2018: Trucking’s Brave New Year
Few in the nation can argue with the numbers. By the end of 2017 GDP numbers provided ample proof the U.S. economy continued to build real momentum that started as soon as the new administration waded into the swamp and began clearing a channel, a channel that just under a year later is flooding the U.S with economic potential in ways not seen in decades. By December 14, 2017 fourth quarter GDP growth figures revealed the fastest-growing economy in years.
According to the Atlanta Federal Reserve’s GDPNow forecast model, the U.S. economy growth is on track to match the prior quarter’s 3.3 percent annualized pace -- following they said, “Surprisingly strong data on domestic retail sales in November.” When the dust settles on Christmas and holiday purchasing it’s likely the figure may settle somewhere North of that – not quite the North Pole, but it is likely most of Santa’s helpers in the motor freight industry came away feeling pretty merry regarding business prospects for a Happy New Year.
Tax reform also made for great political theater as 2017 closed, but Congress got it done and put the bill on the President’s desk – indeed this legislative stocking stuffer for the American economy will be delivering treats for months to come, and especially to all the good girls and boys in the U.S. trucking industry.
It was an incredible year for Trucking and the economic momentum The Roemer Report identified in November shows surprising strength with all indications that it will continue well into 2018. So far, three-percent-plus growth has sustained itself for three quarters and there is little to suggest things will slow down any time soon.
The coming year will be a pivotal one for commercial trucking and all its stakeholders must respond decisively to meet the accelerating demand for shipping and goods and services delivery, driven by renewed economic energy in most all commercial/industrial sectors of the economy.
Although durable goods order stats cooled off somewhat from the two prior quarter’s solid numbers, part of the year’s overall performance had to do with the upsurge in orders for trucks and new truck technologies—part of the industry’s response to a number of factors including freight hauling data and emerging ELD regulation.
According to the FTR Trucking Conditions Index data reported by Commercial Carrier Journal, the market is tilting in carriers’ favor. According to FTR, economic conditions for trucking companies measured by FTR’s monthly Trucking Conditions Index jumped in October. “What’s more, the conditions driving the positive momentum for carriers should continue into 2018, said FTR Chief Operating Officer Jonathan Starks, who advises carriers to “be prepared for big changes — and big opportunities.”
Starks said FTR’s index is nearing a double-digits--which he explains indicates there are big opportunities for carriers with regard to both rates and the loads they carry. “Of course, there are still quite a few ifs in the near future. If the economy can continue to grow at around a three percent rate, we will see freight demand maxing out any excess capacity.”
President Trump addressed the nation in December on his track record regarding the country’s regulatory burden. So far, he said, the administration had cut 22 regulations for every new one created last year. Similarly our President said that in the 11 months since his administration began, 1,500 planned regulations had been killed. In a televised ceremony the President “Cut the Red Tape” in front of a huge wall of paperwork representing the regulations required to build a bridge. The giant stack was staged next to a smaller stack (after Trump reforms) and demonstrating the administration’s dedication to cutting economy-killing regulation.
Although the Trump administration’s regulatory reform train keeps rolling, as the New Year rings in many fleet owners and owner/operators are still hustling to meet ELD mandates. Since the Federal Motor Carrier Safety Administration’s late 2015 release of its final rule for using electronic logging devices, reports CCJ, there’s been a lot of ELD technology development. People can now select hardware and software options from dozens of vendors.
That also means, said CCJ, serious preparation on the enforcement side. “FMCSA has had reported delays implementing its roadside data-transfer system by which officers will interface electronically with any of these systems,” noted CCJ editors but at the time of this writing, the agency said it expected to have it in place prior to December, 18 enforcement deadline for implementing ELDs.
CCJ noted similar implementation delays by truck operators. Most technology suppliers offer either a dedicated-unit or BYOD (bring your own device) ELD. For BYOD users, a freeware app supports the engine plug-in device for full in-cab and/or back-office functionality. Garmin makes one. The baseline tech for a BYOD is about $250, but that expense can add up, and if reports of truckers hoping for leniency or weak compliance enforcement for the first couple of months are true, the wait-and-see crowd may receive a lump of coal well before Christmas next year.
ATA’s advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index – which despite slipping slightly in September--followed a strong 4.7 percent gain during August. Nevertheless, the good news remained that overall rates were up 7.4 percent from the same period last year and that includes some major disruptions from last year’s hurricanes.
FTR’s Stark said if ELD implementation and enforcement stay on track, the spring will bring capacity utilization over 100 percent and the freight transportation market will be scrambling to align loads and trucks. “If severe winter weather comes into play,” he warned, “transportation managers will be facing their toughest year since 2004.”
Yes, 2018 is stacking up to be a brave new year for U.S. trucking, filled with amazing opportunity. Truckers are poised to capture needed profits, but by all accounts, if the industry is to capitalize on the administration’s economic momentum, and the emerging retail, consumer goods economy that relies even more on truck-born delivery, then we have plenty of work to do.
The industry’s gains in 2018 are on track to set records, but those gains may not materialize unless it gets serious about effectively managing operations for safety and being as proactive as possible regarding compliance. Truckers and industry executives will be called upon to put even more effort into sorting out driver pay, recruiting and hiring practices in order to successfully put the additional drivers in cabs that we all need to drive our economy like never before.