Last Legs for Long-Haul Trucking?

June 6, 2017

By Jack Roberts 

Volvo's Magnus Koeck says a new industry emphasis on regional haul routes was a prime design driver for the OEM's new VNR tractor. Photo: Volvo

The long-haul model has been the dominant model for moving freight in North America for decades, but there are signs that could be changing, according to Magnus Koeck, vice president, marketing, and brand management for Volvo Trucks North America.

The long-haul model for freight distribution developed organically after the Second World War in an age of cheap diesel fuel, a large driver pool, and infrastructure limitations at the time: The Panama Canal was not able to accommodate larger freighters and a new class of container ships. This placed an emphasis on East and West Coast ports, with corresponding long-haul truck routes becoming the norm.

A lot of the pieces that set the long-haul freight model in place have changed dramatically over the past several years, however. The size of the driver pool has not kept pace with the rise in freight volumes. Moreover, a new generation of potential drivers sees the isolation and long periods away from home associated with long-haul routes as a distinct negative.
At the same time, the widening of the Panama Canal (with a new, Chinese-funded canal across Nicaragua under construction now) has made it easier for larger container vessels to reach Gulf Coast ports.
Industry experts tracking these trends have predicted they could lead many truck fleets to adopt short-haul, regional, or super-regional routes, leveraging port expansions on the Gulf Coast to get drivers home sooner, while still maintaining increasingly important efficient freight deliveries.
While there is still some ways to go before trucking sees a full-blown shift away from long-haul routes, Koeck sees signs the shift is underway. “We actually don’t see that happening yet in a larger scale as there are still some work to do (renovations, dredging, blasting and bridge raising) in some of the Eastern seaboard ports to be able to accommodate the largest container ships,” Koeck said. “The Panama Canal is ready, but some of the ports are not. The Panama Canal did open up in the end of June last year for larger ships. We’re monitoring the development closely and we’re confident that there eventually will be changes in the freight patterns because of this.”
Volvo reported last week at a press event unveiling its new VNR tractor that its Class 8 build number for 2017 is beginning to indicate a move toward more regional delivery routes by fleets, with production of long-haul spec’d trucks falling off by 5%, compared to 2016, while regional-spec’d truck production has remained steady.
“It’s hard to tell if this is a long-term trend or simply a market correction,” Koeck said. “We do see a declining trend for long haul and a steady, slight upward trend for regional haul, although we’re also positive that the long-haul segment will recover in the years to come and the construction segment will decline sometime after 2019.
"The regional haul segment stands for close to 30% today of the total market and that’s a strong number," he continued. "We truly believe that we are extremely competitive now with our new lineup of VNR tractors, reflecting that we have seen a higher demand for daycabs and smaller sleepers in the last few years.”
Another driver that could push growth in regional and super-regional markets is the increasing pressure for faster delivery times, including a new emphasis on efficient “last mile” delivery, although Koeck said it is again too soon to say for sure if those forces are fueling a significant shift in freight delivery patterns.
“The future will tell if this is happening now,” he said. “But our customers certainly have demands on them for quicker, on-time deliveries, and that trend will continue. We will see different business models for the future. Just see what has happened thanks to companies like Uber and Airbnb. Connectivity and digitalization are enablers for all this. Nevertheless, I believe that we will see long-haul trucks also in the future and it will be the dominant segment in the foreseeable future, but maybe in the context of different business models among our customers.”
For the time being, Koeck said the driver shortage, in his opinion, remains the main driver for shorter transport distances. “Younger drivers also have somewhat different values than older drivers,” he noted. “And they highly value time off with family and friends, meaning it will be harder and harder to recruit drivers just for long-haul operations. That’s also why we at Volvo put a lot of effort into making the best possible driving and living environments in our trucks, both for our long-haul and regional-haul products. We truly believe that our customers have a competitive advantage when they have Volvos in their fleets when it comes to recruiting drivers.”