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FTR Predicts an Instant 2% Hike in Trucking Productivity With 34-hour Restart Suspension

Date: 11.12.2014 / to news list


The analysts and thought leaders at FTR said today that suspension of the 34-hour restart regulations could immediately improve the trucking industry’s productivity by 2 percent.

 

And the Illinois-based forecasting company claims that improvement in productivity would continue for at least the two years it would take for the government to complete a study of the 34-hour restart regulation’s impact and write a modified regulation.

 

At this point, it appears that opponents of the Federal Motor Carrier Safety Administration’s (FMCSA) restart regulations have succeeded in attaching a provision to the current federal funding bill that will suspend the recently changed 34-hour restart regulations pending a study of their effects.

 

The provision is included in an appropriations bill that has passed muster with House and Senate negotiators, and now faces votes in both chambers and then on to President Obama for his signature.

 

At issue is the requirement to have nighttime sleeping periods during the mandated rest period. Those periods mean that truckers are unable to resume their work cycle in the evening or at night, a major hindrance to many schedules. Given the need for a study, followed by several steps in the regulatory process, FTR has estimated that modified regulations would be in place no earlier than early 2017.

 

FTR said it has added this important development to its analysis of regulatory drag with the following important result: The change will improve industry productivity by 2 percent immediately, lasting for the two years it will take to write a modified regulation. And the forecasters estimate the modified regulation will lower productivity by 1.5 percent, if the sleep timing issues are solved. That is a 50 basis point improvement over the current regulation.

 

In the meantime, the 2015 productivity benefit will noticeably affect truckload capacity utilization. This will join an already moderating trend to lower capacity utilization to near 96 percent. While this is high by historical standards, FTR said it is 300 basis points below the critical level of a year ago.

 

This means that the industry will have an important reserve of surge capacity to handle seasonal peaks or other issues in 2015, according to FTR, which expects price increases to moderate as a result — especially for spot markets.

 

Noel Perry, FTR’s senior consultant and managing director, said, “It is important to note that this change does not reduce the impending wave of regulatory drag still scheduled for late 2016 and beyond.

 

“Indeed it makes it worse, because the revised regs will hit just when a bunch of other regulatory changes appear as well. At that point, capacity will move above 100 percent and stay there for a year or more, unless the FMCSA doesn’t do what it says it will do, or if recession appears to blunt demand. Should recession occur — at FTR we think this is likely — that simply will push the crisis out a year or two. At that time, the problem will be worsened by a surge in recovery freight.”

 

In summary, the good news is that the already moderating driver shortage will be reduced more for the next two years. The bad news is that the problem is not going away. It is simply moved out to 2017.

 

FTR’s forecasters collect and analyze all data likely to impact freight movement, issuing reports for trucking, rail, and intermodal transportation, as well as providing demand analysis for commercial vehicle and railcar.

 

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