A Perfect Storm is Churning on the Horizon of the Trucking Industry
Posted on Tue, Aug 17, 2010 @ 09:57 AM
The Department of Transportation (DOT) sent its proposed Hours of Service (HOS) changes to the Office of Management and Budget (OMB) Monday (7/26) to settle yet another challenge to the rules drivers and trucking companies must follow.
Meanwhile, Transport Topics reported this week that 20% of truckload fleets increased driver pay in the second quarter of 2010 citing Gordon Klemp, principal of the National Transportation Institute in Kansas City, MO.
Continuing difficulties in attracting new drivers, a situation that will only be exacerbated by expected reductions in work and driving hours contained in the proposed HOS regulations, are contributing to this perfect storm.
Any reduction in driver working and/or driving hours will further reduce already strained capacity and require more drivers and trucks to move the same amount of freight.
Flatbed carriers led trucking with more than 30% of such companies raising driver pay, while 20% of refrigerated carriers and 11% of dry van operators did so in the second quarter according to Klemp. He also predicted significant increases in the third quarter.
With carrier margins already depressed as a result of market pressures during the recession, shippers can expect sizeable rate increases to fund these long overdue pay increases.
In a related story, transportation and logistics professionals predicted major changes and increased costs associated with any reductions in driver HOS. Shippers claim they’ve already adjusted their operations as much as possible and any HOS changes would require them to reevaluate their supply chain.
Reduced HOS = reduced capacity = increased need for drivers = increased pay rates = increased freight rates = increased end user costs.
As the economy rebounds and freight levels increase the pressures on the supply chain will increase as well. Shippers would be well advised to truly partner with shippers to tweak their operations and maximize driver/truck utilization. The alternatives are even more expensive than rate increases.
The perfect storm is churning on the horizon.
Written by Kevin Mullen, Directory: Safety