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Home » Bring out your trucks! Whoops, they're already here!
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Bring out your trucks! Whoops, they're already here!

May 1, 2013
Mark B. Solomon
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Forecasting the looming truck capacity crunch has become a cottage industry. Nary a week (or industry conference) goes by without someone opining about the lack of drivers and rigs, and the impending impact on shippers.

The latest came from consultancy FTR Associates, which reported last month that its "shippers conditions index" for February hit -9.5, a shade below the -10 reading that indicates an unfavorable climate for shippers. This came several weeks after the firm reported its February truckers index had jumped to 12.9 percent, well above the 10 reading that indicates nirvana for truckers. FTR commented in its shippers index report that shippers haven't faced this dire a situation since 2004, but unlike that period, which the firm characterized as a "one-time blip," the current trends could persist for years.

That may eventually turn out to be the case. But for now, that's news to buyers of trucking services who gathered around the NASSTRAC campfire at the group's annual conference and exposition in Orlando, Fla., late last month. No shipper interviewed or participating in roundtables (all spoke on background lest they be flogged by their companies) reported problems finding rigs, trailers, and drivers.

Bradley S. Jacobs, founder and CEO of Greenwich, Conn.-based freight broker, forwarder, and expedited transport firm XPO Logistics—who went on the record because he runs the place—expressed similar sentiments. "Capacity is very loose," he said in an interview at the conference. Jacobs noted that XPO's load boards, which are chock-a-block when the coffee is brewing in the morning, are usually swept clean by lunchtime. "That tells me all I need to know," he said.

CONTINUING SHIFT TO RAIL
What's keeping the capacity wolf away from the door? For one, a continued conversion to rail intermodal service. Matthew K. Rose, chairman, president, and CEO of Fort Worth, Texas-based BNSF Railway, told the conference that domestic intermodal traffic rose to 24 percent of BNSF's total volumes in 2012, up from 20 percent in 2006. Last year, BNSF converted more than 30 truckers to intermodal service, Rose said. This year, it's added 14.

Shelly Simpson, president of the Integrated Capacity Solutions unit of Lowell, Ark.-based J.B. Hunt Transport Services, reckons that between 7 million and 11 million shipments a year that are now moving on highways can be shifted to intermodal.

Even YRC Freight, the long-haul unit of less-than-truckload carrier YRC Worldwide Inc., moves roughly a quarter of its freight via intermodal, according to James L. Welch, YRC Worldwide's CEO.

The shift is being sparked in part by big shippers' increasing use of third-party logistics service providers (3PLs) and the decisions by 3PLs to steer more of that freight to intermodal, Simpson said. It's also being driven by the flattish status of over-the-road capacity, she said. Capacity has effectively remained unchanged since 2004, which over time has brought supply and demand roughly into balance, she said.

Another factor could be the continued sub-par economic recovery. In a show of hands at one of the general sessions, most transport buyers said their spending growth would be flat to up only 2 percent over the next 12 to 15 months.

CAPACITY CONSTRAINTS
No one knows what the future holds. Industry watchers said capacity will contract between 3 and 7 percent should the federal government be freed by the courts to begin enforcing its new rules governing drivers' hours of service on July 1. Truckers are still not adding capacity; they are only replacing equipment as it ages. The nation's rail network is fixed and finite, and there's only so much converted truck freight the rails can handle before they hit the wall. Railroads can lay new track, but since the industry was deregulated in 1980, BNSF has only added 5 percent more lane-miles to its system, Rose said.

But that is for the future, which is always five minutes away anyway. In the here and now, freight moves, trucks are out there, and shippers aren't complaining.

Transportation Trucking Intermodal
KEYWORDS BNSF Railway Co. J.B. Hunt XPO Logistics YRC Worldwide
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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