacity. Until that rule is proposed later this year, the entire TL sector is on pins and needles.

“Regulations continue to provide uncertainty for carriers and shippers alike,” Schneider’s Rourke says. “The effects of CSA on driver capacity are already being felt.”

About the Author

John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Global express delivery and logistics services provider DHL introduced a new flight geared towards Michigan-based importers and exporters out of the Detroit Metropolitan Airport.

With the sinking of the El Faro last week, and the resulting deaths of its entire crew of 33, the viability of the Jones Act is again being called into question.

“We’re pleased with the ongoing buildup of import cargo,” said Maritime Director John Driscoll. “Our job now is to maintain the momentum.”

UPS today announced it has made a significant expansion to its UPS Worldwide Express service by adding more than 41,000 global postal codes, which it said will result in earlier guaranteed-delivery options for shippers that only previously had end-of-day guarantees.

Students who excel in a semester’s worth of graduate-level classes online and who pass a comprehensive proctored exam can earn an MITx MicroMaster’s credential.


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA