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2020 looks set to be a tough year for the American trucking industry

By December 16, 2019No Comments

(This post originally appeared on The Guardian)

It’s been a tough year for the trucking business. And the outlook for next year isn’t looking any rosier.

Despite a growing economy, many truckers continued to struggle with lower than desired shipping rates and shipment levels. Tariffs took their toll, manufacturing continued to contract and the closely watched Cass Freight Index – which measures North American freight volumes and expenditures – logged yet another decline, its eleventh in a row, this October. Not only that but trucking companies in California are now fighting a new law that will require them to reclassify how they treat their independent drivers.

“The evidence overwhelmingly suggests 2020 is going to be a very, very tough year,” industry analyst Kenny Vieth said at a recent conference. “Freight recovery is dependent on the speed at which equipment supply and freight demand are brought back into line.”

On top of all that, trucking companies across the country are now approaching a national compliance deadline that – while it will certainly contribute to improved measurement and safety – is also just as certainly to add more costs. The Federal Motor Carrier Safety Administration’s rule, which goes into effect on 16 December, will require all trucks on American roads to be outfitted with an electronic logging device (ELD). The purpose of the new technology, according to the FMCSA is “to help create a safer work environment for drivers, and make it easier and faster to accurately track, manage, and share records of duty status”.

Unfortunately, many trucking companies have put things off until the last minute and some experts are concerned that these companies are underestimating the time and costs to make this technology transition. Besides potential problems with connectivity or software bugs, “fleets might (also) have problems with hardware”, Ken Evans, the founder and CEO of Konexial, an ELD solutions company told Freight Waves. Evans also noted that human behavior shouldn’t be taken for granted. “Learning a new piece of software and working around with the hours of service rules is a big change for people,” he said.

There is one bit of good news, however. According to industry reports like this one, another rule that was about to go into effect in December – a rule which would require truckers to provided mandated training to entry level drivers – will likely be delayed for two years. Of course, more and better training – particularly for new drivers – seems like a pretty darn good idea. But unfortunately the states and federal people still need more time to get themselves aligned. I’m sure many trucking company executives welcome the breather.

You would think that running a trucking company in 2020 would be a profitable affair, given a strong environment for consumer sales and online shopping. But shippers – particularly smaller shippers – continue to face driver shortages, significant competition, trade uncertainty, manufacturing declines and government regulations that present many challenges. Yes, as I wrote here previously, some managers could do a better job at forecasting their demand and managing their cash flow during these challenging times.

But I’m betting that even the best managers in the trucking business are struggling to navigate their companies through the coming year … and wondering when things will get better.

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