Big Truck TV
In Part 3, David G. Ross - Managing Director, Stifel Nicolaus discusses how the economy was a negative trend on trucking, how driver shortages remain a challenge along with aging equipment. He also discusses how the Government is more inclined towards more regulation in the year ahead and how CSA was a net negative to industry capacity. David, also reviews his optimistic belief that rates will go higher, more freight will be moving using intermodal and we'll see an increase in movement towards dedicated carriers.
What impacted the trucking industry the most in 2012?
An uncertain economy impacted the growth a lot of people hoped for this year. The industrial, as well as the retail economy fough to show much growth. Interestingly enough however, we did have a little more freight moving around the country than the previous year. The driver shortages we hear so much about are unfortunately very real. Turnover rates stayed near 100% for the truckload industry and will continue to be a challenge. With unemployment benefits being extended, people have other options and driving doesn’t appear to be one of them.
Driver shortage is very much a concern, but in our earlier interview with Tom Kretsinger, Jr., he brings the aging fleet dilemma to the forefront, is this really something to worry about?
I agree that this will be a real problem. We are seeing cases where carriers are trading in 3 trucks to buy one truck and this is having a net negative capacity impact on the industry. In order to help this situation, rates need to go up to help offset these cost. As to when this may happen, we don’t know but it is critical to pay for the new equipment and pay for increase wages for the drivers.
Earlier, Page Siplon was very optimistic about increased freight flow for next year, what are your predictions on this, for 2013?
Given the current economic headwinds, I don’t see how freight will recover quickly. Although we are not anticipating a recession and we’re not forecasting to go negative, our prediction is from zero to 2% freight growth next year. This isn’t a big recover by any means, we think capacity will remain flat with the possibility of contracting a little with increased regulations and is probably going to go up 2% – 3%.
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