Fleet Management News & Business Info | Commercial Carrier Journal
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34 COMMERCIAL CARRIER JOURNAL | JANUARY 2015 C O V E R S T O R Y : 2 0 1 5 E C O N O M I C O U T L O O K The question doesn't seem to be if freight rates will rise, but rather if they will rise enough to help offset driver wage increases and other organization costs. "Fleets need to get paid more, and they know that," says Broughton. "Right now, most truckers are cautiously optimistic about the pricing power and prospects of improving pricing in 2015. There are more loads than trucks, resulting in tight capacity and great demand. If I'm a fleet manager, I may be concerned with pricing, but that is to say, 'Am I charging enough, or can I get even more?' " In the spot market, rates continue solid year-over-year growth on a seasonally adjusted basis after hitting what Internet Truckstop said were record levels in June in refrigerated, dry van and flatbed mar- kets. DAT's rate trends bear out similar results, and the forecast is for continued general strength for spot market rates, at least in the near term. 3: MAINTENANCE COSTS (7.5 PERCENT) Fleets aren't only having difficulty finding employees to sit behind the wheel of a truck. The technician shortage has fleets scrambling to find people to work under the trucks as well. Training constraints and technological advancements in today's power units all point to the need to raise technician wages to attract new entrants to the industry. "Fleets concerned about maintenance costs is another manifestation of a thinned-out labor pool," says Meil. Aging equipment is a primary factor in increased maintenance costs. "There's no doubt why Class 8 sales are going gang- busters," says Costello. "A lot of fleets have old equipment that is nickel-and-diming them to death. If you're not replacing trucks, you're in a really bad spot because your maintenance costs are going up significantly. Yes, new equipment is more costly, but the good news is you're not purchasing a truck that is getting 5 miles per gallon – you're purchasing one that has 7 mpg or more." As fleets continue to shorten their equipment trade cycles, there are imme- diate gains in maintenance savings, but eventual maintenance costs on today's more complex and technology-laden truck models will rise as those trucks age. "The maintenance on a five-year-old truck today is lower than the mainte- nance costs on a five-year-old truck five years from now," says Broughton, refer- ring to new emissions, aftertreatment and sophisticated safety systems not found on many new-model trucks today. "Outside of fuel, I do think we have cost inflation that is certainly higher than inflation overall," says Costello. "I'd lump in maintenance, equipment in general and obviously drivers. I caution carriers all the time not to take their eye off the cost ball. If they do that, there is room to slip up." 2: REGULATIONS (12.9 PERCENT) After a flury of regulatory activity coming out of Washington the last couple of years, the trucking industry is hoping for a quieter year in 2015. Carriers got an early Christmas pres- ent last month when the HOS rollback was signed into law as part of a spend- ing package, but whether carriers will be able to recover the estimated 3 to 5 percent loss in productivity after the July 2013 rules went into effect remains to be seen. "When we talk about the netting out of the HOS rollback, we are talking WHAT IS YOUR BIGGEST CONCERN? Private and government fleets are much less concerned with driver availability than for-hire carriers, but worry more about maintenance costs and the rising cost of equipment. All respondents For-hire carrier Private fleet Government Other Driver availability 48.2% 57.3% 37.8% 14.2% 25.0% Freight pricing 6.3% 8.6% 3.4% 0.0% 0.0% Fuel costs 2.7% 1.2% 5.0% 4.8% 6.3% Freight volume 2.7% 3.1% 2.5% 0.0% 0.0% Maintenance costs 7.5% 4.3% 9.2% 28.6% 18.6% Regulation 12.9% 11.3% 17.8% 4.8% 12.5% Political climate in Washington 5.8% 5.1% 7.6% 0.0% 12.5% Cash flow 3.4% 2.7% 2.5% 9.5% 12.5% Cost of equipment 5.1% 2.4% 6.7% 28.6% 6.3% Cost of labor 1.5% 1.2% 2.5% 0.0% 0.0% Unionization 0.0% 0.0% 0.0% 0.0% 0.0% Cost of credit 0.0% 0.0% 0.0% 0.0% 0.0% Taxes 1.0% 0.0% 3.4% 0.0% 0.0% Access to credit 0.7% 1.2% 0.0% 0.0% 0.0% Other 2.2% 1.6% 1.6% 9.5% 6.3% #1 concern #2 concern #3 concern