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
On February 20, the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) announced their tentative five-year contract. While their 29 U.S. West Coast ports can now resume full operation, it will take months for trucks to clear the cargo backlog. It is unknown when the port employers and dockworkers will vote to ratify the proposal.
Truck tonnage rose a record-setting 6.6% in January, driven by a strong manufacturing sector and easier comparisons due to early 2014’s weather issues. Continued demand for steel in automotive production was especially strong.
According to FTR’s March Trucking Update, a record low number of trucking fleets went bankrupt in Q4 2014. At just 44 fleets, it bested the previous low of 70 fleets in 2012. Strengthening pricing gains, combined with a sudden and steep drop in diesel costs, helped end the year on a strong note. When the price of diesel rises again, we will likely see negative cash flow—which, in the past, caused a spike in bankruptcies. It will be worthwhile to see if the end of year change to the hours of service (HOS) rules helps keep more drivers moving, thus mitigating tight capacity a bit.
Driver turnover discussions often include the fact that private fleets and less than truckload (LTL) fleets have far less turnover than truckload fleets—and that they pay drivers more. A recent survey by the American Trucking Association (ATA) found wages for private fleet van drivers at $73,000, earning 58% more than the truckload van average.
The highway bill future is still in flux, but a House appropriations committee will begin to put together a fiscal 2016 highway and transit funding bill. Transportation Secretary Anthony Foxx will address congressional funding writers for the first time since the Obama administration unveiled its six-year, $478 billion transportation reauthorization proposal.
Diesel prices are up for the fourth straight week. The national average retail price for diesel gained another 3.6 cent increase this week, to $2.936 per gallon—the highest it has been since the week of January 12.
Which transportation indicators or topics are most relevant to your interests? Leave your suggestions in the comment section.