One of the more interesting sessions at this week's WERC Conference in Atlanta was on the subject of trucking rate trends and forecasts. Experts Anthony Hatch of ABH Consulting, Jason Seidl of Dalhrman Rose, and economist Noël Perry of Transportation Fundamentals provided some interesting insights into what shippers might expect over the next several years.
For trucking companies, all of the major cost factors, i.e. equipment, labor, overhead, and fuel are moving up; and over the next two years, the total of these will increase by 6%. For shippers, the bad news is that we will continue to see rate increases of 6-10% over the next two years -- excluding fuel.
As/if the upturn continues, we will once again approach the practical capacity limits of the industry. As one might expect, the problem is not lack of equipment, it is lack of drivers. Perry estimates the current shortage at 80,000, and as regulatory considerations such as CSA 2010 and new rules of service kick in, we will see an annual drag of 70,000 drivers due to disqualification and reduced productivity. Plus -- it is not such a great job anyway, paying $45,000 - 50,000 annually, with long haul drivers home about once a month. To paraphrase an old C&W favorite, "Mama, Don't Let Your Boys Grow Up To Be Truck Drivers".
The major beneficiaries will be the railroads, primarily intermodal service, with attrition from truck to rail of approximately 1.5% annually.
This is a new culture for the Supply Chain Manager. Between 1950 and 2000, he/she could expect costs to decrease most years. Since 2000, we have been in a culture of rate increases and will continue to be so for the foreseeable future.
Image by Mark Hunter