Shipping and Logistics
Trends Tightening Supply of Trucks
Written by Tim Triplett
August 15, 2017
Trucks needed to haul steel and other materials are in short supply and availability is likely to get tighter later this year when drivers will be required to use electronic logging devices (ELDs) rather than hand-written logs to record their hours behind the wheel.
The American Trucking Associations estimate that the new ELD requirement, which kicks in Dec. 17, will reduce trucking capacity industry-wide by 2-8 percent, as drivers will no longer be able to fudge their hours of service. The result will be safer highways, but fewer trucks on the road.
More than 70 percent of the nation’s freight is moved by a fleet of 32 million trucks. Steel makes up only a small percentage of that freight tonnage, but it’s portion is growing. Steel shipments by U.S. mills grew by 3 percent in the first half of 2017, reports the American Iron and Steel Institute. Shipments of steel products by U.S. service centers increased by 3.5 percent in the first half, following a 6.3 percent decline last year, according to the Metals Service Center Institute.
Flatbed trucks were more readily available in 2015 and 2016 as low oil prices and a falloff in drilling activity eased demand from the energy sector. But flatbed capacity has tightened significantly in 2017, according to Morgan Stanley’s Flatbed Freight Index. “2016 was a year of unusual stability and remarkable excess capacity in the flatbed market. With the ELD mandate coming in December (and given that the market is already tighter than normal), it is possible we will see significant tightening of flatbed capacity through the end of the year,” predicts the financial services firm.
Limiting trucking capacity is the shortage of qualified drivers, say industry experts. By some estimates, there are 48,000 unfilled openings for drivers today, a number projected to skyrocket as ever more baby boomers retire.
With the economy so strong, and the unemployment rate so low, the trucking industry finds itself competing for new hires versus a host of other industries, many of which offer careers that are more appealing to young people than driving a truck.
Greg Burns, president and CEO of Pittsburgh-based PLS Logistics, forecasts the flatbed trucking market will get considerably tighter into 2018. He estimates metal volumes are up 1 percent over this time last year due largely to strength in construction and energy.
Trucking executives are keeping a close watch on the pending NAFTA negotiations. Said one quoted in the press recently, “The trade deal has been good for the trucking sector, and manufacturing in general, and tearing it up would be a major mistake.”
Written by: Tim Triplett, Tim@steelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in Shipping and Logistics
Maritime union warns of impending coastwide ports strike
The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) have just over two months left to reach a new labor agreement and avoid a strike at all Atlantic and Gulf Coast ports. However, with talks still suspended, ILA’s president says a strike looks more likely with each passing day.
Flooding on the Mississippi forces lock closures
Flood-level waters have prompted the US Army Corps of Engineers (USACE) to close locks on the Mississippi River.
Reibus: Could seasonal shipping peaks drive up spot market rates?
Flatbed rates remain roughly 20% higher than dry van but have stayed relatively calm for the first half of 2024, rising just 5% in the first half of the year and remaining negative on a year-over-year basis.
Maritime union suspends labor talks over automation dispute
Contract negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have soured.
Reibus May logistics market update
Roughly halfway through Q2, flatbed rates are holding firm, currently showing no change from April to May and a slight increase quarter-over-quarter (q/q).