Shipping and Logistics

Trends Tightening Supply of Trucks

Written by Tim Triplett


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

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