As shippers and brokers deal with a shortage of trucks to carry freight, small-business truckers are poised to make more than they have in years.
It’s a big turnaround from recent years, when there wasn’t enough freight demand to fill up all the nation’s trucks and drivers struggled to get attractive rates.
This year will be the best for the trucking industry since 2005, said David Ross, an analyst at Stifel Financial Corp. “There are real serious constraints on capacity – mainly a lack of sufficient amounts of qualified drivers – that should drive trucking rates much higher as we move through the year.”
“The rates are the best I’ve seen in several years,” Jim Kienbaum, an independent refrigerated truck driver from White Water, Wis., told Trucks.com.
Kienbaum recently earned nearly $7,000 transporting produce from Mexico into Nogales, Ariz., for distribution into the U.S. and Canadian markets. On his return, he received $7,800 for carrying loads of frozen food, cheese and produce. Both were about double previous rates.
Rates “were astronomical coming out of Arizona last week,” he said. They have since eased a bit but are still high.
A stronger economy, the implementation of the federal electronic logging device mandate and inclement weather have pushed the need for more for trucking services, bumping up rates significantly from a year earlier, said Mark Montague, an analyst at DAT Solutions, which tracks freight and rates. In 2017, the DAT network finished with 179 million load and truck postings. This was up 79 percent compared with 100 million in 2016.
“Owner-operators are doing extremely well in the spot market right now,” Montague told Trucks.com.
Rates for the week of Jan. 20 dipped slightly compared with a week earlier, down 1 cent for dry vans and down 2 cents for flatbed trailers. Rates for refrigerated freight remained unchanged at $2.70. Freight rates still remain higher than at any time in 2017, according to DAT.
Freight rates should remain high throughout the year, despite a possible dip because of less freight in February and March, before spring rates surge, Montague said.
The weekly national load-to-truck ratio has been at a record high for the past few weeks, but dropped 4 percent from the pervious week, which means there’s 9.8 loads per available truck, according to DAT’s weekly Trendlines report published Monday.
“The desperation of brokers to move freight this time of the year, which is usually a slow time, is beyond anything I have ever seen before,” Chad Boblett, an independent trucker from Lexington, Ky., told Trucks.com.
The demand for trucks is expected to last for the “foreseeable future,” Montague said.
DAT attributes the surge in rates partially to the ELD mandate, which took effect Dec. 18 and has caused productivity issues and the capacity crunch.
ELDs have been a contentious issue for the trucking industry, primarily among smaller fleets and independent truckers.
The regulation requires truckers to install digital devices known as ELDs, which link to a semi-truck’s engine to capture its movement and record driving time.
The rule was enacted to ensure compliance with a federal hours-of-service rule. The rule limits driving to no more than 11 hours a day within a 14-hour workday. Drivers must then be off duty for 10 consecutive hours.
“It’s forcing truckers to run legally,” Boblett said. “Some are complaining about ELDs, but it’s the best thing that’s happened to us. I have figured out the rate game and how to make money at it.”
ELDs do not allow for any flexibility in a trucker’s day, which can include extended wait times at shippers and receivers, traffic delays and long searches for available truck parking before their 11 hours of driving are up, Montague said.
Previously, truckers on paper logs could adjust their time to show they completed their loads within their 11-hour driving window, but now ELDs record the actual time it took to deliver it, he said.
The capacity problem could heighten in April as law enforcement begins more stringent ELD monitoring. Truckers without the devices will be placed out of service and unable to drive. For now they are just receiving fines.
“We are hoping that shippers get more involved in being proactive to solve these issues like reducing wait times, better communication with carriers so trucking operations become smoother and more efficient,” Montague said.
In response to the ELD mandate, brokers are requesting more team operations that ever. Teams can drive double the miles in a day to ensure freight is delivered on time despite numerous costly complications they may experience on the road.Shippers expect rates to continue to climb because there are not enough trucks or drivers to handle freight demand, according to the analysts at Stifel.
Fewer people are entering the business, Ross said.
The job has a bad reputation. Most parents encourage their children to go to college, “so that they don’t have to drive a truck,” he said. “We have not met one millennial that even thought about truck driving as a career.”
Pay needs to increase 50 percent to attract new drivers to the industry, Ross said. “Anything less is just playing the churn game.”
Truckers are happy with the gains they are experience so far this year, even though post-holiday January is traditionally slow.
“We are seeing some really crazy high rates right now,” said Linda Caffee, who is half of a driver team with her husband, Bob, of Silex, Mo. “The freight is there and the rates are there.”
Last year was the best year the Caffees have experienced in their 13 years as owner-operators. They are anticipating an even better 2018 if rates remain high and trucks scarce.
“Once if [shippers] held you up and you complained, there were 10 more trucks waiting behind you to take that load,” she said. “Now, drivers have more control. If you treat us badly, we are not going to be there.”