Freight Capacity Will Tighten, Carrier Executives Predict
This story appears in the Nov. 22 print edition of Transport Topics.
FORT LAUDERDALE, Fla. — Freight capacity in 2011, especially in trucking, will be constricted by a combination of federal legislative and regulatory policy and recession-related private-sector curbs on investment.
That was the message from Christopher Lofgren, CEO of truckload carrier Schneider National Inc., Green Bay, Wis.; Matthew Rose, CEO of BNSF Railway Co., Fort Worth, Texas; and Michael White, North American president of Maersk Line, Norfolk, Va.
“We are grossly underfunding infrastructure,” Rose said here on Nov. 15 during the TransComp/ Intermodal Expo, focusing on the absence of long-term transportation-spending legislation to fund capacity expansion.
“People think things are OK,” he said. “At the end of next year or in 2012, we will look back to 2006 — 2006 was about chronic capacity shortages.”
White agreed with Rose, saying, “The inefficiencies of the past can’t be kept on in the future.”
Rose predicted that the long-stalled transportation spending bill will move forward next year, and he urged freight officials to get more involved.
“We don’t have a voice around supply chain and transportation issues in Washington,” Rose said. “The lack of a voice allows the members of Congress to do goofy things.”
“If [that legislation] is not freight-centric, we will be in big trouble,” Rose warned.
Lofgren focused his comments on the Federal Motor Carrier Safety Administration’s “Compliance, Safety and Accountability” safety ratings program, which he said could trigger a “really short supply” of capacity in the nation’s truck driver pool.
“The focus will be on finding drivers,” Lofgren said, after FMCSA gives trucking companies, shippers and brokers access to all carrier fleet safety performance records on Nov. 30.
Currently, only carriers can see that information, and it’s limited to their own company.
Lofgren said those capacity shortages could show up as soon as the first half of 2011, with the timing linked in part to CSA implementation.
In the private sector, White predicted that the shortage of international cargo containers that developed earlier this year will repeat itself when freight demand grows and strains the ocean shipping industry’s equipment capacity.
Those shortages sprang up this year after manufacturers cut their building capacity to near zero, he said, because loss-plagued carriers couldn’t afford to buy equipment during the recession.
After 2009, White said, “carriers have made the very difficult but necessary decision to match capacity with demand” and curtailed the habit of creating overcapacity through equipment purchases.
“We saw a significant correction after virtually a total collapse in the market in 2009,” he said.
Lofgren sketched a parallel example for truckers, who have managed their capacity as demand fell.
“There is a discipline that has come in with all of us,” he said. “This is much larger than any single retailer or manufacturer.”
Their views were echoed by shipper officials who spoke for the National Industrial Transportation League trade group, which hosted the event in conjunction with the Intermodal Association of North America.
“Trucking [capacity] is a major concern from many, many aspects,” said Terry Bunch, chairman of NITL and director of logistics and customer service for Rayonier Inc., a forest products company based in Jacksonville, Fla. He cited driver supply, the CSA program and the expected changes in federal hours-of-service laws for drivers later this year.
“And that is against the background of demographics that weren’t very good to begin with,” he added.
“The biggest concern is in the truck area,” said Mary Pileggi, NITL treasurer and a logistics manager for chemical manufacturer E.I. du Pont de Nemours & Co. Inc., Wilmington, Del. “The concern is what will come out of hours of service and CSA.”
