The ABC’s of the Capacity Shortage


Understanding the Capacity Shortage 

Anyone who regularly moves freight likely has realized that their brokerage is facing a major capacity shortage, along with a hike in prices to go with it. Industry experts predicted a shortage and rate increase a few months ago, but it is already underway. Unfortunately, it will likely get worse in the coming months, requiring preparation and awareness by anyone responsible for shipping and freight carrying. With a better understanding of why this capacity shortage occurred, planning becomes possible, keeping your business on top of the problem.

Carriers Knew It Would Happen, But Not When

For months on end, truckload carriers carefully analyzed data to see when the capacity shortage would arrive. During this time, the shortages that did arrive were short lived, quickly being overcome. Even so, most recognized this as a sign that a more long-term shortage was on its way. After all, for months, the spot market has shown that demand was greater than the capacity within the truckload market.

The real signs of an upcoming shortage and rate increase arrived in the middle of August when larger carriers could tell that contract rate increases were about to arrive. At that time, some were dealing with just 3 percent increases but warned that customers who didn’t pay that increase would end up dealing with an increase of between 8 and 10 percent in the near future. Of course, the larger carriers have a bigger influence, but as their rates rise, so do those of smaller fleets. With recent hurricanes in the Southeast, things got even worse.

Tight Capacity

Even before the recent capacity shortage, the capacity was already considered tight. The spot market had recovered and was showing rate increases that seemed like they would remain. That prediction proved true. In the last few weeks, the rates have either remained at these new higher ones or increased even more.

A Major Shortage of Drivers

To make matters worse, the capacity shortage is impacted by the tight labor market. Unfortunately, the driver force was at full employment before the increase in demand arrived. As such, there simply aren’t more drivers to bring in to accommodate the larger demand. Another factor at play is that this population is aging, meaning more workers are retiring.


Because of tighter regulations on things such as immigration, the labor pool for drivers is shrinking. As such, it is nearly impossible to find replacements for those who retire or move on to another job. It is even more of a challenge to increase the number of drivers currently working.

Heavy Construction

In addition, the entire market is experiencing an increase in construction demand. Other segments are also growing or in high demand, such as the oil sector. Even the fact that the economy is doing well overall increases freight demand, as companies need to bring items to new destinations.

Natural Disasters

Recent hurricanes, like Harvey and Irma, have only increased the demand on truckload capacity, as more supplies need to be delivered to the affected areas. Between rebuilding and resupplying, more truckloads are needed than there are drivers available. The initial efforts will focus on relief before rebuilding can truly begin. As such, the increase in demand in Texas and Florida from Harvey and Irma, respectively, should not go away anytime soon.

Stores and other businesses in these areas will also be working hard to replenish and replace their lost stock, which requires the assistance of truckloads. Between the thousands of stores in the states affected by recent disasters, the increased demand is a given. As always, any increase in demand allows the companies to increase their rates, which has led to the price hike.


As you can see, there are several factors contributing to the current capacity shortage and unfortunately we see this trend maintaining through the foreseeable future. However at C. L. Services, Inc., you can rest assured we are doing everything possible to build solid carrier relationships to ensure our freight is moved.


C. L. Services, Inc. Gives Back to the Local Community


On July 14th, C. L. Services, Inc. kicked off a two-week School Supply Drive for Hapeville Elementary School. Hapeville Elementary School is a Title I school located two miles from our headquarters in Atlanta, GA.

To encourage donations, we made the School Supply Drive a friendly competition between departments. We already knew how amazing our employees were, but we did not expect to be so blown away by the outpouring of donations made across all departments. OUR EMPLOYEES ROCK!

All the boxes lined up for donations:


All ready to go!




Thank you for your donation Taylor and John!



Thanks for your donation Alli and Channing!

The winning team was to receive this 1st Place Trophy and bragging rights for going above and beyond for our local community! It quickly became highly sought after.


1st Place Prize!


Some of our leadership team giving back to the local community.


The donations kept flowing in!

All together we collected over 3,036 pieces of school supplies! Everything from folders and paper to pencil boxes and backpacks. Our team went above and beyond for these children!



And finally the winning team is……..The CLS Accounting Department with 801 pieces collected. Well done, team! We are so proud of you, and thank you so much for supporting the children in our community!


We want to thank each and every one of our employees for your generosity. We couldn’t have helped our local community without your support. Thank you!

And lastly, we want to give a special shout out to Meg Scott, our Corporate Trainer, for organizing such a successful event on behalf of our company. You ROCK!

Podcasts for Truck Drivers and Owner-Operators

Spending countless hours in your cab by yourself can get lonely. You need quality entertainment to help pass the time. Good thing there are tons of podcasts – downloadable audio programs – to alleviate the sometimes monotonous journey of over the road driving. You can find podcasts on virtually every subject from business and history to science and cooking. The best part is they are free. Here is a list of some of our favorites:

TalkCDL: This podcast is from truckers for truckers. Every Friday at 5 am a new podcast is posted covering trucking industry news, laws, surveys, issues, etc. It is funny, entertaining and covers extremely useful topics for all professional drivers.

Stuff You Missed in History Class: Let’s admit it, we all fell asleep in high school history class. The creators of this podcast understand. We love how comprehensive this podcast is with a wide range of subjects. It is definitely one of the best history podcasts out there.

Freakonomics: Most people have heard of this podcast and it’s for a good reason. It is amazing! Host Stephen J. Dubner explores the riddles of everyday life and the weird wrinkles of human nature — from cheating and crime to parenting and sports. You don’t want to miss this one!

Trucking Podcast: Trucking podcast was created by trucker, Buck Ballard. The show’s slogan, “helping you make more money and rediscover the adventure.” Not only is this a great resource for truckers, but it is quite entertaining as well.

Serial: If you are into drama, this is the podcast for you. Each season tells a true story with a surprising twist at the end. It has won several awards and literally has a cult following. Make sure to listen to each season in order though.

Good Job, Brian: “Quiz show, offbeat trivia, awesomeness.” Need to stay awake while driving through the night? Trivia is a fun way to stay alert. Test yourself with weird trivia and learn random news.

Trucker Dump: With topics like “How to Find a Great Truck Driving Job” and “Stupid Rules that Truckers Tolerate,” Trucker Dump offers insights into almost every topic in the industry. It is hilarious and relatable.

Outside the Lines: Calling all sports enthusiasts. This podcast takes a backstage look at the lives of athletes, teams and sports culture. Outside the Lines gives you a different angle on the sports industry.

Top Podcast

Let us know your thoughts on our picks. Do you have a podcast that you love? Share it below in the comments. As always, stay safe out there, drivers!


What Effect Will ELDs Have on the 3PL Industry?

December 18th, 2017, a day that most in the industry are fearing, will be upon us in only a matter of months. Phase 1 of the FMCSA’s ELD mandate will be over, and Phase 2 will begin. Requiring drivers and carriers to put down the paper logs and start electronically recording their HOS. Owner operators and contracted drivers have been hoping for some change in the legislation or some type of stoppage to the new mandate, but nothing has been able to halt the implementation. What will the major impacts of this be for the 3PL industry? In short, two major areas will be affected, capacity and utilization.

As discussed in our previous article, the ELD mandate will play a role in the shrinking capacity over the course of the next few months and potentially years to come. Major carriers have already equipped their fleets with ELDs, they have technicians to handle the maintenance, and drivers are being trained to use them properly. The capacity crunch will most likely not come from companies such as Werner, XPO, and Swift but from individual owner operators and smaller fleets. This will still have a very significant impact as roughly 97% of the estimated 1.2 million trucking companies operate a fleet of 20 trucks or less. A large group of veteran drivers also feel that the government intrusion into their work is a perfect time to leave the industry. The impact in this regard will depend solely on who you choose to do business with. Many 3PLs turn to major carriers already to cover freight needs; owner operators though, the most affected by this mandate, could see a drastic decline in capacity. To go hand in hand with this issue, prices could start to surge across the board as competition to find available trucks will increase.


Another factor to consider will be tractor utilization. An increased emphasis on driver safety and HOS regulations are the fuel to the ELD fire. Thirty minute breaks and strict 11/14 hour rules will have to be abided by all drivers on the road. Potentially, this could be very harmful to service levels and overall customer satisfaction. While we don’t like to think that drivers are breaking their HOS rules, if product is delivered on time most of the industry seems to turn a blind eye. No longer could this be the case. Tracking freight will become ever more important as these rules are more strictly enforced. Now, not only do DOT stops potentially shut down drivers, but carriers themselves will be tightly monitoring their drivers’ movement. In addition to this, shippers could begin to use alternate forms of distribution i.e. rail or mandating expedited shipments. Again, the effect of this will vary depending on the specific 3PL, who you work with, and how you conduct business.

There may be a need to retrain employees on HOS rules to ensure that when selling freight, a driver will have the correct hours needed to run the lane as required by the customer. At a minimum, ensuring the appointment times are feasible will have to be a required check before getting a truck on a load. Shippers should already be ahead of the game in diagnosing their freight lanes and setting proper appointments. In order to provide exceptional service though, 3PLs will have to be involved in this process in order to meet customer expectations.

The last shred of hope to potentially end the ELD mandate is the new presidential administration. While we have seen several new regulations come into place, President Trump has yet to touch the trucking industry. With his ideas of looser regulations in all markets we could potentially see the ELD mandate altered or go away all together. No sign has been made yet that this will be the case. The 3PL industry should try to get ahead of the mandate and plan for it accordingly. As suggested, training could be required to inform employees of HOS rules and ensure service does not become your downfall as we see capacity shrink. Customers will expect the same results once the regulation takes hold, ensure your staff isn’t the reason your customers go elsewhere.

Top Ten Tips to Rock the Interview and Land the Job


So, you got the interview! Congratulations. Now what? Interviewing can be extremely stressful, but it doesn’t need to be. We’ve compiled a list of tips to help you succeed and land your dream job.

  1. Don’t wing it, preparation is key: The more prepared you are the more, the more confident you will be.
  2. Research, research, research: The most common mistake applicants make is having little to no knowledge of the company they are interviewing for. Become familiar with the company’s website, learn what they do, look at social media accounts, and understand their history. Familiarize yourself with their specific motto, vision or philosophy.
  3. Prepare your answers to common interview questions: Tell me about yourself. Why should I hire you over the other candidates? Why do you want to work here? What can you tell me about the industry? Know your answers to questions like these ahead of time.
  4. Read the job description (or ad) before the interview: Understand the job requirements and make sure you can explain how your specific skills and experience can deliver what they need.
  5. Dress for Success: According to an article by the Undercover Recruiter, 65% of bosses said that clothes could be a deciding factor between two identical candidates. Make sure you wear professional, modest clothing that you feel confident in.
  6. Arrive early: As the saying goes, “If you arrive on time, you’re late.” Getting there 5-10 minutes early is on time. Take into account the time of day, the weather, the traffic, and the location of the interview. If you are nervous about getting there on time or being able to find it, do a test run earlier in the week or head to the interview with ample time to spare.
  7. Make eye contact and beware of your body language: Look at the interviewer when you answer questions. Sit up straight. Try not to fidget, shake your leg, etc. All of these factors affect your appearance and confidence.
  8. Show your personality: Be yourself. Companies want to see who you are as a person and how you can add to the dynamics of their team. Relax and show them what is unique about you.
  9. Ask Smart Questions: Always have questions to ask the interviewer. Avoid questions about you (this includes questions about healthcare, salary, vacation time, etc) and yes or no questions. Instead, ask insightful questions that showcase the research you did on the company. This is also a great time for you to learn about the company culture. Keep in mind you are not just interviewing for the job but also making sure the company is a good fit for you.
  10. Follow Up: Always thank the interviewer for taking the time to meet with you within 24 hours of the interview. Take the opportunity to reiterate why you are the best candidate for the job and touch on anything you missed. If you interviewed with more than one person, send each one a separate note.

Best of luck to you, Job Seekers!

At C. L. Services, Inc. and C. L. Services Transport, LLC are always looking to hire great people. If you would like to start a rewarding career with excellent benefits and support, give us a call at 678-538-2646. We look forward to hearing from you.

Shippers — Our Capacity Expectations for 2017

Nearly half way through the calendar year there are still only vague predictions as to how the remainder of 2017 will unravel. The ELD time crunch is upon us, which will only further the current driver shortage. A new Presidential administration has already begun to stir the market place. Most major carriers are continuing to either cut or slowly control the growth of their capacity in order to rebound from the almost 2 yearlong “shippers market”. Each of these items will contribute to what most believe is the start of a balancing act between carriers and shippers.

Over the course of the past few years, line haul rates have been fairly mediocre. Mainly with shipping customers on the winning end of most negotiations. This has primarily been due to the ease and accessibility of finding available units along with high competition in the carrier marketplace. Most markets have been seeing a fairly even load to truck ratio, especially on the spot market side. According to DAT statistics taken over the past 2 ½ years, the middle of last calendar year saw a jump in load to truck ratio, roughly hitting 3:1 — a point it hadn’t seen since spring of 2015. From then, there has not been a single month under the ratio of 2:1. As business picks up and capacity remains stagnant, in the best case scenario, rates will have to become more aggressive in order to beat out competition. While we haven’t seen the increase just yet in 2017, most feel it is on the way. A current leveling off could potentially give way to major price hikes. Since the start of the year we have experienced a slight loss in the average RPM for van and reefer, but it is still holding fairly steady.

Screen Shot 2017-05-02 at 12.48.24 PM

The inactivity in the market place is most likely due to the new Presidential administration and in which direction corporations/business owners believe the economy will head in the future. Under President Trump’s proposed tax plan, corporations could see an income tax savings of 20%. With the restructuring of individual tax brackets, the average consumer could receive more buying power as well. In theory, these items will lead to economic growth and the need for greater capacity throughout the market. Wonderful news, again in theory, as this contributes nothing to increasing capacity and will only lead to a widening gap in the load to truck ratio across the country.

New ELD mandates, in addition to the current turnover rate plaguing the industry and lack of youth at the driver position, will play a pivotal role this year. We will see further cuts to available units as some small and medium carriers face the difficulty of not only equipping their tractors with electronic logging devices but also with training their drivers. The average cost of a logging device runs around $400 to $500, factor in installation and maintenance for a fleet of even 50 trucks and the price starts to take a toll on any operation. In addition, carriers that are not yet equipped will have to struggle through training their drivers on how to properly use these devices, potentially harming service, and utilization — indirectly creating even more of a gap in capacity. Major carriers should not see too much of an effect as most already require electronic logs to be used by their fleet, though lease purchase or owner operator heavy fleets could see some minor impact.

So where, if at all, is the silver lining in all of this? Dedicated operations. In my humble opinion, the best available option for both carriers and shippers. In a recent JOC article written by William B. Cassidy, “Dedicated trucking a ray of light after tough 2016,” he details the positive impact dedicated operations had on the trucking industry last year from the carrier side. 10 of the top 25 major carriers last year that saw revenue increases also made strides in advancing their dedicated operations. While this is not the only viable solution, it could be the simplest and most effective. Traditional 3PL’s, as they always have been, are another great capacity solution. As we begin to see an increase in new forms of 3PL’s (i.e. Uber, Transfix, and Truckerpath), it is necessary look at the whole picture. While these matching services provide a direct route to the trucker market and may seem like a creative way to increase the amount of moving freight, there are complications. Without a direct connection or a customer service representative, who will handle the issues that arise? The ability to use 1 individual at a company designed to move freight and provide service seems, at least to us, to outweigh the benefit of potentially matching with lease operator drivers out for the quickest buck.

As we make our way through the remainder of the year, the overall truck availability should remain fairly stable and potentially drop off towards the end of the year. Rates will eventually increase as carrier’s place pressure on shippers and fuel prices continue to rise. With the help of a potential economic boost from the government and the placement of expanded dedicated opportunities, shippers should still see a quite positive 2017.

The Origin Story

I recently sat down with Russ Caudell and Jeff Lantz to discuss their first 20 years in business and their future together. Here’s what I learned:

It all began on January 1, 1997. On this day over 20 years ago, Russ Caudell and Jeff Lantz pursued their lifelong dreams of becoming entrepreneurs by opening C. L. Services, Inc. (CLS), a transportation brokerage. They launched CLS with the goal of working for themselves and providing quality, cost-effective transportation solutions while always putting the needs of their employees and customers first.

In the beginning, it was simple. They started the brokerage debt-free with a heavy focus on dry van freight. They worked hard to exceed the needs of each customer and experienced huge business growth. “We moved quickly right out the gate because of our customer relationships. Within the first year in business, CLS generated $3 million in sales,” Lantz remembers. As their clientele increased, so did their specialties. They began hiring experts, and expanded their knowledge base beyond dry van and temperature controlled freight to include flatbed and over-dimensional, produce and LTL shipments across North America. By 2007, they were a $20 million company.

Ten years ago, Lantz and Caudell were having a strategy meeting about how they wanted to be portrayed as in the eyes of their customers. “We knew we had to be proactive and know about problems before they impacted our customers and carriers. And, at the same time, we wanted to always be responsive. We wanted to be known as Prosponsive®!” Caudell says. After realizing Prosponsive® was not a word, CLS went through the registration and trademark process. They also developed a Prosponsive® Promise – to proactively respond and communicate quickly and honestly with all clients and vendors. Ever since, Prosponsive® has become the hallmark and core culture of the CLS brand.

Prosponsive Promise

“It is instilled in all of our employees that they must use a Prosponsive® mindset along with being knowledgeable, accurate, and dependable to provide raving customer service to all customers, carriers and co-workers.” Lantz says, “This mindset is what sets us apart from other logistics companies.”

As owners, Caudell and Lantz embody the Prosponsive® mindset through continuous research, process improvement, and the employment of highly qualified employees. “While searching for ways to better assist our current customers, we discovered existing talent within CLS that could create more solutions for our growing client base. As a result, we launched a truck asset company, C. L. Services Transport, LLC (CLST), in 2016. This was the next step to providing dedicated services for our clients,” says Caudell.

As a result of the Prosponsive® brand and the development of CLST, they created a parent company, the Prosponsive® Logistics Group, LLC (PLG), which unified the two companies under one vision and mindset. Customers and carriers can expect to receive the same quality service and high level of expertise from all PLG companies.

Today, PLG’s offices are strategically located in Atlanta’s aerotropolis zone – one of the fastest growing transportation hubs. Their stringent hiring and testing standards for both employees and carriers has yielded them over 75 exceptional employees and strong relationships with vendors throughout the continent.

Clayton county ribbon cutting ceremony at our headquarters in Aerotropolis Atlanta

Clayton county ribbon cutting ceremony at our headquarters in Aerotropolis Atlanta

PLG’s vision for the future is centered around taking care of their people, clients and vendors. Their strongest focus is on continuously promoting a Prosponsive® culture that fosters exceptional customer service. To Caudell and Lantz, the future possibilities are endless. “First and foremost, we will continue to provide a stable brokerage company offering logistics solutions for dry van, temperature controlled, specialized and over-dimensional freight,” Lantz says. “However, within the brokerage, we have plans to further expand our expertise in our specialized and over-dimensional department as well as the fresh foods and food safety division. We want to be known as leaders in these specializations.”

PLG is no stranger to new regulations and the ever-changing times. “We know in order to be successful, we must be one step ahead. We will continue to invest in the knowledge of our people. Staying on top of the regulations and new technology, and providing our customers with a team of experts – this is the greatest service we can provide for our customers and carriers,” Caudell adds.PLG also plans to focus their efforts on expanding their assets in order to serve their clients’ specific needs.

As they grow, they will look into adding more offices in strategic locations throughout the United States. In conclusion, Lantz emphasized, “all of our future moves will be carefully calculated for the benefit of our current and future customers.”

Our owners went to Cuba with the TIA to explore future trade opportunities.

Always looking to the future: Our owners in Cuba with the TIA exploring trade opportunities.

Considering Rail? Here’s What to Expect..

Shippers have two options to get their product to the destination, truck or rail.  Depending on the commodity, shipping destination, & the load tonnage, it might initially appear to be more financially lucrative to ship by rail.  However, here are several factors to consider before choosing rail.

Commodity Type

Certain commodities can only be shipped by rail as an incident could endanger public safety if it were to occur on a public highway.  Rail carriers charge different prices depending on the commodity type.  More dangerous commodities will cost more to ship because of the liability.     


How much will your shipment weigh?  Each truck can haul approximately 26-30 tons while a railcar can hold approximately 50-70 tons.  It takes two or three trucks to haul the same tonnage as what one railcar can hold.  If that is the case, rail can be considerably cheaper with heavy loads.  On the flipside, it can be more cost-effective to ship by truck with a lighter load as you will have to pay a fee to lease a railcar whether it is loaded to capacity or not.      


The more distant the destination, the cheaper it usually is to ship by rail as opposed to truck.  Of course, railroads only have a limited number of yards & spurs where railcars can be unloaded.  Trucks can travel on just about any road in the nation.  If the destination does not have direct rail access, this can increase the shipping costs as the load will need to be transloaded to a truck to complete the final leg of the trip. 

Also, trucks are cheaper for short haul trips than railroads and delivery times are more secure.   

Just In Time?

Railroads are not known for being the quickest transportation method in the world.  Yes, there is “premium” freight like intermodal containers & automobiles that get first priority at running from point A to point B to meet delivery deadlines, but it’s not uncommon for railcars to sit idle for several days in railyards or along the line of road.  Reasons can include manpower or engine shortages, mainline traffic congestion, or interchange delays when a different carrier needs to deliver the product to the other half of the country (rail carriers start/end their lines in cities like Chicago, Kansas City, Memphis, New Orleans, etc.). 

Believe it or not, it’s not uncommon for large companies that primarily rely on rail shipments to also deliver time-sensitive deliveries by truck to keep the inventory pipeline flowing.  If and when rail carriers do not meet service windows, trucks can prevent operational shutdowns.  Even small companies with time-sensitive deliveries will ship via truck because of the relative uncertainty when a shipment will reach the destination.  Hiring a truck means a dedicated driver & carrier until the shipment reaches its destination.  Rail shippers might also maintain a larger-than-normal material inventory on-hand to prevent an operational shutdown, if railcars are not delivered on schedule.

Tariffs & Fees

Transportation companies earn incomes through tariffs & fees.  Railroads are no exception.  The more carriers required to make a delivery, the more fees the shipper will pay.  If the shipment needs to be carried by more than one rail carrier, each company will charge their respective fees.  If the shipment needs to be transloaded via truck at the origin or destination, there can be additional fees from these carriers as well. 


The fact is that rail & trucks are both vital to the American transportation infrastructure.  Railroads hold the competitive advantage when shipping heavy loads or to a distant destination.  Trucks are more reliable in meeting delivery deadlines & they can go anywhere a road exists.  For shippers that are primarily concerned about shipping cost and are flexible when the shipment arrives, rail can be the better choice.  But, for shippers & destinations that cannot afford to take the chance of an operational shutdown in the event a shipment doesn’t arrive “just in time,” shipping by truck is the better option.    

For more information on C.L. Services, Inc’s intermodal services please visit:


Shippers – Our Capacity Expectations for 2016

So far, 2016 has been a year of relative economic uncertainty. Although business levels & earnings have remained relatively flat as a result. The transportation (and trucking) industry are no exception. While a majority of publicly-traded transportation stocks made a profit during the 1st quarter of 2016, results and expectations were lackluster. Demand for trucking has modestly increased so far in 2016 from 4th-quarter 2015 lows, but demand and prices are still at recent year-over-year low points with short-term challenges that carriers are currently facing such as driver shortages, reduced revenues, and declining volume. Shipping lanes are experiencing different results as the market conditions vary throughout regions of the United States. American economic projections are still uncertain for the remainder of the year and this has also affected the trucking industry, which hauls 69% of all domestic freight tonnage, also remain relatively flat. Because of this:

2016 Capacity (So Far)

Trucking capacity began 2016 with an excess as 2nd-half 2015 shipping volumes fell short of initial projections. According to trends information provided by DAT Solutions, trucking capacity for spot (non-contract) shipments has increased 11% from May 2015 to May 2016 (the most recent data as of this publication). In general, capacity has looser but carriers have been trying to contain costs as much as possible by consolidating shipments & routes, to offset reduced revenues, but are not making any drastic cuts just yet. Demand has increased in certain trucking sectors like refrigerated freight but has reduced in other sectors such as energy commodities. Carriers are also delivering with LTL shipments (less-than-truckload shipments) instead of waiting to run a full truckload. As a result, trucks are running with lower tonnage volumes and more drivers are required to keep the fleet moving.

Another reason not to reduce capacity is that recent law changes related to a driver’s hours of service limit & compensation for overtime might require companies to retain or hire more drivers. With a projected long-term shortage of drivers over the next 5 years due to turnover & retirement of existing drivers and projected freight demands, carriers are not in a position to trim their fleet size as low as they would have during the economic downturn of 2008-2009.

Carriers are also containing capacity by not ordering as many new Class 8 tractors as they did in 2014, which was the highest purchase of new tractors in recent years. The new fleet additions turned into a “supply glut” in the second half of 2015 when demand dropped rather quickly and volumes dropped. Fleet reductions have been made in certain sectors like energy due to low commodity prices & consumer merchandise as warehouses currently have excess inventory because of weak consumer demand.

Instead, most carriers are placing more emphasis on contract freight with more secure pricing, volumes, and shipping windows than non-contract (spot) shipments and by raising rates in sectors where they are operating at capacity. Shippers without contracts can expect to pay higher prices for their loads & possibly have a diminished quality of service depending on the carrier’s capacity for the type of load and the desired shipping lane.

What Shippers Can Expect For The 2nd half of 2016?

Overall, shippers can expect rates to rise slightly for the remainder of the year but will stay fairly consistent. Below is a graph from DAT Solutions that shows how spot prices have been trending since 2012.

DAT Solutions freight_index_final_May-2016 Infographic

Figure 1: Rolling Spot Price on DAT Load Board Source: DAT Solutions
Spot prices are at the lowest amounts for the 2nd quarter in past four years. Despite a decline from September 2015 through the 1st quarter of 2016, prices have consistently risen.

Reasons Why Rates Will Stay Low

There are several reasons why prices will remain low for the remainder of the year. Listed below are several factors:

Low Diesel Fuel Prices

One reason spot prices & carrier operating revenues were higher in previous years was because of diesel fuel cost more. Carriers collect a “fuel surcharge” from shippers to offset the cost of diesel fuel. The higher the price per gallon, the higher the surcharge that the shipper needs to pay if they went their load hauled to a receiver. As the cost of diesel continues to rise, shipping rates increase. Diesel has increased in price the last month or two and is a contributing factor to rising rates.

Less Overall Tonnage

Many companies have too much inventory so demand for shipping services is lower than it could be. This is one reason capacity has increased since the first half of 2015. According to the American Trucking Association, shipping volumes have increased 1.8% when comparing 1st quarter 2015 shipping volumes to 1st quarter 2016 shipping volumes. Carrier capacity has risen at a faster rate, so there is currently more supply than demand. The ATA projects shipping rates to remain nearly flat until capacity is reduced or tonnage volume increases.

Increased Capacity

This has been covered before in the previous section, but it is important to consider. Carriers, in general, cannot charge as much if they have a fleet that is underutilized. Shippers can have more leverage in negotiating rates as carriers might compete for non-contracted business. Although shipping rates have increased recently, they are still the lowest rates in recent years.

Reasons Why Shippers Could Pay Higher Rates

Just because rates are the lowest they have been in recent memory, it doesn’t mean they will not go back up soon. As long as the price of diesel fuel remains low, carriers cannot charge a fuel surcharge to offset expenses. As a result, they have to raise shipping rate using other methods to cover operating expenses. Here are some reasons shippers will pay higher in 2016:

Carriers Prefer Contract Shippers

With weak demand & low tonnage volumes, most carriers are increasingly trying to secure long-term contracts with certain business partners. In an era of a relatively sluggish economy, contracts give carriers a better idea of how to “right size” their fleet and reduce excess capacity. Contracts & secured rates can be mutually beneficial for both parties as costs and revenues are more consistent. A shipper has a more solid idea how much they will pay per load & they might have a dedicated fleet to haul their loads that wouldn’t be available during busier times when carriers have less capacity and service shippers as business levels allow. Carriers benefit from shipping contracts as they have more secure sources of revenue that can offset the costs of increased LTL (less than truckload) shipments & excess capacity that they do not want to reduce.

If a carrier puts more emphasis in servicing “preferred” customers, shippers needing to pay a spot price will expect to pay more. Especially for expedited service.

Consolidation of Shipping Lanes

Like any business, carriers need to make a profit to remain in business. One way of increasing profit margins is to consolidate shipping routes and charging a slightly higher rate per mile. This method reduces excess capacity but still allows goods to be delivered to a final destination. According to the most recent data from DAT’s load board, shipping lanes in the Sun Belt & in particular the southeastern portion of the U.S. (i.e. Georgia, Alabama, Carolinas) are seeing the highest increase in shipping rates. Some of the rate increase is also due to an increase in shipping demand too.

Smaller Loads

Just because a carrier’s driver is hauling less tonnage doesn’t mean they get paid less money. As most drivers are usually paid by the mile, they essentially are paid the same amount to haul a full load or an empty trailer. As carriers are turning more towards LTL shipping and only hauling partial loads, they theoretically have to maintain a larger fleet size than if they only hauled full loads to keep the supply chain network running smoothly. Similar to consolidating lanes, carriers can also increase rates to help offset the operating expenses required to maintain a larger-than-necessary fleet to handle the partial loads.


It is hard to estimate how much rates will rise or fall in the coming months. The carrier capacity situation has been different in 2014, 2015, and 2016. Not many people expected fuel prices to drop to recent historic lows several years ago. As America currently seems to be approaching the end of a bull market, it is unclear whether it will turn into a recession or if the economy will continue to grow, albeit sluggishly. Until there is more clarity, shippers can expect to pay slightly higher rates than they have been paying for the last nine months, but should remain relatively stable with minimal surprises.

Preparing for Electronic Logging Devices: Mandate for All Truckers Operating in the USA

In December 2015, the Federal Motor Carrier Safety Administration released their final ruling for the implementation of Electronic Logging Devices (ELDs). The document details the technical requirements with which ELD manufacturers must adhere.

The mandate affects hundreds of thousands of truck drivers who must switch from keeping paper logs that indicate miles driven and hours worked to electronic logs. Canadian truck drivers must also comply.

The purpose of instituting this mandate is to ensure that drivers are obeying the ‘hours driven’ restrictions making roads and highways safer by eliminating driver fatigue. The hours are set to prevent drivers from falling asleep or making careless decisions that cause accidents and possibly result in death for other drivers on the road.

Trucking competition will also level out with ELDs preventing drivers who currently abuse the Hours of Service (HOS) to provide faster transit times than those who abide by the rules.

Preparing for the ELD Transition

Currently, trucking companies and owner-operators use either the paper log system or automatic on-board recording devices (AOBRD). The time lines for implementation of ELDs are:

  • Paper log users – December 18, 2017.
  • AOBRD users purchased prior to December 2015 – a grandfather clause is incorporated into the mandate allowing for a transition period that would phase in ELDs by December 16, 2019.

Each ELD must conform to the FMCSA requirements in a format that is capable of transmitting standardized data to law enforcement agencies throughout the US.

How Much do ELDs Cost?

According to the ELD Facts website, the FMCSA has investigated the cost of an approved device to range from $200 to less than $1000 per vehicle annually. Their research provided an average cost of around $500 for one of the more popular devices.

Truckers should also consider that administrative costs stemming from the paper log system will reduce and create a return on investment (ROI) almost immediately. As such, owner-operators should not be at a disadvantage compared to large fleet trucking companies because the initial expense and subsequent ROI is based on a single vehicle.

Registering ELDs

The FMCSA has published the registration requirements on the link below. Basically, the ELD manufacturer must obtain certification that all technical specifications have been met according to the mandate. The trucker can then provide their necessary information to the FMCSA through their website.

In the case of AOBRDs, software updates may be available that comply with the specs of an ELD.

FMCSA Penalties for Non-compliance

As the implementation date is still 17 months away, the administration is still assessing possible measures for non-compliance. Considering the motives of the ELD mandate in terms of driver and public safety, one may expect the penalties to be quite severe.


While the FMCSA has estimated crash reduction costs of nearly $400 million annually and increased highway safety through the use of ELDs, the OOIDA (Owner-Operator Independent Drivers Association) disagrees. They challenged the mandate in March 2016, through the US Court of Appeals claiming that the devices will do very little to improve safety. They also claim that the implementation of ELDs is an invasion of privacy along the lines of 4th amendment rights of unreasonable searches and seizures. The OOIDA has successfully challenged this mandate in the past so time will tell if the legislation remains intact.