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

NATIONAL LTL | REGIONAL LTL | TRUCKLOAD | RAIL
OCEAN CARRIERS | 3PL | AIR CARRIERS | FREIGHT FORWARDERS


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

image
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

In the third-party logistics (3PL) sector, the ongoing trend of merger and acquisition (M&A) activity never seems to take a break. That is apparent in recent weeks alone, with XPO Logistics recent acquisition of Norbert Dentressangle for $3.53 billion, Echo Global Logistics scooping up Command Transportation for $420 million, and Kuehne+Nagel buying ReTrans for an undisclosed sum.

During this webcast attendees will learn about technology that is delivering real-time tracking on freight and putting an end to the all too common question of “Where’s My Brokered Load?”. Whether you’re a broker, 3PL, shipper, or carrier, find out how you can gain automated, TMS-integrated visibility on all your shipments.

FedEx recently took another step in its plans to acquire Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which it announced in early April. The company said it has “submitted the required filing to the European Commission to obtain regulatory clearance in connection with the intended recommended public cash offer all issued and outstanding ordinary shares in the capital of TNT Express.”

The American Trucking Associations last week praised Senator Deb Fischer (R-Neb.) for her bill that takes some positive steps towards alleviating the current environment regarding the truck driver shortage.

Global third-party logistics (3PL) services provider Kuehne+Nagel (KN) said this week it has entered into an agreement to acquire ReTrans Inc., a Memphis-based provider of multimodal transportation services.

Comments

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