Rates Expected to Rise

New federal rules that cut into trucking productivity did not push rates up for most shippers in the third quarter, according to a survey by Wolfe Research.

 

The third quarter survey found 68 percent of shippers saw no change in truckload spot rates after revised hours of service rules took effect July 1.

 

Of the rest, 29 percent of the shippers surveyed said spot rates rose 5 percent on average in the wake of the new rules, which limit truck driver work time.

 

The quarterly "State of the Freight" survey by Wolfe Research provides data that supports anecdotal reports from shippers and carriers dealing with the rules.

 

"There has seemingly been only a modest impact thus far," said the research firm, which surveyed shippers with $20 billion in combined transportation spend.

 

That doesn't mean a more severe impact isn't coming. Truckload carriers are expected to press for higher rates in contract negotiations next spring.

 

That's what Kate Scott, director of logistics at Wendy's Quality Supply Chain Cooperative, told a recent transportation conference she expects.

 

“We were projecting about an 8 percent impact to the rates, not counting in transportation time delays,” Scott said. “We’ve seen maybe a 2 percent impact."

 

However, the third-largest fast food chain expects a bigger impact when it negotiates truckload transportation contracts next year, Scott said.

 

The revised HOS rules require drivers take a daily break and limit the use of a 34-hour restart that lets them begin a new work week in less than two days.

 

Most trucking companies and many truck drivers oppose the new rules, which reduce the distance truckers may drive, which cuts into drivers' weekly pay.

 

Truckload carriers claim the new rules reduce productivity by 2 to 4 percent, limiting the number of "turns" a driver and truck can complete in a work week.

 

Truckers are responding by rethinking or adjusting their freight mix and line-haul operations to get the best utilization they can from existing tractor-trailers.

 

The majority of shippers — 78 percent — told Wolfe Research service had not declined, but 22 percent saw tighter capacity attributed to the HOS rules.

 

The New York-based research firm estimated a 2 percent overall loss of truckload capacity as a result of the rules, based on its survey results.

 

One shipper told Wolfe Research carriers seem to be planning loads further in advance, making his “last minute loads” more expensive and difficult to cover.

 

Other shippers said some freight lanes have been affected more than others and weekend load orders suffered the most when it came to service.