“There’s talk that with this transition, some of the older drivers that
have been around for quite some time, may opt for retirement. These
guys are used to running hard and making the appropriate amount
of money. This may limit them, and they could decide to hang it up,”
Bigger fleets are mostly prepared for the incoming challenges, but
smaller fleets will struggle to deal with this advancement.
Clark says, “For the most part, the bigger fleets have adjusted and
are ready for it, but those medium and small fleets, and owner operators
who have not yet implemented electronic logs, are likely to see some
pressure on their operations.”
The mandatory use of electronic logs is not the only regulatory
matter that will be worth keeping an eye on. Clark also notes that the
industry is pushing for a 20-cent fuel tax. While a seemingly odd move
for an industry so reliant on diesel, Clark explains that the rationale for
the support is based on a desire to improve the country’s infrastructure,
therefore improving the efficiency of the industry as a whole.
The Future is Coming
As smaller fleets see more challenges in the coming months and years,
there will likely be more closures and consolidation.
“2018 should bring an overall pricing increase and steady growth.
The bigger fleets are going to be more competitive when it comes to
adapting to new legislation,” Clark says. “But when the dust settles, the
industry should be more stable and see steady growth and profitability.”
Technology will continue to change the landscape of the industry
far beyond electronic logs. Driverless vehicles and electric freight trucks
are just some of the futuristic advancements that have already been
hinted at in the last year. Obviously, driverless technology would help
combat the driver shortage, but Clark thinks the idea has a long road
ahead. As for electric trucks, especially as companies like Tesla enter
the space, concerns about battery power and the integration into the
U.S. transportation system as a whole mean the electric revolution is
still years away.
For now, dealing with an overcapacity issue is the biggest obstacle,
although it doesn’t appear that the industry will be completely
derailed by it.
“We had a transportation downturn over the last couple years and
its one of the only times in my 38 years that hasn’t been tied to a general
economic downturn. It just became an overcapacity issue that caused
it. I think the industry overall is in good shape,” Clark says. “Trucks
have gotten so expensive now it is not quite as easy for the smaller
fleets and owner operators to make ends meet. Many large fleets benefit
from scale and buying power. The disparity between the two is slowly
becoming magnified.” m
PHIL NEUFFER is associate editor of Monitor.
Clark echoes Costello, pointing to a lack of drivers as a
major reason the industry has been stuck in a replacement
cycle, with expansion nearing a standstill. That doesn’t mean
carriers don’t want to expand, it’s just that they can’t without
more people to actually drive additional trucks.
“Talking to the fleets and various customers around the
country, they would add additional units in a minute if they
knew they could get drivers,” Clark says. “Currently, you’re
seeing up to 10% to 15% of some fleets’ trucks just sitting
because they don’t have enough drivers. For a lot of fleets,
that’s really capping the amount [of] freight they can move.”
The shortage isn’t affecting all parties equally, though.
Some smaller operators, which generally have less of an
ability to forecast and measure metrics, are growing on the
strength of the freight market. But that growth is more of a red
herring than a sign that capacity will improve.
“The problem with that is, it’s reasonable to assume the
larger fleets have a better line of sight on the market and
availability of drivers than the smaller fleets,” Clark says.
“If smaller fleets are adding capacity because they’re seeing
freight in the market, and they then have issues seating those
trucks, many cannot afford to have those trucks sitting idle.”
According to Clark, this shortage is a primary driver
behind a more tepid environment. Otherwise, the industry,
in large part, is exhibiting strong fundamentals. The freight
market is continuing to strengthen, and a number of segments
are either performing well or rebounding from stagnant performances in years past. Clark points to the reefer market as one
such segment that has continued its promising trajectory over
the last couple of years.
A more sporadic segment that is improving is flatbed,
which Clark says is “moving.” When oilfields dried up, flatbeds were hit hard. Now that oil prices are back in the high
$40s and low $50s, in addition to increased freight activity,
flatbeds are “hot,” according to Clark, although he does
not expect the segment to stay there. That gets back to its
Small Fleet Trouble
As noted previously, small fleets could be squeezed more
by the driver shortage in the near future, but there are other
issues that will affect this part of the industry as well. Two
regulatory concerns for the industry are the implementation
of electronic logs and a new fuel tax.
Electronic logs will require all drivers and fleets to
convert their process of record keeping (hours driven, fuel
intake, etc.) from pen and paper to digital only. While technology should make for improved efficiency, there will likely
be a punishing learning curve, especially for small fleets
without the resources and budgets to implement the new
The initial difficulties will be twofold as it will not just be
a matter of getting used to new processes. First, electronic
logs will constrain capacity as companies must put additional
resources into implementation. Then, there’s the impact on
the already shallow driver pool, which could become even
smaller as older drivers choose to retire over such a drastic
shift in day-to-day operations.
“2018 should bring an overall pricing increase and steady growth. The bigger fleets are going to be more competitive
when it comes to adapting to new legislation. But when
the dust settles, the industry should be more stable and see
steady growth and profitability.”