Slow Freight Growth, Political Upheaval Define Year in Trucking

This story appears in the Dec. 19 & 26 print edition of Transport Topics.

It was a year of generally slow growth for freight carriers as well as shifting political winds as Americans elected business mogul and reality television personality Donald Trump to be the next president of the United States.

Spending on infrastructure came to the fore with the president-elect proposing a $1 trillion program over 10 years to repair and upgrade roads and bridges. The plan is expected to offer tax credits to investors who provide money to build new infrastructure and could result in an increase in the use of tolls.

2016 YEAR IN REVIEW: Timeline, top cartoons, top stories and more

In July, Chris Spear succeeded Bill Graves as president of American Trucking Associations, ushering in a new period of industry engagement on issues such as automated driving and an advocacy agenda focused on trade policy, tax reform, funding for infrastructure and safety technology.

Additionally, the opening of the expanded Panama Canal in June marked the beginning of what many industry observers expect to be a shift in international freight shipping from the West Coast to the East Coast and Gulf Coast of the United States.

On the regulatory front, it was an active year, marked by the issuance of fuel-efficiency and greenhouse-gas emission standards on medium- and heavy-duty trucks by the U.S. Environmental Protection Agency and National Highway Traffic Safety Administration.

The Federal Motor Carrier Safety Administration also established national training standards for entry-level truck and bus drivers and implemented a national clearinghouse for reporting results of drug and alcohol tests. The agency in January also issued a notice of proposed rulemaking regarding how it determines whether a carrier is fit to operate safely. The proposed rule would replace a system in which carriers are judged to be either satisfactory, conditional or unsatisfactory with a single determination of being unfit, which would force carriers to make immediate changes or cease operations.

New food safety rules were issued by the Food and Drug Administration, forcing shippers and carriers to adopt new procedures for inspecting and documenting the condition of food and other temperature- controlled products while in storage or in transit.

The government also issued a proposed rule that would require new heavy-duty vehicles to be equipped with speed-limiter devices.

In October, Kevin Burch of Jet Express Inc. stepped in as ATA chairman, bringing his focus on enhancing the public image of the trucking industry.

With an eye toward the future, truck and engine manufacturers introduced more fuel-efficient products. Freightliner offered a new Cascadia model and Navistar launched its HX vocational and International LT over-the-road branded trucks. Cummins Inc. debuted its new X15 series diesel engines.

Volkswagen agreed to pay $14.7 billion to settle charges that it cheated on emissions for its diesel cars. A part of the settlement, $2.7 billion, will be used to fund programs that cut diesel emissions. Separately, Volkswagen announced that it had purchased a stake in Navistar International Corp. and will cooperate with the U.S. truck maker on future engine and truck technology.

Buyers of trucks, meanwhile, took their foot off the pedal with U.S. retail sales of Class 8 units falling 21.9% in the first 10 months of 2016 compared with near-record volumes in 2015. Orders for new trucks also declined, and truck dealers reported higher inventories and lower prices for used trucks.

Market demand shifted from over-the-road tractors to vocational trucks as construction and service industries continued to recover and fleet operators focused on replacing older equipment with more efficient new models rather than expanding the size of their fleet.

Trailer orders and sales also declined from the year before but held up better than tractors.

The Mid-America Trucking Show in Louisville, Kentucky, had a different look and feel in 2016 as all seven major U.S. truck manufacturers decided not to exhibit their products. Most threw their support behind the new North American Commercial Vehicles Show in Atlanta starting in 2017.

In Europe, several manufacturers demonstrated truck-platooning technology on public roads. And at the IAA Commercial Vehicles Show in Hanover, Germany, manufacturers exhibited commercial vehicles powered by electricity.

On Dec. 1, U.S.-based startup Nikola Motor Co. unveiled a hydrogen-electric Class 8 truck with a range of up to 1,200 miles.

Around the country, states scrambled to find money for infrastructure improvements.

Rhode Island implemented a controversial plan to charge tolls for trucks only on its highways to raise money to rebuild and repair the state’s crumbling bridges. Fifteen percent of Rhode Island’s bridges are considered structurally deficient, the highest percentage among all the states, according to a report compiled by TRIP, a nonprofit transportation group based in Washington, D.C.

New Jersey became the only state in 2016 to pass tax increases on gasoline and diesel. The hikes are the Garden State’s first since 1988. Also, voters in New Jersey and Illinois approved changes to the state constitution to lock down funding for transportation.

Indiana came up with more than $1 billion without raising fuel taxes and South Carolina enacted a transportation funding package, while West Virginia’s Legislature rejected a proposal to raise $330 million for roads. Lawmakers voted down fuel tax hikes in Missouri, Alabama and Colorado, although national polls show public support for higher taxes to pay for roads.

Nebraska created an infrastructure bank and Kentucky established a public-private partnership to pay for transportation projects. Several states put off highway projects due to a lack of funds.

Meanwhile, a report by the American Transportation Research Institute showed that congestion cost the trucking industry almost $50 billion annually.

Efforts to address a nationwide shortage of truck parking also gained momentum in 2016 with ATRI joining forces with Natso, a trade association representing truck stop operators and travel centers, to collect data on available parking spots and provide updates to drivers via a smartphone application.

In an unrelated development, former Pilot Flying J President Mark Hazelwood and seven of the truck stop chain’s other executives were indicted on federal fraud charges for withholding fuel rebates from customers.

After a slow start, the number of mergers and acquisitions involving transportation and logistics companies heated up.

The biggest and most important transaction of the year was the purchase by FedEx Corp. of Dutch firm TNT Express, a $4.9 billion deal that bolstered FedEx’s presence in Europe and pulls the Memphis, Tennessee-based company nearly even with rival UPS Inc. in terms of total revenue. UPS and FedEx rank No. 1 and No. 2, respectively, on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. FedEx did edge past UPS to earn the top spot on TT’s Top 50 Global Freight Carriers’ list, in which companies are ranked based on freight revenue.

Several other mergers shook up the ranks of global shipping firms, with French ocean carrier CMA CGM Group acquiring Singapore-based Neptune Orient Lines, China’s Cosco Group picking up operations of China Shipping Container Lines and Germany’s Hapag-Lloyd AG adding United Arab Shipping Co.

The bankruptcy of Korean ocean freight carrier Hanjin Shipping Co. in September further disrupted the market and created headaches for shippers and intermodal carriers who were left to deal with thousands of stranded and empty shipping containers.

Another issue facing international shippers in 2016 was the adoption of the International Maritime Organization’s Safety of Life at Sea amendment, or SOLAS, which requires that shippers provide the precise verified gross mass, and not just weight estimates, for every container loaded onto an ocean vessel.

On the domestic front, trucking and logistics service provider Schneider moved to expand its capabilities for moving furniture and other oversize goods purchased online by acquiring specialized less-than-truckload carrier Watkins & Shepard and delivery software firm Lodeso Inc.

Uber Technologies, the ubiquitous ride-sharing service, acquired Otto, a startup that is developing a self-driving aftermarket kit for heavy-duty trucks. The implications for freight hauling soon were apparent when the first commercial delivery by a self-driving truck occurred in Colorado in October for Anheuser-Busch InBev.

Internet retailer Amazon.com also made waves in 2016 by leasing cargo planes and acquiring an equity stake in two air cargo carriers. The company also continued to build out its network of fulfillment centers and expanded its use of local delivery contractors to provide same-day delivery service in more U.S. cities.

In Houston, officials from the Port of Houston and Texas A&M Transportation Institute unveiled a driverless freight shuttle system for moving trailers and containers from ships to nearby warehouses. And in Georgia and South Carolina, state officials stepped up development of rail-served inland ports as a way to reduce the number of trucks hauling containers in and around seaports.

Also in 2016, President Obama became the first president in more than 50 years to visit Cuba, a move that was expected to lay the groundwork for restarting trade with the island nation once the U.S. embargo is lifted. The government of Cuba has eased some restrictions on private business dealings and more changes are expected as the country adjusts to life after Fidel Castro.

For many fleets, it was a year of settlements with Wal-Mart Stores Inc., FedEx, NFI Industries, Central Freight Lines, J.B. Hunt Transport Services and Swift Transportation agreeing to pay to settle lawsuits and various claims by state and federal agencies over classification of drivers, hiring and pay.

And in November, a federal judge blocked implementation of new overtime pay regulations laid down by the Obama administration.

Members of the Teamsters union re-elected James Hoffa as president and negotiations with car haulers on terms of a new contract dragged on without a resolution.

As the year came to an end, the president-elect tapped former Labor Secretary Elaine Chao to lead the U.S. Department of Transportation.

Technology Editor Seth Clevenger and staff reporters Eugene Mulero, Eric Miller, Roger W. Gilroy, David Elfin and Ari Ashe contributed to this article.