The combination of major trucking regulations like the DOT’s electronic logging device mandate and the EPA’s coming emissions standards, increasing fuel costs and a boost in manufacturing will likely lead to an industry capacity crunch and a big increase in rates, said forecasters this week.
Transportation economist Noel Perry, speaking at the 2016 FTR Conference in Indianapolis this week.
Even though rates have been in a persistent downward trend since early 2015, carriers may soon be asking their shipper customers for substantial rate increases, he said. “Now’s the time to begin thinking about managing in an environment that’s 180 degrees from the environment we’re in right now,” Perry says. “To keep margins good, carriers are going to have to get prices up. I’m forecasting prices to go up at the end of this year and into next year,” he said.
Perry says rates will climb between 5-7 percent by the end of 2017.
Perry expects next December’s ELD mandate to remove about 3-5 percent of the industry’s productivity. The productivity hit — and the costs of the devices — will spur much of the potential rate increases in 2017 and 2018, he said.
A panel of shipper and carrier representatives agreed with Perry in a subsequent panel discussion. When asked by Perry, who moderated the panel, how likely they foresee a “significant capacity issue” within six and 12 months, all panelists said the chance is great.
John Culp, CFO of Maverick Transportation (No. 76 in the CCJ Top 250), said a capacity crunch is 70 percent likely in the next 12 months and 100 percent likely in the next 24. “We fully implemented ELDs in 2011,” Culp said. “Our utilization in 2006 was about 480 miles a day. ELDs dropped it to 414. So from that time to this time, that’s almost a 16 percent decrease in miles per day [per truck].”
