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Trucking facing disconnects, says ATRI

Aug. 7, 2008
NAPLES, FL – The trucking industry is facing a series of disconnects that could hamper its ability to handle projected growth in freight tonnage over the next decade, according to Dan Murray, vp of research with the American Transportation Research Institute (ATRI)

NAPLES, FL – The trucking industry is facing a series of disconnects that could hamper its ability to handle projected growth in freight tonnage over the next decade, according to Dan Murray, vp of research with the American Transportation Research Institute (ATRI).

Speaking at the 6th annual PeopleNet Users Conference held here in Naples, FL, Murray said trucking should see freight tonnage grow by 29% from 2006 to 2018 – from 10.7 billion tons to over 14 billion tons, according to calculations by research firm Global Insight. Yet highway infrastructure funding is only growing by 3% to 4% per year, leaving a big gap between expected volume and the capacity to carry it.

“That’s before you look at vehicle miles traveled, which includes passenger cars,” Murray explained. More trucks are also projected to be on the road to handle all that freight, he added, with the population of commercial trucks over 10,000 lbs GVW growing from 7 million to 9 million units (about 1%) by 2018, while the number of tractor-trailers within that population will increase 24% – growing from 2 million to 2.4 million units.

“So that really leaves us with only two choices – either we have more trucks on the road, or bigger trucks on the road, because the math is just not working out,” said Murray.

Adding more rail may not be a practical solution, he added, noting that railroads currently serve 20% of the U.S. population via 175,000 miles of rail lines, while trucking serves 80% of the U.S. populations via just 55,000 miles of highways.

That’s before the volatility of fuel prices gets added to the picture, Murray noted. He pointed out that the airline industry is undergoing consolidation and bankruptcies at a record rate due to high fuel costs, which totaled $41.2 billion in 2007. By contrast, the trucking industry’s fuel bill topped $112.8 billion last year, which is playing havoc with profit margins.

“Freight is actually up overall for the first quarter,” Murray said, with TL and LTL volumes up 2.6% and 3.6% respectively compared to the first quarter of 2007. “However, high fuel costs are squeezing their profit margins down to nothing. Shipments for some carriers I’ve talked to are up 10% to 15%, but with trucking’s average profit margin around 3.6%, that gets eaten up by high diesel costs. If fuel goes up just 5% in a week – as it has done this year – they suddenly have no margin at all.”

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About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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