• You Are Here: Home > News
  • > Analyst: 2018 a ‘Trucker’s Market’
Analyst: 2018 a ‘Trucker’s Market’

A “trucker’s market” is due to finally arrive in 2018, says Stifel Nicolaus trucking analyst John Larkin, although he cautions that supply and demand is tight across the industry as the domestic economy continues to grow at a slow, steady pace.

“The primary driver of the supply/demand tightness is the economy-wide shortage of skilled, blue collar labour,” he says. “It has become very challenging to find drug free, compliant drivers …  While driver pay scales began to rise in the second half of 2017 … it may (still) take multiple wage hikes before we see any alleviation of this chronic challenge.”

Larkin notes that on December 18, 2017 the Electronic Logging Devices (ELD) mandate will be fully implemented, and that this may “add insult to injury,” further compressing an already tight market.

Meanwhile, truckload rates are soaring.  Larkin recalls that he first witnessed “an inflection” in spot rates in mid-2016.  He adds that normally contract rate increases follow with a six-month lag.  Recently however, this cycle extended for over a year.

And, with the advent of the ELD mandate, additional rate increases may be forthcoming.

This may be especially true for those shippers that treated carriers harshly in the 2H15 and 2016, says Larkin: “Some shippers abandoned their collaborative approach and then resorted to old fashioned rate reduction demands.

As a consequence, the positive rate environment will cut across all the truckload sectors (i.e., dry van, reefer, flats, bulk, et. al.) and could have staying power unless autonomous trucks are pressed into widespread service. This scenario, adds Larkin is “unlikely.”

Larkin observes that the less-than-truckload (LTL) industry, which is much more consolidated than the highly fragmented truckload sector, has seen rates rise modestly over the past couple of years, even as truckload carriers succumbed to widespread pricing pressure.

“But, reports have surfaced recently suggesting that LTL capacity is becoming scarce in some regions,” he says.  “It seems that LTL carriers are picking up some overflow freight from the truckload industry.”

Share This Story