"This year <2018> will be the best for the trucking industry since 2005", says David Ross, an analyst at Stifel Financial Corp. What makes Ross so confident? It's all about freight rates, truck sales, and ELDs. Learn how 2018 trucking industry trends are hauling the trucking industry towards one of its best years ever.
Freight Rates are Soaring
According to the American Trucking Associations For-Hire Truck Tonnage Index, January 2018 saw an 8.8 percent increase in freight tonnage compared to January 2017. Combine this with the current driver shortage, and you begin to understand why we are seeing record shipping rates in 2018. It's all about supply and demand.
And those who are in the industry can capitalize. In January 2018, freight rates for refrigerated trailers reached $2.66 per mile. That's a 71-cent increase from the same time last year. Similarly, dry van spot rates shot up by 59 cents ($2.26 per mile), and flatbed rates climbed 47 cents ($2.39 per mile) compared to last year. Experts expect rates to grow even higher as we move towards spring freight season.
Truck Sales are Surging
Many carriers have been investing in new trucks instead of continuing to spin their wheels investing in new drivers. This is due to a combination of the economy's health, new tax policy, and high driver turnover rates. According to Americas Commercial Transportation Research Co. (ACT), big-rig manufacturers received orders for more than 49,100 trucks in January 2018. A 121 percent increase from the same time last year.
And Class 8 truck orders just rose to the second-highest level since March 2006. Peterbilt is already forecasting sales of a quarter-million Class 8 trucks this year. Also, according to ACT, the industry saw a 250 percent increase in refrigerated trailer orders compared to last January.
ELD Mandate Passes Pressure to Shippers
Interestingly, lingering concerns related to the ELD mandate has partially contributed to rising shipping rates. At least temporarily.
But, there are also positive long-term ELD effects to expect.
As you know, ELDs track the exact amount of time a driver spends waiting for loading and unloading. Shippers can be quickly analyzed, compared, and dropped if they are found to be inefficient.
This means shippers will have to work harder and smarter for drivers.
With such high freight tonnage, and a low number of drivers, the power of choice lies more in the hands of carriers and drivers.