Truckload capacity still remains tight despite some slight signs of improvement

While truckload capacity may not be as tight as it was a year ago at this time, things appear to continue to be more challenging than not, according to industry stakeholders.

There are certainly many reasons behind that to be sure. A year ago at this time, truckload capacity was viewed by most people as the tightest it has ever been, or something close to that anyhow. There was an incredibly difficult winter to contend with, which was the case again again this year, and the driver shortage was rearing its ugly head, too, much like it still is now.

That said, there are some key common themes there, coupled with the myriad industry regulations dinting available capacity, too.

Even with an improving economy and truck equipment orders seeing some traction, the overall truckload capacity outlook, according to Eric Starks, president of freight transportation forecasting firm, is that things remain fairly tight, even though they have eased back some since late 2014.

“Some of that is artificial only because of the rollback of the hours-of-service (HOS) restart regulations, which essentially took some of the bite out.  But it is still pretty tight, given the driver shortage still a problem, too. And there are also some indicators out there suggesting the economy has hit a soft patch, but when you look at the freight market and capacity, you don’t necessarily see those things. You see some of it but not to the level that you would expect, given what is happening in the broader economy.”

As for the soft patches impacting the economy, Starks cited things like slowing manufacturing growth in recent months, a flattening in the housing market, and contraction in consumer spending, which has been evident in retail sales numbers.

Despite these myriad economic challenges, Starks maintains that fleets and carriers are still seeing decent good freight growth, which should be viewed as a positive at a time when things remain relatively tight from a truckload capacity standpoint.

Derek Leathers, President and Chief Operating Officer of Werner Enterprises, explained that on an aggregate basis capacity has stayed flat after having decreased significantly during the recession.

“I think in its trough it was off somewhere between 16-to-19 percent, and right now it is off closer to 14-to-15 percent compared to its peak back in 2007,” he said. “If you look at it, those trucks are going to be very hard to bring back on line-haul. It is much harder to drive a truck now than it was back then, and trucks are much more expensive now, too, and the returns in the industry are still pretty low. I think [carriers] will work to meet their customers’ needs and bring things like brokerage and intermodal to the table. But the idea of adding net trucks will be something people will be fairly cautious about, I think.”

From a shipper’s perspective, the ease or difficulty of securing capacity can often be directly tied to a shipper’s specific industry. 

Candace Holowicki, director of global transportation and logistics at TriMas Corp., a diversified designer, manufacturer, and distributor of engineered and applied products serving a variety of industrial, commercial, and consumer end markets worldwide, explained that TriMas has not had a ton of trouble securing truckload capacity, but at that same time noted things have been somewhat spotty.

“We have a DC in South Bend, Indiana, which is where I usually see capacity problems first,” she explained. “There is a lot of Midwest distribution in that area, and it is in close proximity to the Chicago rail hubs, which can be challenging on the truckload side, but it has not been that bad yet this year. My concern is that we need to be ready in case there is a glitch (that can negatively impact capacity), which we dealt with a bit in regards to the West Coast port congestion earlier this year. Shippers need to continually focus on augmenting relations with carriers and be ready for any hiccups and plan things out ahead of time rather that waiting for the day when a truck is needed, which is too late.”

The impact of federal trucking regulations continues to crimp operations and available capacity, with an expectation it could make things worse long-term, noted Holowicki.

The reason, she explained, is that many regulations impacting trucking are not fully implemented, and things could get worse before they get better on that front.

“As more of these regulations become part of our daily life, I am concerned where that is going to take us,” she said. “Supply and demand are so closely matched right now that there is no room for one glitch which could put things into a tailspin. Other things like the West Coast port situation and bad weather proved that, too. Carriers cannot add capacity, because they cannot add drivers, and when they can they are dealing with these different regulations, including ones directly impacting drivers’ lifestyles. If we are going to be pushing more drivers out of the industry, where is that going to leave us? If we have a problem with six inches of snow in South Bend, what is going to happen when we have half the drivers we used to have available to us? It is very scary and also a slow process.”