US shippers see no near-term truckload capacity ‘crunch’

US shippers see no near-term truckload capacity ‘crunch’

Trucking companies are cutting capacity, but shippers aren't feeling the pinch just yet.

MEMPHIS, Tennessee — Truckload capacity is neither too loose nor too tight, and there’s no capacity crunch in sight, at least through the first half of 2017. That’s the word from shippers surveyed by The Journal of Commerce, shipper organization NASSTRAC, and Truckstop.com this fall for a white paper released at the JOC Inland Distribution Conference here Tuesday.

Despite reports that “abundant” truckload capacity depressed truck pricing throughout much of 2016, 46.3 percent of the shippers surveyed called current capacity “adequate, with some excess.” Only 8.5 percent said truckload capacity is “abundant” or “loose” in late 2016, and 25.6 percent of shippers said capacity is in a “rough equilibrium” with demand.

Shippers appear to be enjoying a “Goldilocks” moment as far as truckload capacity is concerned. Despite significant efforts by many large trucking companies to pare back their truck counts, only 17.1 percent of the shippers said capacity is currently “getting tighter.” Not surprisingly, only a handful, 2.4 percent, characterized current capacity as “restricted, tight.”

The JOC Truckload Capacity Index, which measures available capacity by truck count at large truckload carriers, has dropped from its third quarter 2015 peak and is now about 13 percent below pre-recession peak levels. In this year’s third quarter, the quarterly JOC index fell a full percentage point sequentially to 86.6, its lowest reading since first quarter 2015.

But there are still thousands of smaller carriers operating, with hundreds of thousands of trucks. The shippers that responded to the survey don’t expect much change in capacity levels during the next six months, with 91.5 percent believing truckload capacity either will tighten moderately in that period or stay the same. Altogether, about half expect capacity to stay flat.

The survey didn’t reach as far as the second half of 2017, and the December 2017 deadline for compliance with the electronic logging mandate. Many trucking companies believe the switch from paper logbooks to electronic logging devices will constrict capacity as some companies and drivers drop out of the business and overall truck utilization declines, at least temporarily.

How big a crunch may come in 2018 could depend largely on economic growth. Higher growth rate and freight demand would increase the likelihood of a sharper contraction in capacity.

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc.