Schneider's Lofgren Sounds Truck Capacity Warning

New safety regulations will tighten truck capacity for shippers, perhaps dramatically, perhaps as early as the second half of 2011, pushing up truck rates and potentially shifting some freight to other modes, a top carrier executive warns.

"Ten percent of the (available truckload) capacity could come out" as the Department of Transportation's CSA 2010 initiative takes effect, said Christopher B. Lofgren, president and CEO of truckload giant Schneider National.

That could have a ripple effect across other modes and along international supply chains next year as importers and exporters try to secure trucks at higher prices.

Trucking capacity news from JOC:
Danger Around the Bend.

Lofgren was one of three CEO panelists at a Nov. 15 industry meeting who cautioned shippers about a coming capacity crunch on the nation's highways.

"There is no doubt the industry has drivers who have moved from company to company with records that are less than stellar," he said. The Comprehensive Safety Analysis 2010 initiative will weed them out -- the question is how quickly.

"If it's a shock effect, it's going to have a big impact" early in 2011. Much depends on how a CSA 2010 rulemaking unfolds and the enforcement process. If that proceeds at a measured pace, "the impact may not really be felt until 2012," Lofgren said.

Lofgren spoke on a CEO panel at the joint annual meeting of the National Industrial Transportation League, Intermodal Association of North America and Transportation Intermediaries Association in Fort Lauderdale, Fla.

"There is a real possibility that as CSA 2010 kicks in there will be a shortage in (truck) supply," Lofgren said. "It's not a matter of buying new trucks (to build out capacity), it's finding new drivers" that will be difficult, he said.

That could have a pile-on effect on rail and intermodal, tightening capacity in that sector, said Matthew K. Rose, chairman, president and CEO of BNSF Railway.

"It won't be long, if we get any kind of good economy, until we're back where we were in 2006, with chronic shortages of truck and rail capacity," Rose said.

Michael White, Maersk Line's president in North America, said ocean container lines will continue to manage their capacity "wisely" and in a "more agile" fashion.

"There's a potential for increased pressure in the second half of next year," White said, and perhaps earlier. Container shortages may be an issue in 2011 as well.