Despite what it is happening in the economy, one thing has remained constant over the years: the steady hold, and gains, in freight transportation market share held by the trucking sector.
That was made clear in this year’s edition of American Trucking Trends from the American Trucking Associations (ATA).
“This report shows once again what a critical role trucking plays in the U.S. economy,” said ATA president and CEO Bill Graves in a statement. “Trucking continues to move the most, and most valuable, freight in the United States despite the challenges of congestion, regulations and crumbling infrastructure.”
This year’s edition of American Trucking Trends highlighted various facets of trucking’s imprint on the transportation landscape, including:
-in 2013, trucks moved 69.1 percent of all domestic freight tonnage, up from 68.5 percent the previous year;
-the industry also collected 81.2 percent of all freight revenue, up from 80.7 percent in 2012;
-trucks move the majority of all NAFTA trade, hauling 55.4 percent of all trade with Canada and 65.4 percent of all trade with Mexico;
-trucking employed more than 7 million people in 2013; and
-the industry paid $37.8 billion in state and federal highway user fees, among others
As the ATA’s Chief Economist Bob Costello pointed out in the report, American Trucking Trends serves as a “snapshot” of what the trucking industry and, by extension, the freight economy, look like, as well as provide key insight about the industry for what is really happening, which is crucial for key trucking industry stakeholder like industry leaders, suppliers, and policymakers.
Even with the growth in market share, the trucking sector faces various challenges, including regulatory drag due to new motor carrier Hours-of-Service (HOS) regulations, which took effect in July 2013, as well as CSA. And the sector, like all modes, was adversely affected by the effects of the harsh winter weather at the end of 2013 and into 2014.
Conversely, though the harsh winter came with some benefits for carriers, too, in terms of rate growth due to tighter than usual season capacity early in the year and a push of freight from intermodal to over-the-road, due to clogged rail networks, which has since subsided.
Trucking executives have commented to LM that while approaching the mid-way point of the year, the sector appears to be on steady ground overall, with decent, steady momentum in the manufacturing and retail sectors, which bodes well for the freight economy should the momentum continue into the second half of the year.
But even with some positive indicators afloat within the industry, the tight capacity environment remains intact and is likely to continue to strain shippers’ supply chains.
“Barring an unforeseen catastrophic economic event, capacity is going to remain tight throughout 2014 and beyond, said Mike Regan, chief relationship officer at TranzAct Technologies and LM blogger, at last month’s NASSTRAC conference in Orlando, Fla. “It is going to cost more to operate trucks in the future. And if it is going to cost more, trucking companies need to rebuild their fleets. There are billions of dollars in costs [among carriers] taking the age of the fleet down to the norm, but the way to rebuild a balance sheet is through profitability.”
This situation, he said, leads to the question of how do carriers increase profitability in an environment with higher costs? With tight capacity, he said shippers will pay higher rates in order to get their trucks into the spot market, with tremendous spot market volatility expected as a result of that.