Trucking Gets a ‘Breather’ But Capacity Storm Brewing

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Posted on July 10th 2015 4:16 PM

The under-capacitated trucking industry appears to be getting a chance to catch its breath, but  regulatory drag by 2017 could potentially causing an unprecedented shortage of drivers, according to the latest research from market analysts at FTR.

As Truck News reports:

Capacity utilization in the U.S. has dropped to a more normalized 95% and the impact of regulatory drag on truck capacity has decreased, according to FTR’s Noel Perry who spoke during FTR’s free State of Freight Webinar. However, he also said the reduced pressure on trucking capacity could be short-lived, with as many as 23 regulations still on FMCSA’s to-do list, many of which could reduce the trucking industry’s productivity.

“Right now in mid-2015, because freight growth has slowed and because the FMCSA is in the business of studying and writing regulations and not publishing new ones, there is a reduction in regulatory risk and the marketplace is relatively quiet,” Perry explained.

However, he noted regulations that should come into effect in 2017 – including the mandatory use of speed limiters and electronic logging devices – will require a “substantial amount of additional hires.”

“When that happens we get (capacity) tightness,” Perry said. “The regulatory risks are real; just not in 2015 but in late 2016 and certainly in 2017.”

Perry said the US is currently short about 100,000 drivers, which is “normal for a recovery” but with the onslaught of new productivity-choking regulations expected in the next couple years, the US could be short as many as 300,000-400,000 drivers by 2017, which would be unprecedented.

Carriers, meanwhile, continue to do well financially – and drivers are doing much better as well, said  FTR’s Jonathon Starks .

Driver wages, including benefits, have climbed about 15%, Starks noted, partially offsetting declining diesel prices.

Asked if the US is headed back into recession, given the weakening of some economic indicators and the fact there hasn’t been one in close to seven years – the traditional economic cycle – Perry said he’s not yet too worried.

“In the last three recoveries we’ve gone beyond that seven-year average (between recessions), so there’s reason to hope we’ll be out sometime in 2017 or 2018 before the economy weakens,” he said. “The bad news is, the global economy is not healthy … so there’s a possibility of a globally induced recession in the US beginning sometime next year. It’s not something I’d bet on yet, but it’s something I’d have in my contingency plans.”


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