Improving Economy and Rail Closures Increase Demand For Trucks

The economic recovery has turned into a boom within the transportation sector. Virtually all sectors of the economy are on a strong footing throughout the country, including retail goods, manufacturing, and building products. This growth has come at a time when inventories are at an all-time low, and general capacity throughout the rail and trucking industries are at a no or low growth situation, putting tremendous strain on moving goods.

In the West in particular, the major railroads have been closing service lanes and converting freight that has moved over the rails back to truck. However, shippers are finding trucks that were already in short supply are not able to pick up the slack. After years of lackluster performance and many industry bankruptcies, trucking companies have been extremely cautious about adding capacity, especially when compared to the late 1990's when many of the publicly traded trucking companies grew at more than 20% annually. Now that demand has come back, even truckload carriers who would like to expand capacity are constrained by the lack of drivers willing to live the truckload lifestyle.

On top of this backdrop, on Friday July 16th a Federal Appeals court vacated the newly enacted Hours of Service rules put into place in January of this year. The outcome of this is uncertain at this time, other than it will add increased confusion and uncertainty to a market that already displays plenty of those traits. Hopefully, the issues surrounding this court ruling can be negotiated in a manner that protects public safety and keeps drivers productive with some level of flexibility to perform their work. If not, it's certain that even more drivers will leave the industry at a time when many, many more are needed to support the economic growth that is now evident.