Research Question: Will price erosion and federal regulations push small, private trucking companies out of business to the benefit of the bigger players in the space?
Report Available: March 2, 2016
Blueshift’s initial research finds 2016 off to a tough start for the trucking industry. Freight volumes slowed in the fall of 2015 and that trend has continued along with falling prices due to overcapacity. Shippers can now expect steep pricing declines due to the abundance of available trucks and lower fuel prices, with small, private companies likely among those most negatively affected.
- December freight shipments fell 3.7% from the previous year. A glut of retail inventory and a slowdown in U.S. manufacturing added to the slump in trucking demand. Spot rates for long-haul shipments have all fallen between 16% and 18% in the last year, due to overcapacity in the trucking industry. A federal safety initiative focusing on high risk drivers could eliminate 5% of truck drivers on the road. The lack of truck drivers has caused wages to climb 8% to 12% annually in recent years.
- Industrywide consolidation among trucking companies is expected to continue in 2016 fueled by the declining demand in the oil and gas plays and increasing costs small trucking companies now face from new federal regulations and higher-priced new equipment. This consolidation could benefit larger trucking companies as capacity comes back in line with demand.
- Two supply chain sources in Blueshift’s Jan. 8 Cruise report said there is heightened security at the ports, including searches of trucks, causing delivery delays and a rise in drivers’ compensation as a result. What is unknown is whether the trucking companies can pass this cost on or if they must eat it themselves. Some ports are trying to automate the security process to speed up entry. The Department of Homeland Security has indicated it will now begin to enforce the REAL ID Act, which requires specified credentials from truckers beyond their commercial driver’s licenses at higher risk facilities.
Will truck shipping price declines and new regulations continue to fuel industry consolidations and drive small trucking companies out of business? Will shipping capacity decline and lead to improved market conditions for the larger trucking companies? To gain insight into the trucking industry, Blueshift will gather data and issue a market research report from independent sources in the following areas: Large trucking companies, small trucking companies, independent truck drivers, port security, freight brokerages, and industry specialists.
Companies: Swift Transportation (SWFT), Landstar System (LSTR), Werner Enterprises (WERN), JB Hunt Transport Services (JBHT), Old Dominion Freight Line (ODFL), Celadon Group (CGI), CH Robinson Worldwide (CHRW), Knight Transportation (KNX), Covenant Transportation Group (CVTI), YRC Worldwide (YRCW), Heartland Express (HTLD)
Research Begins: Feb. 15, 2016