Shipping and Logistics
Trends Tightening Supply of Trucks
Written by Tim Triplett
August 15, 2017
Trucks needed to haul steel and other materials are in short supply and availability is likely to get tighter later this year when drivers will be required to use electronic logging devices (ELDs) rather than hand-written logs to record their hours behind the wheel.
The American Trucking Associations estimate that the new ELD requirement, which kicks in Dec. 17, will reduce trucking capacity industry-wide by 2-8 percent, as drivers will no longer be able to fudge their hours of service. The result will be safer highways, but fewer trucks on the road.
More than 70 percent of the nation’s freight is moved by a fleet of 32 million trucks. Steel makes up only a small percentage of that freight tonnage, but it’s portion is growing. Steel shipments by U.S. mills grew by 3 percent in the first half of 2017, reports the American Iron and Steel Institute. Shipments of steel products by U.S. service centers increased by 3.5 percent in the first half, following a 6.3 percent decline last year, according to the Metals Service Center Institute.
Flatbed trucks were more readily available in 2015 and 2016 as low oil prices and a falloff in drilling activity eased demand from the energy sector. But flatbed capacity has tightened significantly in 2017, according to Morgan Stanley’s Flatbed Freight Index. “2016 was a year of unusual stability and remarkable excess capacity in the flatbed market. With the ELD mandate coming in December (and given that the market is already tighter than normal), it is possible we will see significant tightening of flatbed capacity through the end of the year,” predicts the financial services firm.
Limiting trucking capacity is the shortage of qualified drivers, say industry experts. By some estimates, there are 48,000 unfilled openings for drivers today, a number projected to skyrocket as ever more baby boomers retire.
With the economy so strong, and the unemployment rate so low, the trucking industry finds itself competing for new hires versus a host of other industries, many of which offer careers that are more appealing to young people than driving a truck.
Greg Burns, president and CEO of Pittsburgh-based PLS Logistics, forecasts the flatbed trucking market will get considerably tighter into 2018. He estimates metal volumes are up 1 percent over this time last year due largely to strength in construction and energy.
Trucking executives are keeping a close watch on the pending NAFTA negotiations. Said one quoted in the press recently, “The trade deal has been good for the trucking sector, and manufacturing in general, and tearing it up would be a major mistake.”
Written by: Tim Triplett, Tim@steelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in Shipping and Logistics
US-flagged ore shipments on Great Lakes down in 2024
The Lake Carriers’ Association reported a 4.5% y/y decline in December’s ore shipments of 4.6 million short tons.
ILA, port operators reach tentative deal to avoid strike
Both sides had agreed to extend the current contract to Jan. 15 to continue talks
Wittbecker: Challenges ahead for container freight in 2025
In 2024, volatility with a capital “V” has been the rule. That will remain high heading into 2025.
Reibus: November flatbed rates cool after October bump
Following the short-lived East Coast port labor strike in October, we now turn toward the Jan. 15 deadline to reach a long-term agreement.
Reibus: Flatbed, dry van rates ticked up post-hurricanes
After closing the third quarter -3.84% on a y/y basis, our first look at fourth-quarter flatbed spot rates puts us virtually flat y/y, coming in at -0.68%.