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Concerns for Trucking Companies

May 28th, 2018

A survey conducted by Fleet Owner magazine in conjunction with investment company Jefferies & Co. has found that many trucking companies are pessimistic about the odds of obtaining rate increases for 2012 and believe that this state of affairs will only make earning a profit even harder.

However, the same survey revealed unexpected optimism about new regulations affecting the industry. Hours-of-service (HOS) requirements and the government’s new Compliance, Safety, Accountability (CSA) program are expected to have less of a negative impact the industry than expected, with many carriers expecting the new regulations to be easier to meet than many in the trucking industry initially predicted.

“Regarding the still unsettled HOS regulations, for instance, our mid-year survey results revealed that a plurality of respondents… believed that a revised HOS rule could be a drag of at least five percent on productivity,” researcher Peter Nesvold noted. “However, these expectations dropped significantly, with only 28 percent of our year-end survey respondents citing an expected productivity hit of this magnitude. Surprisingly, nine percent of respondents at year-end are anticipating no productivity impact at all.”

Fears that CSA regulations would negatively impact the industry have also become much less pronounced, although Nesvold was at a loss to explain the change, although he suggested that one possible reason may be the perceived edge that carriers with qualified drivers have over other carriers.

The surveyors gathered data from trucking companies in mid-2011 and then again near the end of the year in order to get a handle on the mood of the industry. According to the Nesvold, carriers polled in mid-2011 projected new contracts would increase by two to five percent. By year-end, that expectation had fallen to two percent or less.

“Our sense is that the industry essentially talked down its own expectations due to the onslaught of economic worries following the S&P downgrade of U.S. sovereign debt, which was the most significant economic event between the mid-year and year-end surveys,” said Nesvold. “Fortunately, the percentage of shippers asking for a cap on fuel surcharges also moderated.”

Nesvold said that he expects the trucking industry to continue to feel pressure to increase profits throughout 2012. Worries about the need to increase pay for truck driving jobs has subsided, however, with pay increases for truck driving jobs expected to remain below two percent as 2012 gets under way. Other costs continue to rise, however, and Nesvold said that a large majority of those polled said that rate increases of more than two percent will be necessary for industry growth.