Logistics Industry Report 2017-2018 | BR Williams Trucking

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A Trucking Company Logistics Industry Report 2017-2018 including current trends, laws & regulations, technology, turnover rates, capacity utilization & future recommendations.

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LOGISTICS INDUSTRY REPORT 2017-2018

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I have traveled some in the last year to national meetings discussing various transportation and economic content. As a result I have become increasingly focused on what is developing in the supply chain and trucking industry across the nation. Personally I have been in trucking for some 34 years. Entering into the industry shortly after it was deregulated in 1980 I saw dramatic change in the following five years. Since then three monumental events have taken place in 1994 2003 and most recently in 2014. To veterans in the industry conditions are forming today that feel very similar to 1994. This write up will address these conditions and implications. A PREFACE FROM OUR CEO Greg Brown CEO

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TRUCK DRIVER SHORTAGE 2015 2016 Driver shortage skyrocketed. 45000 drivers needed in the truckload sector Freight volumes softened. 36000 truck drivers needed. TODAY Driver shortages expected to increase to an unprecedented 50000 drivers needed .

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Technology Laws Regulations High Turnover Rates Demographics Lifestyles Job Alternatives FACTORS AFFECTING DRIVER SHORTAGE

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DEMOGRAPHICS • Median age of over-the-road OTR driver is 49 • Average American worker ager is 42 • Current driving force aging and retiring is higher than that of incoming drivers • Minimum age is 21 • Women make up 47 of work force • Only 6 of drivers are women which restricts job growth Age Gender

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Lifestyles Technology Older drivers slow down and retire. Young often newly married drivers assigned to longer less popular routes. Young career makers move to regional or local driving positions once they gain experience. Job Alternatives As recession ended and unemployment rate decreased other job opportunities opened for people such as construction which is more local has less responsibility and fewer regulatory guidelines. Future technology that will help industry will not be available for a number of years. Truck “Platooning” and Smart or Autonomous Trucks are currently in development and testing phases. FACTORS AFFECTING DRIVER SHORTAGE

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LAWS REGULATIONS ELD Mandate The ELD mandate is a regulation effective December 18 2017 that requires all for-hire and private trucking fleets to have switched from paper logs to “ELDs” Electronic Logging Devices. The American Trucking Association estimates that there are 3.5 million truck drivers in the U.S. and upwards of 1 million trucks without the required devices.

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2015 90 2017 90 + 2016 81 Turnover Rate HIGH TURNOVER RATE S Turnover rates in the for-hire truckload sector have soared since the economic recovery of 2008 experiencing at least 90 turnover between 2012 and 2015. While the turnover rate dropped to 81 in 2016 as freight volumes softened current 2017 data indicates the turnover rate for this year will again exceed 90 due to industry churn.

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CURRENT INDUSTRY TRENDS As a result of these and other factors truck capacity is becoming increasingly difficult to source spot market rates are sky-rocketing service failures are mounting and shippers are feeling the pinch. Some shippers with dedicated capacity and contract rates are protected from this instability. However contract rates in the long term tend to follow spot market rates.

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Capacity Utilization and the ELD Mandate Capacity is a truck trailer and a driver with legal hours to drive and the ELD has effectively removed capacity from the marketplace. The reduced capacity increases pressure on trucking company rates the carrier loses driver productivity and the drivers take home less money. The carriers must then reciprocate the drivers’ lost wages as well as their own lost productivity yield. CAPACITY UTILIZATION in the Trucking Industry Capacity utilization has increased from 90 in 2000 to approximately 98 in 2017. Truck tonnage can increase or decrease rapidly but it takes time for trucks trailers and drivers to be added to the market to accommodate increases in demand. Without the “spare” capacity represented in capacity under-utilization any significant increase in demand will cause trucking company shortages.

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FUTURE OF THE INDUSTRY With the large number retiring drivers and slow growth of entry- level candidates in search of a trucking company job the driver shortage is expected to increase again in 2018 to over 63000 needed drivers. If the trucking industry experiences no change or new regulation the trend line is expected to continue at the same pace resulting in a shortfall of 175000 drivers in 2026 or before.

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CONCLUSION Here are a few recommendations when preparing for 2018: • Find ways to provide more advance notice. • Avoid expedites like the plague. • Ask how your 3PL sources capacity and the characteristics of their typical carrier. • Lock in capacity and contract rates for 2018 with a preference for asset-based carriers. While a transitional market period is painful for the entire shipping community shippers have a dedicated friend and partner in BR Williams a logistics and trucking company. For help better managing a supply chain dependable information about the trucking industry or assistance reach out to BR Williams.

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