REPEAT: MNI REALITY CHECK: US Truck Tonnage Off August Peaks

Repeats Story Initially Transmitted at 15:48 GMT Nov 14/10:48 EST Nov 14

--Dec Deadline Looms Re Compliance For FMCSA Rule On Electronic Logging Device 

--Industry Looking For Ways To Deal With Truck Driver Shortage

By Vicki Schmelzer

     NEW YORK (MNI) - Truck freight tonnage edged lower in September, the latest

available month, but this was down only modestly from record levels posted in

August, so volumes remain at high levels, said Rod Suarez, economic analyst at

the American Trucking Associations (ATA), in an exclusive interview with MNI as

part of the REALITY CHECK series. 

     Trucking volumes should remain solid into year-end, but there is

trepidation about the pending deadline regarding the Federal Motor Carrier

Safety Administration's Electronic Logging Device (ELD) rule, where final

compliance, with only some exceptions, kicks in December 18.  

     On the overall rise in truck tonnage seen in 2017, "a lot of this freight

is due to the economic recovery. As we re-approach full employment, freight

levels come up with it," Suarez said.

     The ATA's seasonally adjusted For-Hire Truck Tonnage Index topped out at a

record high of 145.7 in August (final), before slipping 0.9% to 144.4 in

September (advanced). The final September reading is available currently via a

subscription-only report and will be made known to a wider audience later in

November. 

     In April 2009, a month after the S&P 500 posted a crisis-low of 666.79 on

March 6, 2009, the ATA' tonnage index slipped to just over 100, to the lowest

levels since January 2002. 

     It took until 2013 to see a sustained rise above pre-crisis highs near 117,

seen at times in 2006 and 2008, but once vaulted, the tonnage index has not

looked back, buoyed by increased U.S. economic activity.  

     Like prominent U.S. ports, which are seeing fewer, but larger ships

carrying more tonnage, the U.S. trucking industry has streamlined also. 

     "Post recession, there has been a tightening of the industry - in other

words, fewer carriers are moving more freight," Suarez said. 

     "Things like a transition to the hub and spoke system have made the

industry more efficient than ever, as it was required to survive the economic

downturn," he said. 

     In December 2015, the FMCSA unveiled its final ELD Rule, suggesting

voluntary use of ELDs initially, with full compliance by Dec. 18, 2017. Those

few with exceptions, i.e. with existing Automatic On-Board Recording Devices

(AOBRDs), must comply by Dec. 16, 2019. 

     On the pending FMCSA rule deadline, Suarez observed, "this will likely

affect capacity, as the driver pool will be strained and several companies have

decided to simply close up shop instead of comply. But overall, tonnage levels

shouldn't be affected much."

     What may be a greater problem for the trucking industry is the driver

shortage. 

     In October, ATA Chief Economist and Senior Vice President Bob Costello

published a piece highlighting the issue. 

     "In 2016, the trucking industry was short roughly 36,500 drivers, which was

down from 45,000 in 2015. However, the shortage is expected to surpass 50,000 by

the end of 2017," he said

     "If current trends hold, the shortage could swell to over 174,000 by 2026,"

Costello wrote.

     His analysis did account for the ELD rule change, but did not "consider the

impact of other potential regulations in the future." 

     Costello explained the difference between the truck driver shortage and

driver turnover rates, which reflect the demand for drivers. 

     "The vast majority of driver turnover is churn in the industry - drivers

moving from one carrier to another," he said.

     "As demand for drivers increases, trucking companies try to take drivers

from other carriers by offering sign-on bonuses, higher pay, newer trucks, and

better routes," Costello said. 

     In the coming 10 years, the U.S. trucking industry will need to hire an

average of about 90,000 drivers per year, the ATA reckoned. 

     "Replacing retiring truck drivers will be by far the largest factor,

accounting for nearly half of new driver hires (49%). The second largest factor

will be industry growth, accounting for 28% of new driver hires," Costello said.

     Solutions to the trucker shortage include: raising driver pay, limiting

time away from home, lowering the driving age below the current minimum age of

21, improving truck driver public image, "transitioning military personal to

careers as truck drivers" and "better treatment by the supply chain," he noted. 

     In a REALITY CHECK interview with MNI on the U.S. jobs market, Janis

Petrini, business owner and manager of the Grand Rapids Express franchise in

Michigan, discussed an innovative program to address the trucker shortage in

Michigan.

     "We have the correction facilities collaborating with a CDL-B driving

school in order to produce enough CDL-B drivers so when people exit the prison

system, they've already been trained in a skill to have a job when they leave,"

Petrini said.

     She stressed that "these inmates have been very carefully vetted - they've

got an amazing record in the time that they've served." 

     Those chosen have been "hand-selected to go through this program, where

they're actually leaving the correction center and going to train and then

coming back," Petrini said.

     At the end of the program, the candidates will have a valid driver's

license and CDL training, she said. 

     The Department of Motor Vehicles describes a Class B Commercial Driver's

License (CDL) as one that is required to operate "a single vehicle with a GVWR

of 26,001 lbs. or heavier. AND/OR. Any vehicle as described above that is towing

another vehicle weighing UP TO 10,000 lbs."

     As background, Michigan's Department of Corrections currently operates two

"Vocational Villages," one in Ionia, which opened in 2016, and one in Jackson,

which opened this past August.

     In addition to CDL/Truck driver training, these facilities offer schooling

in building trades/carpentry, CNC machining, welding, robotics, auto mechanics

and other skilled trades. 

Editor's Note: MNI's REALITY CHECK series is intended to complement and

anticipate economic data. 

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com