Page 17 - ATR 2 2015 web

aRkansas highWay merce that results in each local area (truckload) price increases over the next
depaRTMenT WiThdRaWs because construction isn’t taking place couple of years, we would like to point
ConsTRuCTion pRojeCTs, — then you begin to understand the out these estimates will likely be proven
unCeRTain fedeRal funding trickle-down effect and the urgency wrong,” David G. Ross, a managing
The Arkansas State Highway of solving this national problem,” said director at the Stifel Transportation and
and Transportation AHTD Director Scott Logistics Research Group in Baltimore,
Department (AHTD) has Bennett. said.
withdrawn 56 construc- Since December Truckload carriers will need to raise
tion projects scheduled 2014, AHTD has been driver pay substantially to attract the type
for consideration in its conducting an evaluation of qualified candidates needed to haul
April 21 bid opening of scheduled federally- freight. On top of that, a host of new
because of continuing funded projects prior to driver-related regulations will make hiring
uncertainty of federal-aid each bid letting to ensure truck drivers harder, and more expensive.
reimbursements avail- sufficient state funds are “The biggest cost component for
able from the Federal available to fulfill com- a truckload carrier is labor (which is
Highway Trust Fund. mitments. primarily drivers), comprising anywhere
The estimated value of projects from 25 percent to 35 percent of reve-
withdrawn is more than $112 million Rising dRiveR CoMpensaTion nue,” Ross said. “Therefore, if we believe
and includes $50 million authorized Could up TRuCkload pRiCing (truckload) driver wages need to go up
by the Arkansas Highway Commission Hefty increases in truck driver approximately 50 percent to bring them
for its 2015 highway overlay program. wages are expected to propel truckload in-line with the (wages paid in the)
The estimated construction value of the rates higher in 2015, pushing pricing LTL market and attract significant new
withdrawn projects is $162 million. up by double digits, one transportation entrants, underlying pricing would need
“If you stop and think about the analyst warns. to rise 12 percent to 18 percent, all else
economic impact this has — not only “While our current earnings mod- equal, to fund these increases.”
on construction jobs, but the lost com- els assume low-to-mid-single-digit 

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