This Editorial appears in the March 11 print edition of Transport Topics. Click here to subscribe today. The word out of the Truckload Carriers Association annual meeting last week is that freight capacity is already beginning to look pinched, even as the number of people applying for driver jobs is falling sharply.
And, the additional word from the Las Vegas meeting is that things are sure to get worse as the economy improves and new federal regulations trim driver productivity later in the year.
The executives of three large TL carriers expressed a nearly identical perspective: that freight demand is rising and driver supply is falling.
Fleet costs are already rising, they said, and while rates have risen some in recent months, the increases aren’t keeping pace with the higher costs they’re paying.
Max Fuller, chairman and CEO of U.S. Xpress Enterprises, told us that his fleet has raised rates by 3% over the past year but that the carrier’s expenses have risen by twice that percentage.
And with truck availability tightening, Fuller warned, “we are going to see more rate increases than at any other point in the last three years. There has got to be a catch-up.”
At the same time, Fuller said, he is hearing that applications for driver jobs are down around 20% at many carriers.
Derek Leathers, president and chief operating officer of Werner Enterprises, said applications at his fleet are down more than 10%.
This falloff is apparently occurring as the construction industry is beginning to recover from its deep recession, since conventional wisdom is that driver jobs and building jobs draw from the same labor pool.
On top of this, upcoming changes to the federal hours-of-service rule are sure to decrease driver productivity, which means fleets will need to hire even more of them to move the same level of freight.
Dan England, chairman of C.R. England, said he expects that driver productivity will decline 6% on a typical 1,300-mile run when the new rules go into effect on July 1. That means that rates will need to increase about 4% to make up for the decline, he told us.
In all, it looks like the second half of 2013 could resemble that Chinese curse about living in interesting times if U.S. economic growth continues to improve at the very time truck capacity is tight and driver supply falling.
So, as they used to say, stay tuned for further developments.
