Market Update: Transportation Industry News
In the transportation industry, there are many moving parts that can impact your day-to-day operations. From monitoring carrier capacity and driver shortages to tracking diesel pricing and government regulations, staying current on the events in transportation means you will be better equipped to make knowledgeable business decisions and drive growth and efficiency into your supply chain. This month’s Market Update highlights key factors that impact the transportation industry in North America and will keep you up to speed on the latest news and topics that matter to your supply chain and business.
Large Scale Market Indicators
As we make our way into 2015, trucking freight volumes look good. According to American Trucking Associations (ATA) Chief Economist Bob Costello, “Overall, 2014 was a good year for truck tonnage, with significant gains throughout the year after falling 4.5% in January alone. Expect an acceleration in consumer spending and factory output to offset the weakness in hydraulic fracking this year.” Read more.
As ports near gridlock congestion levels, Federal Maritime Commission (FMC) regulators are determining whether the increase in demurrage charges hitting shippers is unreasonable; simultaneously, the FMC is trying to find and outline potential solutions. The increase in demurrage fees has triggered an increase of exporter complaints according to the FMC even though the facilities cannot accept empty containers. Conversely, importers are complaining of incurring demurrage charges, even though they cannot get their containers released from the terminal yard. FMC Chairman Mario Cordero said that addressing port congestion is the agency’s top focus for 2015. The FMC is requesting the federal government to give ports more of the money collected via the Harbor Maintenance Tax (HMT). Read more.
Fleet failures are at record low as rates rise. A total of 605 trucks were pulled from the road in the fourth quarter of 2014. That’s fewer than the previous low of 725, set in the second quarter of 2012. The fourth quarter of 2013 saw 7,775 trucks pulled off the road. Read more.
The average fleet size continues to be elevated (26 trucks) and is high for what we have seen historically during a growing economy. Read more.
ATA released its 2014 Driver Compensation Study and found that half of carriers offer sign-on bonuses—averaging $2,300 each—to attract new drivers. Read more.
A new analysis of U.S. census data by NPR shows that truck driving is the most common job for full time working adults in 29 states, and the U.S. Bureau of Labor and Statistics says demand for truck drivers will nearly double over the next decade—from 1.44 million in 2014 to 2.76 million in 2022. The number of unfiled trucking jobs on the market varies. Some reports state that just a year ago, there were 25,000 available jobs. According to FTR’s February Trucking Update, the driver shortage as of Q4 2014 is at 193,503.
The Federal Motor Carrier Safety Administration (FMCSA) comment period for a proposed rule to increase financial responsibility for motor carriers closes February 26. The rule would increase the minimum levels of financial responsibility for motor carriers, including liability coverage for bodily injury or property damage. The current minimum required is $750,000. Read more.
The Hours of Service (HOS) change provides some relief for tight capacity. Industry analysts say carriers are still scrambling to find drivers and meet shippers’ needs, though suspension of the 34-hour restart rule created about 2% more capacity. Read more.
Fuel dip savings are being offset by surges in costs for drivers, equipment, and healthcare. Shippers negotiating with carriers over 2015 freight rates should be aware, however, that overall costs of doing business are rising. Read more.
Which transportation indicators or topics are most relevant to your interests? Leave your suggestions in the comment section.