Fleet Management News & Business Info | Commercial Carrier Journal
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commercial carrier journal | march 2018 59 tions as their top challenge by fleet size, another story emerges. Of survey respondents from fleets with 10 to 100 power units, 16.2 percent cite regulations as a top challenge in 2018, com- pared to only 7.1 percent of respondents from fleets with more than 100 power units. Much of the current regulatory concerns – particularly among respondents from smaller fleets – likely center around the new electronic logging device mandate that took effect last December and the ongoing enforcement rollout. According to a November 2017 survey of 1,982 carriers by carrier-sourcing firm CarrierLists, only 40 percent of fleets with 100 or fewer trucks had adopted ELDs – just six weeks before the deadline – while almost all the larger fleets in the survey already were ELD-compliant. CarrierLists' follow-up survey in December 2017 showed the adoption rate among smaller fleets had increased to 75 percent ahead of compliance. But as early adopters can attest, ELD implementation and compliance oen carries a steep and prolonged learning curve and can hurt productivity for two years or more. Productivity losses related to the ELD mandate, in addition to a strong freight environment, have contributed to tightened ca- pacity and helped create one of the strongest rate environments in years, said Jonathan Starks, chief operating officer at industry analysis firm FTR. "It's no surprise to the industry that the end of 2017 and the beginning of 2018 have been good for carriers," said Starks. "In terms of the overall economy and freight demand, we are looking at strong potential for further upside possibilities for carriers." e capacity crunch also is evident in the spot market. In January 2018, spot market loads grew to record levels with a 134 percent gain compared to January 2017, according to DAT Solutions. Meanwhile, capacity declined 6.9 percent compared to the same month last year. Monthly rates in the van, refrigerat- ed and flatbed spot markets all logged significant year-over-year increases, up 35 percent, 24 percent and 36 percent, respectively. PUTTING TAX CUTS TO WORK From a business perspective, the Trump administration earned high marks from trucking company executives. Among CCJ Economic Outlook Survey respondents, 55.7 percent said the administration's overall policy had a positive or extremely positive impact on their company's business decisions in 2017, and 58.2 percent believe that policy will benefit them in 2018. Only 11.3 percent said Trump policy negatively impacted their businesses last year, while 32.9 percent said it had no impact. In addition to the regulatory rollback, the new tax reform legislation enacted at the end of last year certainly is a reason Trump's pro-business policy received high marks from re- spondents. According to the survey responses, much of the new capital will be directly reinvested in the business. "e reduction in ineffective but costly regulations has had and will continue to have a tremendous positive impact," said a CCJ survey respondent from a private fleet with more than 100 power units. "Reduced taxes allow us to pay higher wages, purchase equipment, improve telecom infrastructure and invest in expansion." Roughly 42 percent of both for-hire carrier and private fleet respondents plan to use tax savings to invest in new equipment purchases. Only 23.7 percent of private fleet respondents plan to apply tax savings to raise driver pay, compared to 43.3 percent of for-hire carrier respondents. On a truck-count basis, 44.4 percent of respondents with more than 100 power units plan to use tax savings to raise driver pay compared to 34.9 percent of respondents with 10 to 100 power units. 0% 5% 10% 15% 20% 25% 30% 35% 40% Fuel Healthcare (including health insurance) Tires Tractors Liability insurance premiums Driver pay Driver recruiting costs Truck parts Cargo insurance premiums Physical damage insurance Trailers Financing costs Lubricants 2018 2017 Other Don't know What company expense item will increase the most in 2018 compared to 2017? Many trucking companies expect driver pay increases to be their biggest expense increase in 2018. Corporate tax cuts encourage fleet spending The majority of for-hire trucking companies plan to allocate corporate tax savings toward driver wage increases and new equipment purchases. 0% 10% 20% 30% 40% 50% Hire more drivers Raise driver wages Invest in new equipment Save it to increase prots More than 100 power units Up to 100 power units All for-hire carriers None of the above Other