Page 41 - ATR 1 2013

as there is no recession, Costello expects However, those numbers are deceiving riers to about 100 percent levels. That
that to be temporary before things because the unemployment rate only will be a continuing problem, especially
pick up in 2014. From fall 2011 to fall tracks people who are actually look- as the housing market picks up steam
2012, LTL volumes dropped .8 percent ing for a job. The important figure is and more potential drivers take con-
while large company truckload volumes job creation. That number has been struction jobs. The driver shortage that
fell 2.3 percent. Truckload volumes stuck at 150,000 jobs per month and began forming in 2012 is projected to
for small companies, defined as those should remain at that pace the rest of reach 239,000 openings in 2022. The
with less than $30 million in annual this year. In a good economy, it reaches industry will need 96,178 new drivers in
revenues, fell 13.4 percent. Flatbed, 350,000. the next 10 years, 37 percent because of
tank, temperature-controlled and dry Also, federal budget deficits con- retirements and 36 percent because of
van loads all have been on the decline. tinue to be a $1 trillion annual prob- industry growth.
Long-haul drives of 1,000 miles or more lem. The strategy of increasing taxes Small fleets face unique challenges.
were down 15.4 percent from one fall to on the rich won’t bring the budget into Some are struggling to get credit and
another. balance because while only 2.3 percent selling two trucks in order to buy one.
Carriers are on the right side of the of households have annual incomes More than 30 percent are leasing their
supply and demand equation, however, over $250,000, they already pay 30 to vehicles rather than buying them.
which should help pricing. The nation’s 35 percent of all income taxes. Cutting Still, Costello said, trucking
fleet capacity is still below 2007 levels. only discretionary spending also won’t remains remarkably diverse with both
While demand and truck supply have be enough because the bulk of gov- large and small companies. “This is still
been roughly tracking each other since ernment funds go to defense, Social a very competitive market with a lot
there was an oversupply in 2009, the Security, Medicare, Medicaid and inter- of different players in it,” he said. “Is
nation’s fleet cannot handle two con- est on the national debt. it more consolidated than it once was?
secutive quarters of three percent gross The improving economy has Sure. But compared to other industries,
domestic product growth at current resulted in rising driver turnover rates it’s still very competitive. There are a lot
levels. at both large and small truckload car- of players.”
That’s partly because the fleet
is aging – from an average age of 5.8
years in 2006 to 6.8 years in 2011 –
and carriers are reluctant to buy new
equipment because of purchasing and
maintenance costs. New tractors now
cost $125,000 compared to $95,000 in
2006. Moreover, because their assets
have aged, carriers have less trade-in
value and must finance more of their
purchases. For example, a seven-year-old
tractor might trade for $20,000, mean-
ing a company would have to finance
$105,000 – more than the entire cost of
a tractor in 2006.
Indeed, according to Costello,
equipment has replaced diesel fuel as
carriers’ most worrisome expense. After
dropping to $2.99 a gallon in 2010,
diesel fuel hit nearly $4 in 2012, but
is expected to drop to $3.83 in 2013.
Fortunately, rising fuel prices don’t
result in nearly the number of truck-
ing failures as in the past because fuel
surcharges have become accepted in the
marketplace.
In other economic news, unem-
ployment is slowly dropping from 8.1
percent in 2012 to 7.7 percent in 2013.

arKanSaS truCKing report | issue 1 2013 41