An overall positive outlook for the trucking industry this year is being damped down a bit by concerns over rapidly rising cost pressures, such as skyrocketing fuel prices and a shortage of drivers.
“We believe the economy is heading in the right direction now and that trucking has turned the corner,” Bob Costello, chief economist for the American Trucking Assn. (ATA), told Fleet Owner. “Though freight volumes dipped in January [falling 2.3%], it was mostly weather-related, and even with that dip we still see a lot of smiling faces.”
But while truck freight volumes continue to rise – up 3% overall in 2003 and up 1.8% in February this year – Costello is becoming more concerned about increasing cost pressures on truckers.
“Driver wages continue to go up and up as hours of service (HOS) reform has increased demand for truck drivers,” he said. “Driver turnover has also become more acute – last year turnover reached 119% in the third quarter, the highest we’ve ever seen, largely due to impeding HOS changes.”
“The biggest factor in creating [truck] capacity shortages could be the new HOS rules,” Jeff Chung, vp of logistics practice at investment bank USBX Advisory Services, told Fleet Owner. “Not only do [the rules] limit capacity, but they will also drive up costs as trucking companies compete to hire more drivers from a limited pool.”
The recent run-up in diesel fuel prices is also pinching the bottom line of many carriers, added Costello, as are still-high insurance rates.
“While the rate of insurance hikes have lessened, they are still going up and many carriers are taking on more risk in the form of higher deductibles to cut their insurance premium costs,” he said. “That can make accidents much more costly to a fleet.”
Overall, said Costello, although the freight environment continues to improve, this is no time for carriers to ease upon cost-control measures.
“To remain competitive, carriers have to control costs— it’s the only way to manage the bottom-line pressure of higher fuel prices, driver wage increases, etc.,” he explained.