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April 29 2019

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April 29 2019 | The Journal of Commerce 33 www.joc.com Surface Transportation truck market was hot. Driver numbers dropped again in February 2018, as well, and those three monthly drops may have been related to the electronic logging device mandate, which took effect in December 2017, or other immediate mar- ket shifts as the spot market boomed in early 2018, Tucker noted. Only five of the 17 drops in driver numbers involved fewer than 1,000 drivers. Most involved 1,000 to 2,500 drivers, Tucker said. Even the most recent swing of more than 5,000 drivers isn't a seismic shift, however, because it's out of a total of 2.61 million truckers. But larger carriers "have got to be frustrated as all daylight," Tucker said. "When rates are great, you wish you had more trucks. [Now that] they do have more trucks, rates are coming down and the business is more competitive." Other indicators of market pressures may be reshuffling the truck driver pool. In the fourth quarter, the driver turnover rate, the percentage of a company's driver pool that would have to be replaced within a year, at large truckload carriers dropped nine points to 78 percent, according to the There is also a lean component to PSR. An airline would rather fly 900 passengers on six planes of 150 people each than on 12 planes of 75 passengers. Likewise, the goal in a PSR network is to use fewer trains, ones completely full. Every well or flat car should have freight to maxi- mize revenue. There are several ways to evaluate such a system, and results based on these benchmarks have been mixed. One metric is asset utilization. If an airline can use six planes instead of 12, the other six are redeployed to other locations or sold off. A lean PSR operation scraps excess assets, rather than letting them collect mothballs. But data from FTR Associates Matt Harding, vice president of the Freight Market Intelligence Consortium at Chainalytics, believes some owner- operators already are leaving the spot market, either quitting or contracting with large carriers. "I would expect drivers dropping out of the market," he said at the Transportation & Logistics Council's annual conference in Memphis in March. "Anyone who came into the market last year to make a lot of money [when spot rates soared] is going to be dropping out. Look for a lot of used equipment to enter the market." Tucker sees a rebalancing under way that stems from changes shippers made last summer and autumn to their routing guides and the transportation manage- ment systems that help them select motor carriers. Overall, shippers agreed to pay higher rates last year to secure capacity from their primary carriers, which meant less freight spilling over to the spot market. JOC email: bill.cassidy@ihsmarkit.com twitter: @willbcassidy CSX's intermodal train speeds improved 5.4 percent in 2018 and are nearly 9 percent higher in 2019 on a year- over-year basis. matthew siddons/ Shutterstock.com Shutterstock.com show total US railcar capacity utiliza- tion has risen only a few percentage points, from 75 percent to about 78 percent, since 2017, and has actually declined slightly since UP, KCS, and NS began to install PSR principles. "Part of that might be because the railroads are implementing [PSR] more gradually than in the past. Part of it might be that ship- pers aren't seeing the benefits yet," said Todd Tranausky, FTR's vice pres- ident of rail and intermodal. "We don't know what to expect of PSR, or think of it yet, but that should become clearer in the next six to nine months, as railroads get further into implementation." Ross Corthell, director of trans- portation for Packaging Corporation of America, said his company shifted some loads to truckload during CSX's rocky rollout in 2017. Nevertheless, he agreed that PSR has resulted in shippers needing fewer railcars because equipment turns are quicker. Corthell, however, warned that railroads need to "maintain open lines of communication" with shippers, keep enough capacity in the network, and "not make the cuts so deep." Average train speed is another common way to measure perfor- mance. When fewer trains are run- ning, the chances of a problem go down. Fewer breakdowns mean a train departs and arrives at the same time, every time with consistent speeds. Consistency of service is perhaps the most important benchmark but is more difficult to track. US freight railroad service has been inconsis- tent for years. "If your freight is supposed to be available Friday at 3 p.m., it can't be Friday one week, Sunday another week, Wednesday another time," Tranausky said. "It needs to be ready by Friday at 3 p.m.; it can't be all over the map." As railroads look to improve service using PSR, they need to keep in mind the changing freight mix, lengths of haul, and service require- ments if they want to grow volume and fend off the lure of trucking when just-in-time shipping and speed to market are more critical than ever. JOC email: ari.ashe@ihsmarkit.com twitter: @arijashe American Trucking Associations (ATA). At the same time, the turnover rate for small truckload carriers, those with less than $30 million in revenue, rose five points to 77 percent. It's been a long time since the gap in turnover rates for those two groups was so narrow. In the second quarter of 2018, as spot rates were soaring due to the tightest truck market in at least 15 years, the average turnover rate at large truckload carriers hit 98 percent, while turnover rates at smaller fleets slipped to 72 percent, according to ATA data.

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