Trucking Industry Trends Look Positive Until 2016

Avondale Manager Director Donald Broughton
Avondale's Donald Broughton believes the trucking industry will strong for the next two years. Image Source: St. Louis Round Table
Avondale Manager Director Donald Broughton
Avondale’s Donald Broughton believes the trucking industry will be strong for the next two years despite industry changes. Image Source: St. Louis Round Table

Positive Trucking Industry Trends Is The Outlook Until 2016

Trucking industry trends are looking positive up to 2016 according to a study done by Avondale Partners at the 2014 Commercial Vehicle Outlook Conference. This was the analysis from managing director, senior research analyst and chief market strategist Donald Broughton.

I’ve got a relatively optimistic outlook for where the trucking industry is right now,” Broughton said. “Though we remain in a slow- to no-growth economy, the exception is tracking, which continues to drive the first industrial-led economic recovery since the early 1960s. That’s why most economic analysts remain confused; we’ve never seen what an industrial-led recovery looks like.”

The big trucking industry trends Broughton believes will be impactful is the continued shift of consumer goods purchasing from retail stories to online e-commerce platforms, increased movement of freight from over-the-road (OTR) trucks to intermodal, more consolidating within trucking’s ranks, and continued difficulty finding new truck drivers.

The tight capacity environment especially in the TL sector should result in rate increases running from 4 percent to over 6 percent during the next two years as freight demand keeps rising, Broughton stated. He also noted that truck tonnage went up 5.8 percent overall in 2013, though loads were up only 2 percent due to the increasing weight of shipments being driven by the aforementioned growth in industrial and not actual consumer activity.

Regulations continue to shrink capacity,” he said. “I talked to many involved in trucking failures over the last 12 to 18 months and found they all had one thing in common – they’d been forced to adopt EOBRs.” He added that a 8-10 percent reduction in miles could cost a truck driver 10-15 percent of their pay. More then likely, they would call it quits. This would leave 5-15 percent of the fleet idle. Carriers would have to account for that and likely pay truck drivers more to account for the loss of miles.

Demand is up and diesel prices are actually flat to down,” he noted. “So what you have here are failures being driven by regulation.” Usually, trucking failures are caused by high diesel prices or low demand. That is not the case this time. Diesel prices are down and demand is rising. This leads Broughton to his decision that trucking failures are being caused by regulations.