The economy is looking great for the trucking industry, but watch out for pitfalls.
An article in CGMA Magazine earlier this week cited the fourth-quarter Business & Industry Economic Outlook which shows impressive gains. Among the most positive, US economic optimism is up 22 points from a year ago while projections for profit and employment are up ten and nine points respectively. Of those obstacles that finance executives find most concerning, regulation tops the list, especially healthcare legislation. However, the ability to find skilled workers runs a very close second (this concern came in sixth in last year’s survey).
The trucking industry is the perfect example of this good news/bad news paradigm. The CGMA article interviewed two finance leaders at trucking companies in the Midwest to get their take on this situation. For the industry, greater demand coupled with lower fuel costs is an unanticipated boon, but now those carriers have to find drivers to keep up with the increased demand…and that’s just not happening. I’ve written a number of blogs dealing with this issue, and will probably write a lot more in the future, but this is the reality for those of us in the industry. Some companies actually have to turn down business because they don’t have the drivers available from hauling every load.
One of the CPAs interviewed, Melissa Ruby, is the controller for Melton Truck Lines in Tulsa, Oklahoma. According to her, 10% of their company’s trucks stand empty because of the difficulty in finding and retaining drivers. She feels that the energy boom In oil and natural gas, as well as the increase in construction, has attracted people who might have been perfect candidates as truck drivers. Plus, long periods of time away from home and inadequate pay make the job less attractive. What carriers are doing to combat this varies, from increases in pay to increased benefits to amenities in the workplace.
So much for the bad news…let’s get back to the good news in the survey. Growth is clearly in the air, with 71% of the survey respondents indicating that they expect to expand in the next 12 months. Of the respondents, 23% felt they had too few employees, which is a big jump from 13% that responded the same way in the fourth quarter of 2013. Additional findings included:
- An expected growth in revenue of 4.7% and an increase in profits of 3.9% for 2015.
- Staffing is expected to rise 2.1% over the next 12 months compared with a 1.2% expectation last year.
- Salary and benefits are expected to increase by 2.5% in 2015.
- In a nice turn, healthcare costs are expected to increase 5.9%; they were projected to rise 6.6%.
Read the full article here.