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The State of Expedited Trucking: 2018 Forecast

By Sean M. Lyden - Staff Writer
Posted Jan 15th 2018 11:09AM

What are the key trends to watch in expedited trucking in 2018? What will be the impact of the ELD (electronic logging device) mandate? What is the outlook for fleet owners? And what direction is the expedite market, as a whole, heading--will it grow, hold steady, or hit economic headwinds?

Expedite Now asked four industry experts to peer into their crystal ball and share what they see for 2018. Here are their insights.

ELD Impact
“I think 2018 will see a little bit of a ‘shaking out’ of the industry because of the ELD mandate,” says John Elliott, chief executive officer for Load One LLC, an expedited trucking carrier headquartered in Taylor, Mich. “It will force carriers to operate legally, which will level the playing field for those carriers that are already using ELDs and operating properly within the hours of service (HOS) regulations. I think some carriers who survived and profited by exceeding the HOS regulations will have to compete legitimately. I think many of them will not be able to, and we’ll see some smaller expedite carriers close their doors.”

According to Stu Sutton, CEO of Full Circle TMS, a Toronto-based transportation management software firm, the mandate may lead to some drivers leaving the industry, putting a strain on capacity--at least initially.

“There are some drivers who resist change and resist this concept of having to be automatically tracked,” says Sutton. “I was speaking with a customer recently who said that they're hearing grumblings from drivers who are talking about taking the remainder of December off after the ELD mandate goes into effect (on December 18). They’re talking about taking that time off to see what's going to happen. And I know that’s around Christmas time, but it's still going to be an impact if you lose that kind of capacity of trucks.”

Fleet Owner Growth
For the past five years, fleet owners have been the fastest growing segment of attendees at Expedite Expo, the annual industry event focused exclusively on the expedited trucking sector. Does that trend accurately reflect what’s happening in the wider expedite market? And what is the outlook for the fleet owner segment in 2018?

“The recent trend (past ten years) has been growth of the fleet owner vs. owner-operators,” says John Mueller, founder of The Transportation Station LLC, a Toledo, Ohio-based consulting firm that provides a full-range of regulatory and safety compliance services to trucking companies.

Why? What’s driving that trend?

“Since the economic decline of 2008, financial institutions have tightened lending policies and practices, now demanding larger down payments and higher credit scores of borrowers, which has become increasingly difficult for interested potential owner-operators to secure first-time financing,” says Mueller. “But like the housing sector, the truck financing sector has been softening lately. I would venture to guess that soon we should see the return of reasonable lending guidelines for trucks.”

Sutton says that the growth in fleet owners is a welcomed trend for carriers when it comes to recruiting drivers. “There's lot of work to the recruiting. So, if I’m a carrier and can get a fleet owner who has five drivers, I’ve just increased my capacity by five trucks, which is a lot easier than recruiting one driver at a time. That is, as long as the carrier keeps that fleet owner happy. Otherwise, if they don't keep that fleet owner happy, those five trucks will go away real quick.”

But, as Elliott points out, driver recruiting and retention is a challenge for fleet owners, too. “I think fleet owners will continue to grow in 2018,” says Elliott. “But finding good drivers seems to the biggest hinderance to that growth.”

John Lalonde, sales representative for Buckeye Western Star in Columbus, Ohio, agrees. “The challenge for fleet owners will continue to be drivers--or lack thereof. The small fleets and owners that are creative and continue to evolve with the business will attract drivers and prosper.”

Cargo Van Capacity
What about cargo van capacity? In recent years, there has been a decline in demand for cargo vans vs. straight trucks in expedited trucking applications. Any changes to that trend?

“I think van usage will trend up,” says Elliott. “As demand heats up and straight truck capacity is strained, vans will be needed more than ever. Since vans aren’t tied to the HOS regulations, I think they will be needed quite a bit to get smaller shipments or partial shipments to plants while the truckload now takes longer to get there.”

Says Mueller, “There will always be a demand for cargo and Sprinter vans in the expedite industry. For some time, we have seen a flood of these vehicles into the industry because they are the easiest vehicle to use to gain entry into the industry. I am amazed that some enterprising individuals have been very successful in establishing new expedite companies based on the van configuration without the use of larger straight trucks or tractors. These individuals have been able to see a specialty niche and provide a superior service.”

Market Trajectory
Is the expedited trucking market growing, holding steady, or heading into economic headwinds?

“I think we will see the expedite market grow in 2018,” says Elliott. “ELD’s will cause a disruption in the market for most likely 6 months. Shippers, brokers and 3PLs (third-party logistics providers) are going to have to adapt quickly. As the truckload carriers and shippers go through this process it will force an increase in the number of expediters needed. And continued growth of the economy will also increase truck traffic, which, in turn, will increase the number of expediters needed. I think teams will especially benefit as more runs will not be able to be completed by singles and will require team service. Teams may see an increase in 550 to 700 mile runs that singles can no longer make work like they may have done on paper logs.”

Sutton’s outlook: “I would say holding steady at least for 2018. And if the economy keeps on rolling like it is, there's going to be even stronger demand for drivers, which will push up drivers’ pay, which will then push shippers to pay more money, driving up the cost of transportation.”

Says Mueller, “I forecast growth for the expedited market as well as the trucking market as a whole. There is a shrinking pool of drivers and also a quickly diminishing owner-operator pool. Until pay rate increases for drivers and owner-operators fully materialize, these pools will continue to shrink. At this time, we are seeing many large carriers (within the trucking industry) announce pay increases for both drivers and owner-operators. The need for capacity from the truckload industry may easily spill over into the expedite sector.”

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