Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: https://read.dmtmag.com/i/925196
BUSINESS 20 | Overdrive | January 2018 Bullish forecasts for trucking during much of 2017 continued through yearend. Rates climbed throughout the year, hitting multiyear highs in the three major truckload segments. That strength is expected to continue into 2018, with freight projected to stay strong and capacity to tighten. Here are contributing factors: Tonnage and freight soar. The amount of freight carried in October, as measured by ATA's monthly Truck Tonnage Index, grew 3.3 percent from September and 9.9 percent from October 2016, the largest year- over-year increase since December 2013. Compared with the same 10 months in 2016, the index was up 3.1 percent year to date. Freight demand on the spot market in October continued a 17-month streak of year-over-year increases, according to DAT's monthly North American Freight Index. Spot-market freight volume grew 65 percent com- pared to October 2016. Driver turnover is climbing. Driver turnover rates, which had slumped in 2015 and 2016, shot up again, indicating higher competition among fleets for drivers. The turnover rate at large truckload fleets hit 95 percent in the third quarter. Truck orders top 30,000 again. North American Class 8 net orders for November reached 32,400 units, according to freight forecaster FTR. It was the second consecutive month that heavy truck orders surpassed 30,000 units. November fell short of October's strong order intake but soared 71 percent from the same month a year ago. Carriers have 'big opportunities.' In October, FTR's Trucking Conditions Index for carriers soared from the prior month. "The TCI indicates that there are big opportunities for carri- ers with regard to both rates and the loads they choose to carry," said FTR Chief Operating Officer Jonathan Starks. Rates are not slowing down. Per- mile rates for van and reefer climbed to multiyear highs in November, according to Truckstop.com. Flatbed rates dipped for the first time since July following months of strong gains. Reefer rates led the increases among the three major truckload segments, climbing 8 cents a mile to $2.43 from October. Compared to the same month in 2016, reefer rates were up 41 cents a mile. Van rates climbed 5 cents a mile to $2.31 from October, the highest van average since December 2014. Van's average was up 40 cents from November 2016. While flatbed rates dipped 5 cents in November from October to $2.39 a mile, they were up 38 cents from the same month in 2016. ELDs could restrict productivity. Many industry observers predicted a modest decline in productivity follow- ing the onset of the electronic logging device mandate. With most drivers forced into a more rigid system of logging, it's expected that the average driver will log fewer miles, based on the experience of large fleets that have operated for years under ELDs and experienced low-single-digit decreases in productivity. All systems go for trucking in '18 Truck orders have been high, indicating a confidence in freight demand for 2018. While leased owner-operators don't have the same pressing need to own a trailer as most independents, they often find trailer ownership has significant earning potential. Leased owner-operators who own their own trailer gross about 6 percent more, or $10,000 annually, than those who don't. After relat- ed expenses, they keep more than half that. The Partners in Business program is pro- duced by Overdrive and the consultants at business services firm ATBS. It is spon- sored by Ryder and Truckstop.com. Free Partners in Business seminars will be held at the Great American Trucking Show in Dallas, Aug. 23-25, 2018. Want more Partners in Business tips and information on how to run your small truck- ing business more prof- itably? Visit OverdriveOnline. com/pib-podcasts to find 20-min- ute podcasts on topics such as managing time, budgeting money and controlling fuel costs. PARTNERS IN BUSINESS TIP: THE BENEFITS OF TRAILER OWNERSHIP