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Supply Chain News: Full Utilization of "Seated Trucks" Continues On in US Truckload Sector, While Flatbed Rates are Soaring

 

However FTR Analyst Says ELD Mandate has Had Little Impact

May 17, 2018
SCDigest Editorial Staff

Since the Hurricanes of 2017, US truckload carriers are enjoying almost 100% utilization of their seated trucks – meaning trucks for which they can find drivers.

That, in short, is the reason that in general rates continues to rise higher. For example, March’s Cass Truckload Linehaul Index, which measures US per mile truckload rates, continued the acceleration established over the last four months by posting a 7.2% year-over-year increase (the largest year-overyear percentage increase since January 2015).

Supply Chain Digest Says...

FTR expects flatbed loadings to be up 7% to 9% year-over-year through the end of 2018, perhaps even higher.

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That assessment comes Avery Vise, vice president of trucking research at FTR, during the firm's latest State of Freight webinar on May 10.

He added that for more than a year, trucking firms have been saying that they could haul more freight if they had more drivers to get behind wheel. But in fact the for-hire trucking industry – which includes many sectors - was actually adding jobs for the first three months of the year, but the number fell in April.

"We think carriers have largely exhausted the supply of potential drivers who already had CDLs and were employable," Vise added.

With very low unemployment in the US, Vise noted that there is "competition from sectors like manufacturing and construction, and even local delivery, which has grown sharply over the last year."

He added that despite the number of carriers raising driver pay overall, "there isn't much difference between wages in trucking and those in home building and manufacturing" – and workers in those sectors in general get to come home every night to their families and a real bed.

Vise noted capacity is tight in the rail sector too, so not much truckload freight is being diverted to the trains.

So "you end up with essentially full utilization of seated trucks, and this is where we've been essentially since the hurricanes. We don't see any meaningful change until the fall," Vise added.

That is when carriers will have taken delivery of new trucks and trailers that are currently in the production pipeline – with hopes that current aggressive driver recruiting efforts will find drivers to move them.

FTR also does not believe overall the start of real enforcement of the ELD mandate has not had much of an impact on capacity and rates.

Flatbed Rates Soaring

Meanwhile, US flatbed trucking rates are on the march, up 45 cents per mile since the end of 2017, while van and refrigerated freight rates are down slightly from their year-end highs.


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FTR expects flatbed loadings to be up 7% to 9% year-over-year through the end of 2018, perhaps even higher. Growth in van and reefer will not be as spectacular, but both will see solid increases through 2018.

What's driving the growth in flatbed? There's more demand coming from recent strength in manufacturing and construction, Vise said.

And it is possible the EDL mandate may be impacting the flatbed sector more so than regular van, Vise added. That's because the flatbed sector includes a more owner-operators and small carriers most impacted by the new rule

So overall, still more bad news ahead for US truckload shippers, as SCDigest is not optimistic aggressive recruiting efforts by carriers will really deliver more drivers.

How do you see 2018 rates playing out? Let us know your thoughts at the Feedback section below.

 

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