Truck utilization stable in December
January 30, 2012
The capacity situation continues to remain tight, but not critical. HOS implementation in mid-2013 will be a game-changer for that. Fleets are continuing their replacement-only truck purchases and freight growth had been sluggish but is improving. FTR’s estimate of truck utilization rose slightly in December, to 97.2%. The historical average is ~90% so we are in a tight capacity environment.
Utilization is currently stable and moderately tight – near-term improvements in freight volumes has pushed the early 2012 utilization forecast slightly higher. Although the 2013 HOS changes are less than expected, their implementation in a year full of other regulatory pressures will push capacity utilization to the same levels as in the 2004 crisis. Barring recession capacity will stay tight longer this time due to more regulatory change.
Aside from a 3 month drop to ~94% in late 2010 capacity utilization has been between 95 and 98% since the start of 2010 and should stay in the moderately tight (~98%) range until economic growth changes or HOS changes are implemented. Slowing capacity growth is just offsetting modest demand and regulatory drag. We have updated our forecast to account for the later than anticipated implementation of HOS rules. We now have an official date of July 2013. Click Here to see a quick synopsis of Noel Perry’s initial thoughts on the published rule.
While we finally have a known date and ruling on HOS, including it in the forecast is still an educated guess of sorts –we don’t like to try and guess what politicians or lawyers will do. We do know that capacity will likely stay near its current level until the economy changes pace or the HOS rules are finally in place.
Our forecast calls for utilization to remain near 98% until the summer of 2013. Once the HOS rules are implemented utilization will quickly approach 100%. It will remain at this level until the latter portion of 2014. This will be an event to watch because as we approach 100% the market will have to prepare for potential capacity shortages.
FTR’s Active Truck Utilization metric calculates the percentage of the population of active trucks that is required to move the U.S. truck freight. In general, a figure above 95% indicates a tight market where the majority of the truck population is at work. A figure below 90% indicates a weak market where a significant portion of the truck population is idle.
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