Jeff Champa's picture

Dec 29, 2016

By:

Jeff Champa

Vice President, Product Management

If you think 2016 was, for good or ill, an important and tumultuous year for the trucking industry, 2017 should really get your attention.

On the clearly positive side, the year now coming to a close featured fuel prices that remained lower than analysts had predicted for much longer than expected, not making a significant move upward until late November. And headlines regarding driver hiring and retention were better to close the year as turnover dropped to a five year low.

Overall, industry news in 2016 was dominated by four stories:

ELD preparations continued in earnest. More than 80 percent of large fleet operations — those with 250 or more trucks — completed the installation of electronic logging devices in their trucks in 2016. That required lots of study, negotiating, installation effort, and driver/manager training. More alarmingly, only about a third of small firms have completed the move to ELDs this year, meaning half or more of the rigs on the road today have only about 11 months to get the equipment selected, installed, and their personnel trained.

Many of the small carriers have not yet moved to ELDs because they had been waiting for the Seventh Circuit Court of Appeals to rule on a legal challenge to the ELD Mandate brought by the Owner-Operator Independent Drivers Association (OOIDA). The ruling came in October 2016, and while the ruling upheld the ELD Mandate, there are still processes that OOIDA can take to request a rehearing, which at this time OOIDA appears to be seeking. This situation still leaves many small carriers waiting, and it will leave lots of operators competing with one another for equipment and installation services.

NPRM for Light Duty vehicles for V2V communications. As is typical, a NHTSA V2V NPRM was released from OMB on 12/13/2016 for light duty vehicles. This notice is for comments on a NHTSA safety initiative that is believed to have the potential to result in an 80% reduction in accidents by deploying a safety message transmitted between vehicles multiple times a second with warnings of proximity, speed, and size of approaching vehicles. The industry has been working with NHTSA on the Commercial Vehicle needs to the regulation. If not as of this writing, the regulation may be released for comment very soon.

Driver retention continued to be a challenge. Despite a bit of light to close the year, Bob Costello, chief economist for American Trucking Associations, estimates that there is a current need for between 35,000 and 45,000 new drivers to meet the growing — and increasingly pent-up — demand among shippers. And the shortage is growing, he says. Some in the industry fret the driver shortfall will be made worse once the new federal Electronic Logging Device mandate takes effect and drivers are forced into more strictly managing — and limiting — their work hours.

Autonomously driven trucks hit the road. The first delivery — at least part of the way–by an autonomously driven truck took place in Colorado in September. It was a special test circumstance, complete with chase vehicles and a police escort. Legal and insurance questions still must be answered before we see large fleets of self-driving trucks on the highways, but the event was hailed by some as the first step in a revolutionary change to the industry. Others dismissed it as little more than a technology stunt and practical dead end, but you still can’t overlook the fact that the delivery was successful 

Looking forward to 2017 in the trucking industry

The single biggest challenge in 2017 will be for the owners of around half of all trucks on the road in the U.S. today to implement ELD equipment. Equipment manufacturers already have begun warning of equipment shortages and/or a lack of time for all the equipment to be installed by the deadline next December. 

Next year also is likely to see the real arrival of new-fangled freight and delivery competition from previously unexpected sources: Amazon and Uber.  Amazon, the giant online marketplace, already has launched its own overnight air delivery operation that uses contracted freight carriers to compete with the established air freight giants UPS and FedEx. And reports tell us that the company is setting its sights on entering the ground freight hauling business to some degree in 2017. Indeed, there are serious projections that an Amazon freight hauling operation could pass FedEx in volume in three years and UPS in five. And if that doesn’t work, Amazon completed its first commercial delivery by drone as 2016 was winding down.

Uber, the technology-driven, ride-sharing company that has turned the taxi-cab industry’s business model into an uncompetitive relic in just four years, is turning its sites toward the trucking industry. In the fall of 2016 Uber bought Otto, a company that is developing some impressive (though still in development) autonomous driving technology for trucks. 

Nearly 85 percent of all freight transported in the nation goes by truck. And the market is estimated to be worth $800 billion in annual sales. So it makes sense that companies offering new and more efficient systems will want to get into that market.

It also makes sense, given the intense competition and low freight rate environment, that trucking companies from the biggest to the smallest increasingly will be looking to technology to find ways to improve their operating efficiency, lower their capital spending on rolling stock, improve drivers’ job satisfaction and retention rates, and earn bigger profits through increased efficiency.

And all of that will be unfolding more than ever before in 2017.
 

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