Fleet Management

Driver Issues May Hurt Trucking Industry Growth in 2015

February 12, 2015

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Analysts at GE Capital compiled a list of expected trucking industry trends for 2015. GE highlighted expected outlooks for Freight, Equipment and Rates and Capacity.

The analysts believe that carriers were benefitting from an ideal supply and demand environment entering 2015 with profits strengthened by freight trends, pricing leverage due to tight capacity, and lower fuel prices.

They also expect the trucking industry to be affected by challenges in 2015. Driver turnover is at a historically high level in the long-haul market. There are operating inefficiencies due to regulatory mandates, driver shortages and pressure to improve driver compensation and benefits.

The freight outlook for the year is positive with new construction activity, light vehicle sales and retail sales continuing to drive freight tonnage. Demand in all these segments is expected to benefit from a modest hike in domestic GDP growth during 2015.

GE analysts expect energy production to be a potential negative for freight given a sharp decline in crude oil prices but overall, they expect the lower fuel prices to counteract this and benefit trucking in the long run.

They expect an upward bias in interest rates with the Federal Reserve potentially tightening in 2015 but don’t believe it will pose a significant threat to the primary drivers of freight tonnage as long as the increases come gradually and are reflective of a steadily growing economy. However a significant spike in interest rate volatility could present a challenge to positive tonnage market.

GE’s outlook for equipment production and sales is that it growth will slow relative to 2014 in the medium and heavy duty truck markets but should remain positive during 2015. Much of this is due to the huge boost that came towards the end of 2014 continuing into the beginning of this year, with analysts saying that it is unrealistic to expect that pace to continue through this year.

They noted that while lower fuel prices have decreased the demand for newer, more fuel efficient trucks, the market will remain positive as fleets continue to order new vehicles to alleviate capacity constraints and to stem driver turnover.

Freight rates are expected to be moderate this year as all the new trucks that were ordered in 2014 relieve some of the strain in capacity. However, the difficulty of new market entrants due to stiff regulations, driver shortages, and liability and insurance costs will prevent the industry from increasing capacity enough to completely meet the demand. In addition to that, upward pressure on driver wages and benefits will help to justify higher freight rates despite the decrease in fuel surcharges.

For additional information and analysis, sign up for GE Capital’s Industry Research Updates and Monitors.

Comments

  1. 1. Dan Boyce [ February 15, 2015 @ 09:03AM ]

    this long time over the road driver has adopted the "2daily program"-i tell at least two people -in their 20's- daily to stay away from this industry!

  2. 2. Goober Smoocher [ February 19, 2015 @ 01:20PM ]

    Let's see............living in a Truck for 4 to 5 weeks at a time..........driving 11 hours/day, every day + 3 hours of loading/waiting, etc b4 you can get those tires rolling again. you are only paid when the wheels roll.i can't imagine why anyone wouldn't flock to these jobs in droves. They're Grrrrreat!!

    NOT

  3. 3. Fred R. [ February 22, 2015 @ 04:36PM ]

    We all keep hearing about the profits of these big companies,none of the profits come bakc to the driver though. Driving since im 17, still cant make ends meet. Maybe I ought to start drinking again...lol...frustrated Fred...oh yeah,these huge companies(UPS) would rather hire inexperienced drivers who destroy equipment,accidnts,cant spot trouble,then pay a loyal,experienced,true driver what he .needs to feed his family. I just don't get it at all.

  4. 4. scotty [ March 03, 2015 @ 11:32AM ]

    I recently lost my CDL due to a snafu regarding lost medical card info that I faxed to Austin. Decided to retire after 30 years of driving, no more hassles.

  5. 5. John [ March 05, 2015 @ 07:30PM ]

    The Gov't. is in this from both sides. Too much regulation, on one hand, and the open southern border, on the other. The ever growing ridicoulus regulations that are pushing vetern drivers into early retirement, thus creating a driver shortage. On the other side of the coin, the open border, is putting unqualified drivers behind the wheel, which in turn jepordizes the safety of the motoring public.

 

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