Trucking Capacity Crunch Leading to Record Freight Rates

January 25, 2018

By Evan Lockridge

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Competition for truck drivers is fierce and one reason for tight capacity. Photo: Jim Park
Competition for truck drivers is fierce and one reason for tight capacity. Photo: Jim Park

There is increasing evidence that the supply of trucks available to move freight is outpacing demand, based on a flurry of recently released reports – but it’s also helping push freight rates higher.

ACT Research reported this week that its For-Hire Trucking Index rose faster than the capacity index in each of the last 12 months, allowing the supply-demand balance to climb to the highest reading this index has ever recorded.

“The wide spread between freight and capacity additions bodes well for continued strength in freight rates into the new year,” said Tim Denoyer, ACT vice president and senior analyst at the truck market research firm. “Clearly, truckers are entering 2018 in the best negotiating position in many years.”

“Clearly, truckers are entering 2018 in the best negotiating position in many years.”

ACT’s survey of trucking companies also found a wide range of productivity effects from the recent severe weather. These centered on a 10% utilization hit in late December and early January for the fleets in the affected areas, but as one trucking executive noted, “the weather hasn’t affected the demand for capacity!” Moderate productivity impacts were felt even in the Southeast.

Shippers Feel the Pinch

Meantime, the Washington Post reported that more and more trucking operations are simply running out of capacity. As evidence, it cited a study that polled 1,600 shippers in late 2017. The big finding? Truck capacity is the trucking industry’s “primary hurdle” this year.

This 2018 State of the North America Supply Chain Survey from Averitt Express also found nearly 1 in 5 respondents had experienced issues with capacity last year. In comparison with 2016, capacity issues nearly doubled for shippers.

Much of the reason for the capacity crunch is the fact that 2017 was a good year for the U.S. economy, as it grew at least at a 3% annual rate in the second and third quarters following a lackluster 1.4% performance in the first quarter. Fourth quarter 2017 and full-year gross domestic product figures are set for release by the U.S. Commerce Department on Friday.

A better economy, however isn’t the only reason trucking capacity has tightened.

Is the ELD Mandate to Blame?

As Lawrence Gross, president of Gross Transportation Consulting, wrote in a piece for the Journal of Commerce this week, “The North American supply chain is now in the teeth of a substantial shortage of truck capacity.”

He said there are several reasons this is happening, following his attendance at a seminar at the University of Denver that brought together both trucking and intermodal executives.

Among the reasons, Gross observed, is the recent electronic logging device mandate that went into effect in December, which he said put the trucking industry “well on the road toward a level playing field where all truckers play by the same rules."

But that’s not the only reason.

Gross noted the capacity shortage has also been affected by the fierce competition among carriers for drivers, as well as more carriers willing to operate at higher levels of capacity utilization.

A separate story, also in the Journal of Commerce, looked at how shippers need to be prepared for what the publication called “record U.S. trucking rates,” due to not only a strong U.S. economy, but also increased global economic activity, according to Economist Donald Ratajczak.

Ratajczak is expecting global trade to grow 4.5% this year and that, he said, will result in one thing for the U.S. “Growth in global trade will fill more U.S. trucks.”

How much this will push freight rates higher this year remains to be seen, but if past performance is any indication, it will be significant.

The Cass Freight Index, which separately measures both shipment volumes and truckload linehaul rates (which is minus fuel surcharges), reported respective increases of 7.2% and 6.2% in December 2017 from a year earlier. On the spot market side of trucking, those rates have jumped too, including for truckload van freight, up some 30% earlier this month from the same time in 2016.


  1. 1. Mavrick [ January 26, 2018 @ 05:12AM ]

    This soundslike good news for Drivers & Owner Operators but ...
    I can't see that I've seen any real uptick in driver pay being offered.
    I see lots of promises to make a driver's life "better" ... more and regularly scheduled home time for instance ... which are typically not true
    I see a major uptick in "sign-on bonuses" but they've always been wrapped up in requirements and incremental payouts that they're often not forthcoming in a useful manner ... if at all.
    Further, most drivers seem to be getting hurt by the ELD in several ways.
    So, as a Driver I ask; when does any of this begin to arrive in Our Pockets?

  2. 2. Keystone [ January 26, 2018 @ 06:48AM ]

    Mavrick, do you work for percentage pay, or CPM pay? I know my percentage drivers have seen a major uptick in their pay

  3. 3. Richard [ January 26, 2018 @ 07:38AM ]

    Good. I hope the freight rates continue to rise. I think these ELDs will help them rise. That may be the only good thing that comes out of these ELDs. They will not help safety, which they are supposed to do. Shippers/receivers are one of the biggest problems in trucking or most of them. Mainly the big ones They could care less about the trucks/drivers. They take their sweet time loading/unloading, while drivers get paid nothing for sitting there.

  4. 4. Russ [ January 27, 2018 @ 07:56AM ]

    The only reason for the capacity shortage is the ELD. A lot of owner operators simply parked and put their trucks up for sale, I see trucks for sale everywhere I go. Many drivers also quit and took jobs driving local farm or gravel trucks. One local flatbed company has 37 of their 107 truck seats vacant simply because the drivers decided not to play the game, those are drivers that will never drive for any other carriers that aren't able to run paper. I personally have notice the lack of truck traffic on the freeway in our rural community, we also have 15,000 tons of hay in the area that needs to be moved to California but the shipper can't get anyone to haul it for 2 reasons, lack of trucks and people not wanting to haul into California. Keep piling on the regulations you bureaucratic SOBs.

  5. 5. Kevin [ January 27, 2018 @ 11:06AM ]

    It’s not the ELD????? Are you crazy!!!! It’s mainly the ELD. When a driver can’t deliver because he runs out of time on his machine. His load becomes late. As well as every other load he would have hauled that week, that month, and that year. Capacity is tight because people with no real world experience in trucks are legislating trucking company’s. Not the ELD!
    I say man get real. Wake up. It’s ok though. I’ll keep pulling 3,4, and 5 dollar a mile freight with my dry van and my 1998 tractor. Thanks Obama!!

  6. 6. Matt [ January 27, 2018 @ 01:16PM ]

    I haven't seen an uptick in overall pay. Mileage pay went up. The miles went down. And home time is non existent. I am sick and tired of the cat and mouse guessing game trucking companies have played on me over the years. So I will be resigning from trucking permanently in April.

  7. 7. Michael Robinson [ January 29, 2018 @ 08:32AM ]

    The reality is the "dark shadow" that is hidden in the background between the broker, shipper, dispatcher, and receiver. Brokers make unrealistic demands of free services from drivers, shippers treat drivers like 2nd class citizens in their shipping locations, dispatchers cowl under the threats of the brokers, shippers, and receivers illegal expectations of the drivers, and the word...LUMPERS, and unrealistic receiving times that comply with the receivers whim, not the realities of what the driver deals with the entire trip of the load. Bulling drivers to find alternate ways to circumvent to laws created to protect them, and the public is the falt of the shippers, brokers, dispatchers, and receivers. And the FMCSA and DOT, don't shot them, their the messenger's, they do more to protect the drivers then the shippers, brokers, dispatchers, and receivers would. When the shippers, brokers, dispatchers, and receivers realize that truck drivers are being aligned to the same protection as railroaders. When was the last time you saw a railroad conductor unload a boxcar for someone?


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