Trucking and Transport Industry looking good for 2018
If you’re an owner-operator trucker, you could be well on your way to your best year in while thanks to favorable rates, reasonable gas prices and high demand for you.
That was the message from Todd Amen, CEO and president of American Truck Business Services (ATBS), during a conference call with independent truck drivers on Tuesday. “The good news about that is there are a lot of things lined up to help you become a successful – or continue to be a successful – owner-operator this year,” he said.
ATBS predicts the current market conditions to last for at least the next 18 months – or mid-2019. “This is the best time – literally – in trucking in 30 years,” Amen said. “So if you’re not having success, you need to figure out how to get success and take advantage. The next year and a half is going to be a great time to be a trucker.”
“We have the most robust freight market I’ve ever seen,” said Amen, who has been collecting trucking data for 20 years. “There’s plenty of freight no matter what segment you’re in.”
He also pointed out there is a lot of money available for financing trucks and owner-operators. “There’s still a lot of money in the world that wants to invest and earn a return,” Amen said. “It’s not as easy as it used to be – it’s not the fog-the-mirror test to get in a truck – you have to be a legitimate person who wants to be in business and probably needs to put some money down on a truck. But if you can do those things, there’re people willing to finance you.”
With the electronic logging device (ELD) mandate here to stay, Amen said, those who are operating legally stand to be in good position to take advantage of rising rates. Anyone who isn’t in compliance with the ELD after the April 1 enforcement date goes into effect, he said, will start to be put out service because of rising CSA scores and insurance companies dropping those drivers.
“That means we’re going to reduce capacity,” he said. “All those guys who have been faking it on their logs and running 130,000 miles for the last number of years – that’s going to stop as we get further into this year. And maybe that’s painful for you if you’ve been one of those people – but in the end, that’s one of the big reasons that our rates have gone up 20, 30, 40 percent over the last few months and one of the reasons they’re going to continue to go up.”
Ultimately, this means good things for the industry.
“The best news about trucking at the moment is the driver shortage,” Amen said. “It’s tough for trucking but in the end, it’s good for all of you on the line.”
Unlike 2014, which was a good year until too much truck capacity was created too quickly. “I don’t see us creating that truck capacity in the near term,” Amen said, “simply because in 2014 we had been through the Great Recession and we had an 8%-plus unemployment rate – so there were a lot of people who had been displaced out of long-term careers that all of a sudden weren’t earning money and they needed to find something to do. They would love to drive a truck and make $50,000, $60,000 per year – so we could create a lot of capacity.”
2016 and most of 2017 “were struggling years,” Amen said. “And then things finally got good at the end of last year.”
With unemployment hovering around 4% these days, Amen said that “pretty much anyone who wants a job making $50,000 per year can find it. There aren’t a lot of people stepping up looking to become truck drivers. So that puts a lid on that capacity.”
Fleets seeking independent truckers “Fleets expect to grow their owner-operator count this year because it’s a robust market and they want more capacity out there running because there’s more freight to haul,” Amen said.
Earlier this year, ATBS polled a “few hundred” fleet operators if they plan to add more independent contractors to their fleets this year. Only 9% of respondents said they don’t plan to. A plurality of 35% said they would add 5% to 10% more owner-operators; 26% said they expect to add 10% to 20% more independent drivers; 20% said they would add less than 5% more; and 11% said they would increase independent operators by more than 20% in 2018.
We really started to see robust freight at the end of last year after the hurricanes and we really haven’t slowed down,” Amen said.
There are more than 50 loads available for every one truck looking for a load, according to latest TruckStop.com index numbers released earlier this week. “In our opinion – over the last 10 years we’ve watched that index – when we’re above a ratio of 12-to-1, that means things are good for truckers,” Amen said. “When we’re below 12-to-1 – like we were during the recession – things are bad for truckers. So, at 50-to-1, we’re four times the break-even amount, which is an indication that things are incredible and the market is really good for truckers.”
A lot of spot rates have gone up 40 to 50% over the last nine months, which is more good news for truckers.