The recent hours of service revisions, along with FTR Associates’ Trucking Conditions Index, indicate that the trucking industry will not face capacity issues as severe as expected this year.
When the Federal Motor Carrier Safety Administration (FMCSA) announced its proposal to reduce a driver’s hours of service from 11 to 10 hours, members of the trucking industry reacted with concerns of productivity and capacity issues since drivers would be restrained to how far they can travel/how many loads they could deliver without breaking their hours of service. Thus, in order to secure more loads, companies would need to invest more money on drivers and trucks, which, with an already slim driver pool, would lead to capacity issues.
But when the FMCSA’s final rule was released last month, it showed that the agency decided to uphold the current 11-hour driving limit. Although drivers are still arguing about their work week decreasing from 82 to 70 hours, due to the rule’s revision of the 34-hour restart provision to include two consecutive breaks between the hours of 1 a.m. and 5 a.m., this ruling, along with other changes, would not go into effect until 2013.
Due to the changes not being effective until next year, FTR Associates expects capacity to remain tight in 2012 (due to driver shortage, CSA regulations meant to improve safety by removing unsafe drivers from the road, recovery from the recession (in which tonnage increased 6%), and higher costs of conducting business), but would not be as severe as expected.
Based on the Trucking Conditions Index (TCI), presented in the FTR’s January Trucking Update, “The environment for truckers remains modestly favorable with decent growth, capacity and pricing conditions,” increasing to 5.2 in November (“Any reading above zero indicates an adequate trucking environment with readings above 10 a sign that volumes, prices and margin are in a good range for trucking companies”) (http://www.ftrassociates.com/public/home/document.php?dA=news269).
Rates, however, are expected to increase over the upcoming year due to higher equipment costs, capacity issues, diesel prices and other increases in conducting business.
Do you agree with FTR in stating that although capacity will remain tight this year, it will not be as severe as expected? List your comments below.
