The ongoing shortage of qualified truckload drivers and subpar industry profitability that discourages banks from lending for fleet expansion is keeping a tight lid on organic capacity growth, says the CEO of truckload and logistics giant Werner Enterprises Inc.
As reported by DC Velocity, Derek J. Leathers told attendees at the NASSTRAC conference and transportation expo in Orlando the truckload industry faces unprecedented challenges to adding capacity despite remarkable efforts to reduce the average fleet age.
The skyrocketing cost of buying a truck has also contributed to carrier reluctance to grow their fleet sizes. As a result carriers have “never faced a more difficult time” adding equipment. Things are unlikely to change until driver demographics improve and profit margins expand in a sustainable manner, he said.
Recent data showing record numbers of orders for new trucks is not translating into more equipment on the road. Many of those vehicles will continue to be used to replace aging equipment.
On that score, the average age of the fleet has declined dramatically – from the typical tractor age of 6.6 years in early 2014 to about 5.7 years when 2014 concluded, he said. Older trucks removed from service in this market are unlikely to have an afterlife because they aren’t designed to accommodate today’s technological needs or comply with impending changes in various government regulations. “Trucks are leaving the industry,” he said.
Another factor reducing truck utilization is the rapid growth of e-commerce, which has dramatically shortened a typical truckload carrier’s length of haul. Despite the reduction in overall miles, about 10 to 20 percent of U.S. truck capacity moves around empty, mostly on backhaul.
The good news is that carriers and shippers are finally having constructive dialogue about the capacity and driver shortage challenges, said Leathers, praising the NASSTRAC shipper group for organizing the open session.