According to transportation analysts across the country, the demand for all modes of commercial transportation is on the rise. This is good news for truckers, considering that trucking transports the majority of goods in the United States. It is reported that freight rates could increase up to 15-20% in the next few years. This is also relieving to many full truckload and less-than-truckload carriers who have had to keep rates relatively low in order to survive the Great Recession and the rebounding periods thereafter. According to transportation analyst Justin Long, of the Arkansas-based investment bank Stephens, “As we head into 2015 and beyond, be prepared for significant rate increases across all modes.”
What’s causing these rate increases? Multiple factors come into play and many pertain to industry capacity. Simply put, as our economy grows stronger, the forecasted increased demand for trucks will outpace the supply. However, US economic growth is not the only culprit whittling at trucking capacity. Analysts surmise that other factors may be to blame for the expected crunch.
First and foremost are the ever-changing regulatory schemes that directly affect the trucking industry. Those of us in the trucking industry are well aware of the EPA’s new emissions mandates for heavy-duty trucks. While striving to make tractors more fuel efficient, many have experienced the adverse effects of the regulations, including increased downtime, missed deadlines, higher costs of tractors and repairs, and potential issues with the resale of the hybrid “kit” models that have been created to circumvent some of the rigorous standards. Beyond emissions, regulations such as hours-of-service, electronic logging, and enhanced food handling requirements could push some carriers out of the industry. Tack on the ever-increasing driver shortage and the issues carving away at the country’s capacity seems insurmountable.
However, the silver lining is evident. The economy is strong, companies are manufacturing, and people are buying consumer goods. If there’s a product in demand, there’s a demand for a truck to haul it. Although governmental regulations and driver shortage issues are alarming, we will have plenty of freight to haul at the rates we need. With overall economic forecasts pointing to more growth, the only recourse at this point is to get to truckin’.
This article was written by Lesley Hall, JD, MBA, associate attorney at Roberts Perryman PC. Lesley focuses her practice on Transportation and Logistics as well as Trucking Litigation. Additionally, Lesley is third generation of a trucking family.
Roberts Perryman has been a leader in transportation defense for over 50 years with offices in St. Louis and Springfield, MO and Belleville, IL. http://www.robertsperryman.com