ILMA Compoundings June 2019 - 19

By Mindy Long

he strong freight growth the transportation industry
experienced in 2018 has slowed slightly, but capacity
issues have remained, and carriers and shippers are
working to increase efficiency and keep driver's seats filled.
Bob Costello, chief economist for American Trucking
Associations (ATA), said the key drivers of freight - consumer demand, construction and factory output - are
continuing to grow, but at a slower rate than they were last
year. "However, everything remains at high levels, even if
they are growing more slowly," he said.
Brad Delco, an analyst with Stephens Inc., said the debate
on whether there is a capacity crunch or not is starting to
heat up, and people are asking if things are beginning to
balance out as a result of the economy, the government shutdown effect, tariff threats, more capacity within the market
or all of the above. "I think in certain markets and lanes,
capacity is still tight, but to a lot lesser degree than last year,"
Delco said.
Dennis Moriarty, director of operations for Altom
Transport Inc., said tightened capacity is an extension of
hours-of-service (HOS) requirements and the electronic
logging device (ELD) mandate. "That has restricted driver
capacity, but the average age of a tank truck driver continues to increase every year. There aren't enough young folks
getting into this line of work," he said.
A result of the tight transportation market is customers
canceling or rescheduling pickups due to the lack of a
carrier, which can have a ripple effect throughout the supply
chain. "Missed pickups and rescheduling requires us to
tie up finished-product holding tanks and, in turn, causes
production scheduling issues," said Barbara Kudis, president
of Allegheny Petroleum Products Co. "To help, we have
had to increase our holding capacity for finished product by
installing several new holding tanks. We have also acquired
more bulk trailers to enhance our delivery capacity."
Kudis said Allegheny Petroleum is continuing to diversify
its carrier portfolio and is using its own fleet to deliver and
pick up at vendors' locations where, historically, they would
arrange freight. She said that even though there seems to
be more capacity in the first quarter, the company will be
prepared if the market tightens again.
What's more, some vendors have started adding in a
freight surcharge as a line item on their invoice when they
have to schedule the carrier. "This is even more reason to
have a strong logistics arm to handle all of our own shipments," Kudis said, adding that the company's efforts have
optimized its logistics. "Future endeavors include barge and
rail to enhance our logistics and buying power."
The fuel surcharge has leveled out with the cost of diesel
fuel, but the surcharge is still being used on a sliding scale
for some heavy loads and specialized handling, Kudis said.

ILMA Compoundings June 2019

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