Is There a Truck Shortage?

Is There a Truck Shortage?

Is there really a truck shortage? That depends on whom you ask. Hours of Service regulations have reduced running miles in most small fleets. CSA 2010 monitoring makes running a truck over allowable hours very risky for drivers and fleets alike. Carriers have to charge more to make up for this reduction in annual miles and shippers aren’t buying price increases. Railroads, too, have taken price increases because trucker did.

When I look at safety ratings, however, on thing speaks out to me. I watch the maintenance violations, hours of service can be fixed, an old truck only has so many miles in it and bringing it up to passing specs for an inspection is expensive with a lot of down time. New tractors can cost in the $125,000 range and they get 8 mpg vs 6mpg for old tractors. For a large fleet that is a big advantage. Their money is cheap.

Looking at the publicly help transport companies, recent quarters show drops in productivity and lower margins. Watch this season’s earnings reports and pay attention to revenue per truck or in the biggest brokerages, margins. This is withering down margins to the brokers.

It doesn’t help that for the past year we’ve had government game playing from uncertainty as to who would be POTUS to the 11th hour tax bill in January, sequester in the spring on then the debt ceiling issues, government worker furloughs combined with the upcoming expense of the Affordable Healthcare Act.

There is plenty of capacity in the market if you pay the price for it. Some large brokers will make up a lot of the difference by reducing personnel expenses by lowering commissions and bonuses. They have to cope somehow.

The biggest drags will be in commodity type freight hauling, as they are very sensitive to freight price increases. To gain revenue market share large enterprises have to accept lower margins, they need the clients that give them millions of revenue each year. Boutique brokers probably aren’t seeing much erosion of margins because their clients need their specialized services.

By Tim Taylor

Internet Truckstop