2013 in the Rear-View Mirror: Slow Growth Postpones Capacity Woes
By Peggy Dorf Marketing TransCore DAT
The hot topics in 2013 were expressed in acronyms: MAP-21 HOS and CARB boosted costs for fleets and intermediaries while GDP muddled along and LOH continued to shrink. Let’s spell it out:
REGULATIONS – New Rules Cut Driver Hours Raise Broker Bond – Regulatory pressure added to costs and reduced flexibility for fleets and intermediaries further constraining capacity.
HOS – New Hours of Service rules took effect July 1 adding new constraints to fleet scheduling and dispatch. Productivity was reduced by about 3.3% according to several studies. HOS pressures added about 1.7% to freight rates yielding an average 1.6% loss for trucking companies. Drivers who are paid by the mile lost out as well because their total mileage was constrained by mandatory breaks.
CARB – The California Air Resources Board pursued carriers with non-compliant transport refrigeration units (TRUs) as well as the brokers and shippers who hired them.
MAP-21 – On October 1 the surety bond requirement rose from $10000 to $75000 for freight brokers and the new bond or an equivalent trust is now required for freight forwarders as well as for-hire carriers who broker loads even occasionally. By mid-December the FMCSA had revoked brokerage authority for more than 8000 of the 21700 licensed property brokers in the U.S.
RATES – Vans and Reefers Get 2% Increase – The average truckload rate dipped 0.4% — less than a penny per mile — on the spot market in 2013 but all the downward pressure came from a welcome source: an 11% decline in fuel prices (see below.) When the fuel surcharge is omitted the average line haul rate remained stable for vans and rose 1.5% for reefers but declined 5.8% for flatbeds compared to the same period in 2012. Contract rates rose 1.5% for vans and 1.8% for reefers but remained stable for flatbeds year over year. For more information on rates read DAT Trendlines. If you’d like details on the lanes you run learn more about DAT RateView.
DRIVER SHORTAGE – 1.8% More Drivers 0% Turnover – For-hire trucking added 22000 jobs in 2013 to-date a 1.6% increase over 2012. That’s okay for now but a shortage of trained drivers will be a brake on capacity if and when economic growth accelerates. Driver turnover was estimated at 0% which — believe it or not — is a big improvement. Turnover exceeded 100% in 2012 meaning that a fleet with 100 drivers had to hire more than 100 drivers during the year just to maintain the same staffing level. Many of the drivers moved from one carrier to another working for various companies in the same year. The industry has emphasized driver training especially for returning military veterans to expand the ranks of eligible drivers.
FUEL – Diesel Prices Drop 1.1% – Fuel prices have been rising in recent weeks but the overall downward trend for the year was a relief. Diesel prices slipped 1.1% to an average of $3.3 in 2013 to-date compared to $3.7 per gallon in 2012. The reprieve may be short-lived however as Congress is currently considering an additional tax of 15¢ per gallon on diesel and gasoline to pay for infrastructure improvements.
CAPACITY – Spot Market Activity Expands 51% – For-hire truck freight tonnage increased 5.6% in 2013 to-date according to the American Trucking Associations compared to the same period in 2012. At the same time a 51% increase in freight availability on the spot market is a signal that shippers rely more heavily on 3PLs and brokers as a source for capacity.
SUPPLY CHAIN – Intermodal Volume Adds 4.8% – Infrastructure was upgraded in the private sector as key railroad lines made way for double-stacked containers. The added capacity as well as improvements in reliability timeliness and tracking further increased the popularity of rail intermodal transportation. One result was to hold down truckload rates in rail-competitive lanes making the longest hauls less profitable for most for-hire fleets. The average length of haul continues to decline for trucking companies as rail intermodal takes over more of the longest routes and shorter hauls are intermixed with expanding drayage routes.
WEATHER – Produce Season Starts Late and Lasts Longer – Rain and cold delayed the start of spring harvests in California and elsewhere but the produce season was prolonged and crops were abundant in the summer and fall. As an example the U.S. apple crop was 13% more robust this year than in 2012 which admittedly was not a banner year for tree fruit. Severe weather including floods and tornadoes wreaked 
havoc throughout the year but damage was localized — and much of it was thankfully temporary.
ECONOMY – GDP Expected to Grow by 2.1% – U.S. Gross Domestic Product (GDP) added an estimated 2.1% in 2013 after a third-quarter surge reset the previous 1.8% growth trajectory. GDP is expected to grow by 2.8% in 2014. None of those numbers indicates a booming recovery but they don’t point to recession either. The one-word summary: tepid.
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Note: This article was adapted from DAT’s blog post on www.DAT.com. It was first published in December 2013