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Capacity Crunch Greatly Effecting Carrier Performances

Carrier Capacity is at an all-time high right now for all Domestic LTL carriers. Carriers are suffering from lack of certified drivers as well as available trucks. Carriers are getting filled up on their pickups before they reach all of their scheduled deliveries and don’t have the fleet force to go back out to the customers still on their schedule so customers are seeing a 1-2 day delay in pickups.

This is greatly affecting the service and performance of the carriers domestically. Carriers are taking drastic measures in increasing the number of trucks in their fleet and are currently hiring more quality drivers.

Carriers are also being affected by labor laws. Gone are the days when drivers did not mind being away from their homes weeks at a time. Salary demands and drivers preferences to remain close to home have greatly affected carrier’s long haul on time service percentages. Also now all drivers cannot go over 70 hours per week in driving.

What Contributes to the Trucking Capacity Crunch?

1. Less Trucking Companies, Less Trucks

Over 5,000 trucking companies went out of business in 2012 and nearly 400,000 trucks have been taken off the road. In other words, there are about 8,000 fewer trucks available nationwide on any given day. Certain industry segments (e.g., flatbed trucks) have been hit harder than others (e.g., tankers). Overall capacity can no longer meet current demand and industry experts expect it to keep getting worse. Click here to read more >>

2. Lack of Drivers Replacing Retiring Drivers

A large number of long-time drivers are approaching retirement age. Help-wanted ads in local newspapers are dominated by the 800-numbers of trucking companies looking for CDL holders. On the Internet, anyone who visits a few trucking-related pages soon will find banner ads by driver-desperate carriers appearing next to a favorite cat video. The quarterly earnings reports of publicly traded trucking companies caution investors about the high cost and potential dangers of the growing driver shortage.

While the industry is not replacing trucks, other factors are also contributing to future trucking capacity crunch problems, among them reduction in productivity due to electronic logging devices, fewer qualified drivers and increased demand for trucks and less supply. The driver situation could become a big problem, Costello said.

Again, Costello from ATA notes, “Turnover is a good reflection of the driver market and it is getting close to hitting 100% in large truckload fleets. The turnover rate in LTL is currently 15% while it’s at 82% for small truckload carriers. There are a lot of costs associated with that amount of turnover.”

Trucking faces increased competition for drivers as the industry improves, particularly from construction. From June 2012 to March 2013, construction employment increased by 184,000 workers and in February, it saw the largest increase in seven years, up 48,000 jobs. Click here to read more >>

3. Economic Factors Decreasing Equipment Investment

Economic pressures have forced equipment shortages too, adding to shrinking production capacity. Many carriers held onto tractors and trailers longer than they normally would because they could not afford to replace them. Now that most are in a position to replace older equipment, a sudden demand for new tractors and trailers has created added problems.

That makes sense, considering the recent downturn and slow growth. Looking at for-hire trucking, Costello said that about the same number of trucking firms added tractors as decreased tractors (39% to 37%) while 24% of fleets reported no change in their fleets. Some of the companies reporting no change have moved trucks to different work, from dry van to tank for example, but on the whole, the industry has added few trucks the last two years. Click here to read more >>

4. Government regulation Affects Trucking Capacity Crunch

Compliance, Safety, Accountability (CSA) went into effect in December of 2010 and was designed to make the raods safer by measuring trucking company performance and the performce of individual drivers. Industry analysts believe as many as 200,000 drivers could lose their jobs as a result of the new regulation.

Additionally adding to the trucking capacity crunch is the New Hours of Service Rules, specifically the new 34-hour restart provision and its impact on scheduling for some segments, increasing prices for shippers, particularly those who rely on early morning deliveries. The new 30-minute driver rest break may or may not prove to have a significant impact on productivity. Still, there is a possible safety risk if drivers feel compelled to “make up for lost time” after the mandated mid-shift pause. Tightly scheduled routes with multiple deliveries will feel the change more than over-the-road operations, Albrecht agreed. He also questioned how many drivers actually are going to be back on the road in exactly 30 minutes, and not 45 minutes or more. Click here to read more >>