Federal Efforts to Reduce Trucking Capacity: Analysts Warn of Time Lag

Studies show the trucking industry has been stalled with freight stagnating for about three years, but the Trump administration’s recent efforts to raise freight rates by reducing excess vehicle capacity have yet to begin to bear fruit.

In a market where observers say there are too many trucks competing to transport a dwindling range of goods, shipping companies have been able to transport their loads at cheaper prices than usual. The White House aims to tip the balance by reducing the number of trucks on the road by mandating stronger standards for commercial driver training, licensing and qualifications, according to the Owner-Operator Independent Driver Association (OOIDA).

In a letter sent Monday to leaders of the U.S. House and Senate transportation committees, OOIDA threw its weight behind the effort, which includes what it calls “common sense reforms” such as: enforcing English language proficiency rules; rnEnsure integrity in the issuance of non-domestic CDLs; Strengthen entry-level driver training; He rejected efforts to lower professional standards.

These can be seen in recent initiatives from the U.S. Department of Transportation (USDOT) and the Federal Motor Carrier Safety Administration (FMCSA) such as moves to restore English language proficiency violations to off-duty standards and the Interim Final Rule (IFR) restricting the issuance of non-domestic commercial driver’s licenses (CDLs), which are licenses that states grant to drivers who do not have an address there.

Express says these steps will likely result in fewer drivers – and trucks – on the roads, but change will take time. For example, transportation analysis firm FTR predicts that the Trucking Conditions Index (TCI) will show improving market conditions for truckers in 2026 and 2027, but in the meantime, that measure has improved only slightly to a “basically neutral” 0.3 in August from -1.03 in July, thanks to marginally less challenging freight rates.

“The likelihood of a capacity-based recovery in trucking has increased over the past month due to severe restrictions on the issuance and renewal of commercial driver’s licenses for foreign drivers,” Avery Vis, vice president of trucking at FTR, said in a statement. “However, despite some anecdotal reports about the various impacts of the crackdown on immigrant drivers, available data has not yet shown a significant impact on market conditions. We expect pressure on foreign drivers to be an important factor in increasing capacity in the coming months, but many questions remain about the scope and speed of the impacts of CDL tightening and the implementation of English on the truck shipping market.”

Likewise, financial analysts at TD Coin said today that the new non-local rules could have a higher impact on capacity than previously thought, but only if they are strictly enforced across a few critical, highly populated states. “Implementation in Illinois, California and Western Australia is key as data shows these have been significant contributors to capacity and continued significant CDL issuance in 2015,” the company said in a note to investors. “We still believe implementation will take time but the Department of Transport appears poised to do so and conditions appear to be favorable for a strong bidding cycle for 2017.”

However, this level of implementation may be easier said than done, as other voices in the industry point to potential downsides such as the huge impact on disadvantaged populations, job losses, and disruption to existing flows of imports and exports.

Leave a Reply

Your email address will not be published. Required fields are marked *