Rate Hikes Expected Across All Modes of Transportation in 2015
Right now there is a big driver shortage in the trucking industry and the ports are backed up for multiple reasons. This is causing chaos in the supply chain and shippers not aligned with quality partners are facing tremendous rate hikes and delays in transit.
There are some key government regulations on the horizon for the trucking industry including electronic logging devices, speed limiters and your typical “going green” initiatives for cleaner emissions and more fuel efficient trucks. Additionally, many carriers have placed or will be placing new equipment orders for new trucks that should yield better fuel mileage, and these investment costs from the carriers in new equipment and driver training and retention will be passed along to shippers in the open market.
Also, in an effort to improve productivity and better align pricing to reflect their costs, carriers have begun using density scanners to analyze the freight in their systems for a better understanding of the shipments moving through their networks. Density based pricing, rather than the class based system that’s been used for years is in the near future.
Right now we are about 35,000 truck drivers short of filling truck seats that are available, and the industry doesn’t seem to know itself the best way or combination of ways to entice drivers to come to work. We are also losing about 95,000 drivers each year to retirement, so we need to attract more young drivers in addition to retaining the ones that are there now. Increasing regulations from the government have pushed some drivers that may not have necessarily been at the age of retirement to go ahead and retire - not only because of the hassles, but with these regulations their earnings and potential earnings have (or would have been) been drastically reduced.
Ken Hoexter, senior air freight, surface and marine transportation analyst at the Bank of America/Merrill Lynch, summed it pretty well in a quote from the recent Journal of Commerce article titled Tough times ahead for US shippers, FTR warns, as port woes continue : "All the networks are in tight capacity. Shipping demand is still at very elevated levels. The one thing you’re guaranteed is that you’re going to see price increases. What’s unknown is how high they’re going to be.”
There are some key government regulations on the horizon for the trucking industry including electronic logging devices, speed limiters and your typical “going green” initiatives for cleaner emissions and more fuel efficient trucks. Additionally, many carriers have placed or will be placing new equipment orders for new trucks that should yield better fuel mileage, and these investment costs from the carriers in new equipment and driver training and retention will be passed along to shippers in the open market.
Also, in an effort to improve productivity and better align pricing to reflect their costs, carriers have begun using density scanners to analyze the freight in their systems for a better understanding of the shipments moving through their networks. Density based pricing, rather than the class based system that’s been used for years is in the near future.
Right now we are about 35,000 truck drivers short of filling truck seats that are available, and the industry doesn’t seem to know itself the best way or combination of ways to entice drivers to come to work. We are also losing about 95,000 drivers each year to retirement, so we need to attract more young drivers in addition to retaining the ones that are there now. Increasing regulations from the government have pushed some drivers that may not have necessarily been at the age of retirement to go ahead and retire - not only because of the hassles, but with these regulations their earnings and potential earnings have (or would have been) been drastically reduced.
Ken Hoexter, senior air freight, surface and marine transportation analyst at the Bank of America/Merrill Lynch, summed it pretty well in a quote from the recent Journal of Commerce article titled Tough times ahead for US shippers, FTR warns, as port woes continue : "All the networks are in tight capacity. Shipping demand is still at very elevated levels. The one thing you’re guaranteed is that you’re going to see price increases. What’s unknown is how high they’re going to be.”
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