Continued Growth Expected For Flatbed Trucking Sector
In a May 10th freight webinar, Avery Vise, FTR vice president of trucking research shared that the key economic indicators affecting trucking are all positive, or at least neutral. One possible concern is business inventories, which have ticked up higher recently. Potential reasons for that could be related to the need to keep product closer to customers for online sales, or even a reaction to the trucking capacity shortage itself, he said, as companies hold back some slower-moving inventory.
Of course, there are a number of external factors that could affect that rosy picture, including trade tensions and rising oil and fuel prices. But overall, Vise said, we can expect continued growth in the near term.
The flatbed sector is especially hot, and FTR expects loadings to be up 7% to 9% year-over-year through the year, perhaps even higher. Growth in van and reefer will not be as spectacular, but both will be solid through 2018.
Flatbed sector fuels the record-breaking spot market trend
Vise pointed out that according to Truckstop.com’s Market Data Index tracking, an “unprecedented tightness” in the flatbed sector is likely a key factor in the record-breaking trend in the spot market. Flatbed rates are up 45 cents per mile since the end of 2017, while van and refrigerated freight rates are down from their year-end highs.
A combination of several possible reasons are could be fueling this trend, both on the demand side and the supply side of the equation. Recent strength in manufacturing and construction has increased demand for flatbeds, as well as recent increases in petroleum prices pushing more domestic production.
On the supply side, Vise said, many people think the ELD mandate is hitting flatbed the hardest. This sector includes a lot of owner-operators and small carriers and is typically not the first to adopt new technology. “There could also be equipment constraints. We saw a sharp increase in flatbed trailer orders starting in September, and that continued until very recently.”
Near full capacity to remain until the end of the year
“We are essentially at full utilization of seated trucks, and this is where we’ve been there since the hurricanes. It is unlikely we will see any meaningful change until the fall.” Visa said.
In order to seek out more efficiencies and take out lost time, fleets will take on the delivery of new trucks and trailers that are currently in the production pipeline, implementing aggressive driver recruiting efforts, as well as making scheduling changes, having more drop-and-hook operations to ease the capacity crunch.
Vise said FTR expects elevated year-over-year growth in rates to continue through the second quarter, but to come down somewhat from “fairly inflated levels” later in the year.
Don’t expect that change to come from any reprieve from the ELD regulations, although he sees it as “quite possible” that a current temporary exemption for livestock haulers will be made permanent.
More likely, relief would come from the underlying hours of service rules themselves, although that’s a longer-term prospect. He pointed out that there’s a pilot program underway to test moving back to a split-sleeper berth option, and the Owner-Operator Independent Drivers Association has petitioned for the ability to pause the 14-hour on-duty clock once during a shift for up to three hours.
“If these things come together during a business-friendly administration, I would anticipate a good chance that one of these has a chance of happening in the next few years,” Vise noted.