The bevy of current and future trucking regulatory changes could strain capacity in a truckload market that currently sits at 90-percent utilization, noted FTR Associates’ Noel Perry.
Perry, who spoke recently at a lunch hosted by Cowen and Company, predicted a price increase of between 4 percent and 5 percent for next year, but said that regulatory pressures, combined with driver-shortage issues, could squeeze capacity and cause rates to shoot up.
He also acknowledged that the full impact of the hours-of-service rule change has not yet been felt, and that it might take some time for the market to see the full impact of the rule change. He added, however, that traditional, asset-heavy carriers are likely to weather the hours-of-service storm better than others in the industry.
One non-regulatory challenge that could potentially crop up is another recessionary cycle.
“If historical patterns of the average length of an expansionary phase were any indicator, a recession may not be too far away,” wrote Cowen and Company, summarizing Perry’s speech. “In such a scenario, the typically lower-margin LTL sector and the TL sector, which has not demonstrated sustainable pricing power, could be more impacted than the railroad sector, in which pricing has fared well for the last several years.”
Regulations could strain truckload capacity
