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2012 First Quarter Trucking Industry Recap

Thursday, May 31st, 2012

Below is a recap of the trucking industry’s first quarter findings as reflected by industry experts in the following categories: freight growth, tonnage, capacity, driver employment, and out-of-services.

FREIGHT GROWTH

Although freight is expected to grow, it still has a long way to go. Experts report a drop in truckloads from 200 million in 2006 to 158 million in 2009 with only a 40% recovery in 2012’s first quarter.¹

According to FTR Associates Noel Perry, “We won’t get to a new peak until at least 2015, and that assumes we have no recession out there. If we get a recession, which I think we will mid-decade, we could not get to a new peak in trucking or rail perhaps until the end of the decade.”¹

TONNAGE

The trucking industry has been experiencing a steady increase in tonnage over the past seven months. This incline, however, was interrupted by a 1.1% decrease in the month of April as compared to March, stated the American Trucking Associations earlier this week.

Despite the decline, April’s tonnage index was still 3.5% higher than last year and continues to fall between the estimated 3-3.9% predicted annual growth range (2012 tonnage is currently at a 3.8% growth from last year). ²

CAPACITY

Trucking capacity remains tight in the first quarter reflecting higher rates for shippers. In analyzing seven large truckload carriers, researchers found that compared to last year, capacity had decreased 0.6% and if the economy were to pick up within the next few quarters, could get even tighter.³

As TransCore’s David Schrader explains, “What we’ve seen so far in 2012 is some of the heaviest freight volumes we’ve ever seen,” and greater freight volumes translates to a shortage of trucks/drivers available to move the goods.

AVAILABLE DRIVERS

One of the reasons we are dealing with a capacity shortage is not so much a lack of available trucks to move the freight but rather a shortage of drivers. Driver shortage continues moving into the 2^nd quarter as many carriers compete with incentives in order to draw drivers to their fleet.

Carriers dealing with a shortage of drivers are forced to have their equipment sit until a driver is available and those lanes they do accept come at higher rates. For this reason, carriers are investing in trailers moreso than trucks, while others are shifting to intermodal.⁴ And when worse comes to worse, many trucking companies have no choice but to shut down.

CLOSURES

Newer, more fuel efficient trucks may be one reason why the number of trucking companies that went out of business decreased this year, experts believe. According to Avondale Partners, “160 companies with an average fleet size of 13 trucks went under in the first quarter of this year,” compared to 295 during that time last year, with a total of 2,110 trucks shutting down in 2012’s first quarter compared to 3,955 in 2011’s.⁵

At the same time, the Federal Motor Carrier Safety Administration (FMCSA) has already shut done six motor carriers so far this year due to unsafe conditions, with Texas-based Demco Express/Demco Trans being the most recent.⁶

According to the FMCSA, Demco had several safety violations which included “10 drivers being placed out of service within the last year for not being licensed to drive,” falsified hours-of-service records, and failing to properly drug test drivers.⁶

In looking at Demco’s CSA scores (in which a score of 65% and above places a carrier on alert status), the company scored the following:

Would you choose a company with a safety score such as the one above to transport your cargo? You may already be doing so if you are not properly vetting your carriers. For an instructional video on how to do so, visit http://www.youtube.com/watch?v=DUXpdbubDVM.

Can you guess the names of the following carriers based on their safety records below? Maybe you have utilized one or more of them in the past. (Click on safety record to reveal name)