Bob Costello, chief economist for American Trucking Association, put it best “Forecasting has gotten more difficult. [But] things are pointing in the right direction1.” The transportation industry is in a unique place where various political and economic factors could have an immense effect on the industry at any time. Drivers, hours of service, and service implications will continue to alter the conventional dedicated fleet model. The best thing that a company can do in 2017 is to be prepared, have a contingency plan, and be agile enough to continue to successfully transport their freight.
In 2016, North America faced two elections, one for the President of the United States and the other being the Prime Minister of Canada. A new administration could change viewpoints on many issues affecting the transportation industry.
There are many regulations are expected to be examined within 2017 including speed restrictions in trucks, the next phase of the green house gas emission standards, and the minimum CDL age. One regulation that is most certain to continue to be passed is the adoption of Electronic Logging Devices (ELDs) for carriers. Although ELD implementation is not going to be enforced until December, the impact has already affected the industry. As carriers begin to transition to ELD systems, there could be a reduction in capacity as firms decide to exit the market instead of comply3. Similar to 2016, the regulatory market will continue to drive companies to rely on their 3PL partners for dedicated transportation.
Coverage at a Cost
Another factor that will impact the industry and could increase the dedicated fleet model will be the expectations of insurance premiums to rise between 10 to 30 percent this year. The smaller carriers may not be able to cover the surge in pricing which will ultimately affect capacity. On the other hand, companies who run private fleets will need to evaluate if they will absorb the cost or turn to a 3PL to reduce their risk and cost implications for their business4.
Will Political Opportunities Trump the Challenges?
The transportation market is susceptible to many changes as a new administration takes office in the United States. Items like infrastructure spending, trade agreements, and tax reform are all items that have come up in recent discussion. For instance, if production and manufacturing grows in the United States, there will be an impact on the locations of dedicated fleets. The volume will begin to move away from the coasts and there will be more of a need inland. However, many of these items won’t materialize for quite some time as the new administration settles into their new roles. William Mahoney, SVP of Sales at NFI, gave his advice to shippers, “With so many unknowns, lock in the best solutions you can today with partners you trust. Great partners will find a way to help each other adjust to the ever changing needs of the supply chain.”