Annual Review & Outlook 2013: Tranzact Technologies

Mike ReganThe real issue this year will be carrier capacity. The looming change in the hours-of-service rule (effective this July) will reduce capacity in the truckload sector. According to some experts, the change in the “restart” provisions could reduce capacity by as much as 3 to 5 percent.

An improving economy, especially if GDP increases 2.5 percent or more, will result in a “seller’s market” where carriers are able to pass through significant rate increases. The magnitude of these rate increases (5 to 7 percent) will be higher than what most companies have budgeted.

Additional factors will exacerbate the capacity crunch. Carriers won’t invest in expanding their fleets unless there is a satisfactory financial return and they can find a sufficient number of drivers. The chronological age of the driver population, the impact of the CSA initiative and an increasing focus on driver health issues will make it more difficult to recruit and retain drivers. Consequently, carriers will be forced to increase driver compensation to retain their drivers.

Everyone needs to pay close attention to federal legislation, or new rules from the Department of Transportation. Expect the government to push for independent contractors to be classified as employees, a move that would have a significant negative impact on the compensation and benefits structure for transportation companies. When this issue was raised in 2009, the American Trucking Associations estimated there were approximately 600,000 independent contractors in the transportation industry.

New rules from the DOT rules affecting electronic onboard recorders or driver health issues also could decrease capacity in the truckload sector, especially among members of the Owner-Operator Independent Drivers Association. 

Add it all up and the scenario outlined in the Council of Supply Chain Management’s 2012 State of Logistics Report could become reality: Tight capacity could make it more difficult for shippers to find trucks to move their freight in 2013.

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