The sluggish freight volumes experienced by the trucking industry of late may not dissipate any time soon, but an impending capacity crunch driven in large measure by the mandated adoption of electronic logging devices (ELDs) in 2017 should give motor carriers a huge and potentially long-term advantage – and maybe sooner than expected at that.
“Some shippers are stepping up as they ask carriers to begin installing ELDs now as [they] have decided that it is too risky to wait until the middle of December 2017 to see if [their] core carriers have sufficiently progressed in installing ELDs,” noted John Larkin, managing director and head of transportation capital markets research at Stifel Financial Corp., in a presentation this week at the 2016 Truckload Carriers Association (TCA) annual meeting in Las Vegas.
“Most shippers have little interest in using non-compliant carriers,” he stressed. “We mention this fairly widespread trend to suggest that the impact associated with ELD implementation may be felt a little earlier than some had projected.”
It’s also part of what he dubbed a “five to six year regulatory wave” that is just now beginning to wash over the trucking industry.
Larkin added that the driver shortage continues to be a “huge” industry problem, with the industry on pace to be short an estimated 250,000 drivers six years from now. He also noted that the “quality of recruits” is declining as well, meaning many carriers will be further restricted in efforts to add capacity to their networks.

“A long-term truckload capacity crunch should kick in around 2017 and 2018 if the economy continues to grow slowly,” Larkin (seen at right) pointed out. “It would not take much incremental growth in retail [freight demand] to put us right back into the capacity constraints we experienced in 2014.”
Yet he emphasized that “bloated inventories, sluggish consumption, and contracting industrial activity” that started to occur in mid-2015 through the first part of this year got exacerbated by shipper attempts to cut freight costs; a move Larkin likened to “Neanderthal practices.”
“Maybe 20% of the shippers out there went out to re-bid freight; and they have no idea how disruptive that is to carrier networks,” he said. “It is still out belief that greatershipper/carrier collaboration is an untapped resource, but we’ve not heard the word ‘collaboration’ used in the last three to four months.”
Still, Larkin emphasized that over the last two to three weeks, many carriers he’s talked with say a more “normal seasonal acceleration” in freight demand is now occurring as retailers began to stock up with late spring and early summer merchandise. 
“With any luck, this traditional seasonal pattern will hold up for the remainder of 2016,” he said.