4 Reasons for the Tight Truckload Capacity in 2014

If you've booked a dedicated truck any time this year, you're likely to have experienced the the biggest trucking load board.

crunch that is occurring throughout our nation's trucking industry. Driver shortages were always to blame, but new insights into the true reasons for the high demand and low supply of trucks are being looked at in a new whitepaper by the DAT,

The 11-page whitepaper by Don Thornton, Senior VP of DAT Solutions, titled Truckload Capacity in 2014: What’s Causing the Capacity Crunch and What Can Shippers Do About It? gives us that late-in-the-year hindsight view into the trucking capacity issue.

In the beginning of the executive summary, Thornton writes, "Freight transportation capacity has been subjected to enormous pressure from a number of sources in the twelve months beginning July 1, 2013. Factors that constrained capacity and drove rates higher include new and more stringent regulations, extreme weather, increased operating costs, and a chronic shortage of experienced drivers."

Let's break down the four reasons for the tight capacity:

1. Extreme Weather

Remember last winter? Are you hearing reports that this upcoming winter's forecast won't be any better (and may be even worse)? Seasonal, inclement weather seems to be the gift that keeps on giving, and we never really caught up from late 2013 when a Domino effect of delayed pickups, warehouse storage costs, and missed deliveries disappointed shippers. Expect this year to be no different and plan ahead. If you enter this season with some flexibility in your pickup and delivery dates, you'll have less of a headache.

2. New Regulations

We saw US DOT regulations galore starting in July 2013. These regulations aimed to improve safety, but some may have missed the mark. Like the Hours of Service (HOS) rule for instance. It aims to keep drivers safe with adequate rest breaks, but when you look at the time drivers are forced to remain off the road (1 a.m. to 5 a.m.) it puts them square in metro cities during rush hour. Then you have the strict environmental regulations in California - a high freight volume state - and you've got trucking companies in California leaving due to high fleet operating costs. So we're left with fewer trucking hours and reduced service in a major GDP-producing state. But that's not all, we're now facing the deadline for MAP-21 otherwise known as Moving Ahead for Progress in the 21st Century, which forces all brokers and forwarders of freight to protect shippers with a $75,000 minimum surety bond. This regulation not only stopped carriers from easily brokering their freight to independent drivers, but it also put a few small and medium sized brokers out of business.

3. Increased Operating Costs

Fuel, labor and equipment costs are on the rise without an end in sight. It's the nature of the business for any fleet owner, but when these costs aren't being offset by revenue than it makes it harder for carriers to turn a profit. Thornton breaks it down best by saying, "On a per-mile basis, carriers today might require an average of $1.75 to $1.80 or more per mile for all miles, loaded and empty alike, in order to break even. For that reason, for-hire carriers cannot afford to run an empty truck, and a low rate can be acceptable in one direction only if a high-paying return trip boosts the round-trip average comfortably above a break-even rate."

4. Driver Shortage

Last but not least, we have driver shortage. This is a problem that is certain not to go away. According to the American Trucking Associations, the driver shortage could climb from a deficit of 30,000 drivers in 2014 to approximately 239,000 drivers in less than 10 years¹. With the rigors of the road, it has become increasingly difficult for owner-operators to fill a seat in their empty trucks with trained, experience drivers.

At FreightCenter, we've noticed the capacity issue is bleeding over into the LTL shipping market as well. As carriers experience trouble getting their trucks on the road, brokers and shippers are finding it harder to rely on transit times and steady rates. As a service-based organization, FreightCenter strives to maintain shipper expectations by quickly acting on missed pickups, finding alternative resources, and notifying shippers when delivery dates fall through.


References:

1. American Trucking Associations (ATA): Truck Driver Shortage Update, November 2012. (available: http://portal.trucking.org/StateIndustry/Documents/Driver%20Shortage%20Update%20November%202012.pdf)