Truck News | Truckload Pricing Could Rise 4% This Year: FTR

01.16.17 | James Menzies, Truck News

Trucking rates in the US will increase by about 4% this year, according to a projection from industry forecaster FTR.

In its monthly State of Freight webinar, FTR transportation economist Noel Perry, said truckload contract rate increases could take hold as early as the first quarter of this year. The spot market is four times as volatile, he noted, meaning spot market prices could swing as high as 15-20%, “so there is real exposure if you’ve got a lot of spot market business.”

Perry also said there’s about a 60% chance of a “major truck shortage” in the next four to six months. This is being driven by a tightening of capacity that’s expected to occur as fleets install electronic logging devices (ELDs) ahead of the December 2017 mandate. Capacity utilization sits at a bout 97%, but could exceed 100% this year or next.

“If utilization gets above 100% there’s going to be some real stress in the marketplace,” Perry said. “That is why our pricing forecast is going up.”

FTR does not expect the incoming Trump administration to derail impending regulatory requirements such as the ELD mandate.

“That’s a statutory requirement that has pretty wide acceptance, so he’s unlikely to do much about that,” Perry said of the ELD mandate. “The real question is enforcement and to what extent will people cheat on this requirement?”

However, Perry conceded cheating on the ELD requirement will be difficult and risky.

“If you have an accident, what do you think the plaintiff attorney is going to do first?” he reasoned. “Let me see your ELD records. If you don’t have any, you are then in violation of the law and can be assumed by a jury to be a careless trucker. The same goes for customers in that scenario.”

Perry said shippers are already asking carriers for proof they are, or will be, ELD-compliant.

He also questioned the trucking industry’s ability to ramp up its capacity to compensate for the lost productivity the ELD mandate will create. FTR predicts the industry will have to hire 100,000 more drivers in 2018, above and beyond its usual hiring rate.

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