Despite a recent dip seen in long-haul driver churn, key signals that the economy is on the move going into 2014 indicate the driver shortage/turnover issue will only become more acute in the months ahead.
As it happens, the latest Trucking Activity Report issued by the American Trucking Assns. (ATA) found that the annualized driver-turnover rate at large truckload fleets dropped two percentage points to 97% in the third quarter of 2013.
And turnover at truckload fleets with less than $30 million in annual revenue dropped eight points to 74%-- reaching its lowest level since the first quarter of 2012.
Nevertheless, according to ATA chief economist Bob Costello, “the market for experienced, qualified drivers remains exceptionally tight. I expect, as the economy continues to pick up, we’ll see that market get even tighter.”
Certainly, that view is supported by the fact ATA determined that driver turnover at less-than-truckload (LTL) fleets jumped seven percentage points to 13% in the quarter—marking its highest level since the first quarter of this year.
“Between increasing demand for freight services and regulatory pressures, I expect fleets to remain challenged finding enough qualified drivers and we’ll be contending with driver shortage-related issues for the foreseeable future,” Costello pointed out.
That challenge should only grow, given the positive outlook for trucking detailed in the U.S. Government’s new Commodity Flow Survey (CFS). Just released, the report is prepared via a partnership between the Census Bureau and the Bureau of Transportation Statistics (BTS) every five years as part of the Economic Census.
According to the agencies, the CFS “produces data on the movement of goods in the United States. It provides information on commodities shipped, their value, weight and mode of transportation, as well as the origin and destination of shipments of commodities from manufacturing, mining, wholesale, and selected retail and services establishments.”
This latest CFS indicates that trucking continues to be the “dominant mode for moving freight in the United States,” according to ATA’s Costello.
“The CFS showed once again that trucks move the vast, vast majority of freight in the United States,” he remarked. “Since it is only updated every five years, the CFS report is a critical tool for policymakers and researchers in examining the freight market.”
According to Costello, these CFS results are “particularly enlightening”:
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In 2012, trucks moved 73.7% of all freight by value and 70% of the tonnage vs. 3.3% of value and 15.8% of tonnage moved by rail
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The average length of haul for trucks is 212 miles
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Only 3% of freight tonnage moved on multiple modes-- i.e. a train and a truck or a barge and a truck
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Just 15.1% of all freight shipments were longer than 500 miles and only 9.7% traveled more than 750 miles
“The length of haul data is crucial, particularly when talking about rail and truck competition,” Costello explained “While feasible under certain conditions, the potential for rail intermodal to gain a significant amount of truck market share is limited.
“Now more than ever, the two modes are more likely to complement each other than compete for business,” he added.
Also of interest to fleet owners mapping their business strategies as the New Year approaches may be the comprehensive analysis of retail sales released today by Lindsey Peizga, chief economist of brokerage firm Sterne Agee.
Piezga found that retail sales jumped 0.7% in November, a tenth better than expected, and the most in five months. What’s more, “October’s headline was revised up from +0.4% to +0.6%” and year-over-year retail sales are up 4.7%.
Excluding autos, sales rose 0.4% in November, “a modest rise but still surpassing expectations. Last month was also revised up from 0.2% to 0.5%,” she pointed out.
Per Piezga, these are the key upside figures:
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Autos climbed 1.8% in November after a 1.1% increase in October, “reflecting Americans' continued robust appetite for autos”
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Furniture sales rose 1.2% in November and electronics 1.1% after a 2.6% increase in October
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Building materials went up 1.8% after a 1.5% drop last month.
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Non-store retail sales rose 2.2% and eating/drinking sales 1.3%
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Sporting goods sales increased just 0.1% as did general merchandise
And these are the numbers on the weaker side:
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Clothing sales fell 0.2% in November after a 2.6% rise in October
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Gasoline station sales dropped 1.1%, “thanks to a welcome price reprieve, the third monthly decline since June”
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Food and beverage sales dropped 0.1%. Miscellaneous item sales fell 1.3% after a 0.4% rise last month.
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Health and personal care sales were unchanged.
Taken all together, Piezga said the results amount to a “better-than-expected November retail sales report, in part because so many were bracing for modest disappointment which lowered the bar of expectations.
“As preliminary data showed,” she explained, “consumers were out spending in the weeks after Thanksgiving, but not spending quite as much as last year. We continue to see consumers dramatically shift the goods in their basket from month to month, rather than simultaneous strength across all categories. Last month, it was apparel, electronics and miscellaneous sales, this month its building materials and non-store retailer purchases.”
On an annual basis, Piezga contended that “the consumer still appears to be losing momentum-- with growth falling from a peak of near 9% in 2011 and remaining stagnant for the past two years at an average of under 5%.”
She indicated that a “temporary reprieve from pump prices” as well as a “lingering wealth effect from rising home prices and record-high equity markets” have supported both consumer confidence and consumer spending.
“Going forward, however, temporary factors can only do so much,” Piezga concluded. “Consumers will need sustained job creation and income growth, which unfortunately do not go hand in hand.”
As for next year, the annual Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation (ELFF) paints a fairly positive picture of the economic road ahead.
The report forecasts the U.S. economy to grow 3.0% in 2014— which would mark its fastest pace since the 2008-09 recession.
Assuming there is a solution to the current federal budget discussions, ELFF said economic growth will be driven by a number of positive factors:
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Strong housing market recovery
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Falling natural gas prices
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Record high household wealth
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Steadily improving credit availability
However, those positive trends will be “counter-balanced by high oil prices, slow international growth, moderating fiscal consolidation and the continued threat of policy uncertainty.”
Nonetheless, in 2014, ELFF expects that “more dependable economic growth” will help to generate stronger overall investment in equipment and software.
As regards transportation, the report points out investments in transportation equipment saw “modest” growth in this year’s third quarter and that “improving indicators point to stronger momentum over the next six to 12 months.”
“Looking into 2014, businesses will be making financing decisions in a dynamic environment,” observed William G. Sutton, CAE, ELFF president and president & CEO of the Equipment Leasing and Finance Assn. (ELFA).
“While the threat remains that policy uncertainty could negatively impact the U.S. economy and capital investment,” he added, “potential stability in the federal budgeting process and an increase in GDP growth will drive up demand for equipment finance.”
