INTREPID members of National Tank Truck Carriers braved almost arctic conditions to reach Toronto, Ontario, Canada for the association’s 70th Annual Conference & Exhibits. The event took place April 15-17.
Those that made the trek through the ice and snow heard an upbeat economic report on the tank truck industry and got the latest details on the future status of the North American Free Trade Agreement (NAFTA).
Bob Costello, chief economist for the American Trucking Associations, presented the economic outlook. He said that tank truck loads are increasing in 2018, while truckload freight is down. Tank truck revenue has begun to recover from a slump at the end of last year. However, truckload rates are growing faster than tank truck rates.
Tank truck carriers were among the beneficiaries of 2.3% growth in real gross domestic product last year, according to Costello. Real gross domestic product grew by just 1.5% the previous year. Costello projected real gross domestic product of 2.7% in 2018 and 2.9% in 2019.
For truck fleets, that translated to a 3.7% increase in truck tonnage in 2017, which was the largest gain since 2013 (6.1%). Freight volumes rose faster than capacity during every month in 2017. Costello says truck tonnage has continued to grow in 2018.
According to Costello’s data, tank truck carriers kept busy over the past year as factory output grew by 1.5%, light vehicle sales averaged just under 17 million units, plastics production grew by 1.8%, chemical production was up 1.2%, paint production soared by 5.7%, and cement production was up 3.5%. Clay, lime, and gypsum production jumped 4.1%. Food output was up 3.8%. Crude oil production grew in fits and starts.
He said he expects continued production growth in most of the key sectors that impact the tank truck industry. In 2018, plastics production should grow by about 3.7%, chemical production should see robust growth of around 4.9%, paint production should increase by roughly 5.2%, cement production should be up by 3.9%. Clay, lime, and gypsum production should grow by about 4.4%. Food production growth will be in the 2% range. Crude oil production is relatively flat, but exports are growing rapidly.
With more loads to be hauled, the driver shortage is becoming more acute. At the same time, driver turnover at large truckload carriers seems to be rising.
“The uptick in turnover is consistent with continued tightness in the market for drivers,” Costello said. “Anecdotally, carriers continue to struggle both recruiting and retaining quality drivers—leading to increasing wages. The tight driver market should continue and will be a source of concern for carriers in the months ahead.”
According to ATA’s Trucking Activity Report, the annualized turnover rate at large truckload carriers—fleets with more than $30 million in annual revenue—jumped six points to 94%. The increase set turnover at these carriers 20 percentage points higher than in the first quarter of 2017.
The turnover rate at less-than-truckload carriers rose two points to 10%. At smaller truckload carriers, the turnover rate sunk to 73%, but was still seven points higher than for the same period the previous year.
“Turnover is not a measure of the driver shortage, but rather of demand for drivers,” Costello said. “We know that as freight demand continues to rise, demand for drivers to move those goods will also rise, which often results in more driver churn or turnover. Finding enough qualified drivers remains a tremendous challenge for the trucking industry and one that if not solved will threaten the entire supply chain.”
To fight turnover and attract new drivers, many tank truck carriers have responded with pay increases. Median annual pay in 2017 for over-the-road tank truck drivers was in the $67,000 range, according to an ATA study. In comparison, over-the-road reefer drivers pulled in close to $68,000.
NAFTA chill
While Costello was upbeat about the overall economic outlook, he acknowledged that President Donald Trump’s continuing efforts to renegotiate the North American Free Trade Agreement (NAFTA)could have a chilling impact.
With Senate Republicans calling for President Trump to end talks by Labor Day—Canadian, American, and Mexican trucking associations are calling for modernization, not a complete overall, of NAFTA. They outlined their joint case during a presentation on “Cross-border Trucking in the Age of an Uncertain NAFTA” at the NTTC annual conference.
“We strongly encourage our governments to update NAFTA to keep North America competitive internationally,” said the Canadian Trucking Alliance (CTA), American Trucking Associations (ATA) and La Cámara Nacional del Autotransporte de Carga (CANACAR) in April in a joint statement.
“In this endeavor, making border crossings and rules governing international commercial transportation more efficient is a crucial element that will only help our industries make North America stronger. We look forward to working with our governments to achieve a better NAFTA.”
Speakers at the NTTC Annual Conference included Geoff Wood, vice-president of operations and safety for CTA and the Ontario Trucking Association (OTA); Lak Shoan, OTA’s director of policy and industry awareness; and Costello, who said 10 million trucks cross the Canada-US border annually.
Those trucks move 90% of all consumer products and food, and two-thirds of Canada’s trade with the United States, contributing a staggering 1.2% to Canada’s overall gross domestic product (GDP). CTA said Canadian trucking fleets have experienced substantial growth as a direct result of NAFTA, which took effect January 1, 1994, including 140,000 Canadian drivers now operating in the United States, which is close to half of all truck drivers in Canada.
Top driver
PAUL Emerson, a driver with Foodliner Inc, was named National Tank Truck Carriers’ 2017-2018 Professional Tank Truck Driver of the Year. He is the fifth recipient of the William A Usher Sr trophy, which is sponsored by Protective Insurance. His 47-year truck-driving career includes more than two million accident-free miles of driving.
Gemini Motor Transport, Oklahoma City, Oklahoma, and G&D Trucking Inc/Hoffman Transportation LLC, Channahon, Illinois, earned their first NTTC Outstanding Safety Performance Trophies for their calendar year 2017 safety achievements.
Gemini Motor Transport won in the Harvison Division with an accident frequency of 0.291 accidents per million miles. G&D Trucking’s accident frequency of 0.090 accidents per million miles was the winning mark in the Sutherland Division.
John Whittington, vice-president of government affairs for Grammer Industries and subsidiary Vickery Transportation, was elected chairman of the board. He succeeded Lee Miller, chief executive officer of Miller Transporters Inc, who now serves as chairman of the executive committee.
NTTC’s membership will gather for the association’s 71st Annual Conference & Exhibits at the Wynn Las Vegas in Las Vegas, Nevada April 23-25, 2019.