Truck Freight Outlook: ‘Maximum Impact’ in 2018

Truckload rates will increase about 4% in the U.S. this year, with capacity pressure brought on by the looming ELD mandate more than compensating for an economic recovery that’s become “stale,” contends transportation economist Noël Perry, as reported by Fleet Owner magazine.

“Our economy has shifted from a high-growth, high-cyclical economy to a slower-growth, more consumer-oriented economy where it grows at about 2%,” Perry said Thursday, speaking for the monthly FTR State of Freight webinar series.

While he expects modest buoyancy in the economy this year, he did warn about the chance of a recession, “certainly for 2018-19.”

Still, an array of federal regulations – most significantly, the electronic logging device mandate that takes effect in December – will result in productivity losses in the near term, increasing the demand for truck drivers. Except, he adds, those drivers are not to be found.

“The maximum impact will occur in 2018, and it won’t stop until two to three years afterwards when people finally figure out they have to do it,” Perry said.

FTR charts truckload capacity utilization spiking at more than 100% into next year, assuming the ELD requirement “is enforced with any kind of efficiency.” The “worst case” result will be “a major truck shortage” lasting 4-6 months. But even this year, Perry puts the chance of a “significant” capacity shortage at 60%, with a 30% chance of a “real whacko” shortage.

On the other hand, automation offers significant opportunities for improving efficiency in the coming decade, adding up to savings of as much as $1 per mile on the average linehaul cost, Perry estimates.

“Right now, a truck spends more than half its time sitting while the driver rests. If you automate that truck one way or another, you don’t have to stop it to let the guy rest and it doubles his productivity,” Perry said. “There’s a whole bunch of things that are coming at us faster than you think.”

Full Fleet Owner article here.

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