Trucking, Except Local

SIC 4213

Companies in this industry

Industry report:

This category covers establishments primarily engaged in furnishing "over-the-road" trucking services or storage services, including household goods either as common carriers or under special or individual contracts or agreements, for freight generally weighing more than 100 pounds. Such operations are principally outside a single municipality, outside one group of contiguous municipalities, or outside a single municipality and its suburban areas. Establishments primarily engaged in furnishing air courier services for individually addressed letters, parcels, and packages generally weighing less than 100 pounds are classified in SIC 4513: Air Courier Services and other courier services for individually addressed letters, parcels, and packages generally weighing less than 100 pounds are classified in SIC 4215: Courier Services Except Air.

Industry Snapshot

According to the U.S. Census Bureau's 2008 Country Business Patterns, 30,203 long-haul trucking firms employing 489,270 workers who earned annual wages of more than $18.6 billion. Texas led the nation with 2,294 trucking firms employing 35,142 workers. Additionally, Less-than-Truckload (LTL) carriers numbered 7,880 firms employing 281,444 workers who earned more than $13.5 billion. There were 8,059 trucking firms within the used household and office goods moving sector with a workforce of 97,784 workers who earned annual wages of an estimated $3.1 billion. The bulk or 1,061 trucking firms of LTL carriers were located in California, followed by New York with 625 trucking firms.

The U.S. trucking industry increased its share of the nation's freight pool in 2006, hauling more goods than ever, according to the American Trucking Associations. The ATA reported that trucks carried 69 percent of the total volume of freight in 2006, an all-time high.

Although tens of thousands of companies were involved in the long-haul trucking industry, the 50 largest firms accounted for nearly half of all general freight revenues and about 30 percent of specialized freight revenues. A slowdown in the economy caused financial difficulties in the early 2000s, with many trucking companies either going under or swallowed up by larger firms during the recession. When the economy recovered, however, the remaining companies were running near full capacity and experienced a 24 percent increase in operating profits during 2004.

As the first decade of the twenty-first century progressed, the long-haul trucking industry faced two major issues: rising fuel costs and a shortage of drivers. A May 2005 study commissioned by the ATA stated that the long-haul, heavy-duty truck transportation industry had a shortage of 20,000 truck drivers in the United States. As for diesel fuel costs, they continued to rise and the national average stood at $3.43 per gallon in November 2007 as compared to $2.26 per gallon in May 2005.

During the late 2000s history continued to repeat itself with the trucking industry still enduring increasingly higher and erratic fuel costs. The national diesel fuel average spiked to more than $4.70 per gallon in July 2008 at a time when the economy was anything but stable, before plunging 40 percent in August 2010. Moreover, lessened demand brought on by one of the worst global economic downturns in U.S. history forced many trucking companies to shut their doors, thus removing their trucks off the road. As the economy began to pick up speed, trucking companies were left with over capacity and a driver shortage that was expected to only intensify.

Organization and Structure

The non-local trucking industry is divided into several segments that are based on the size of freight shipments (truckload, less-than-truckload), the type of goods hauled (household goods, general freight), the size of the trucker's market (regional, national), and the nature of the availability of the trucker's services to shippers (common, contract, or private carriage). Thus, an industry firm can be categorized as a regional contract carrier who hauls less-than-truckload shipments of general freight or as a national common carrier who hauls truckload shipments of bulk goods, and so on. National carriers have the equipment, facilities, and operating authority to transport freight cross-country while regional carriers primarily serve smaller multistate geographical areas such as the southern states or the West Coast. Long-haul transport is defined as shipments of 200 to 1,000 miles or more, and short-haul transport refers to shipments of 50 to 700 miles, depending on the carrier and other variables. "Off-the-road" transport refers to primarily agricultural and construction-related trucking involving minimal use of public roads.

Less-than-Truckload (LTL) carriers haul shipments of 10,000 pounds or less in combined lots from more than one shipper. Although modern trucks can carry loads of 40,000 pounds or more, a "truck load" has traditionally been defined as 10,000 pounds. LTL carriers, then, are distinguished from truckload (TL) carriers not by the weight of individual trucks but by the number of individual shipments that make up the truck's load. Unlike TL shipments, which typically involve the direct hauling of one shipper's freight from origin to destination, LTL shipments usually involve five phases: pick-up, sorting at a distribution terminal or transfer hub, line haul (the main, and longest, leg of the shipment), sorting at a destination facility, and final delivery. The LTL market is divided evenly between general freight carriers and carriers of small packages (shipments weighing less than 500 pounds). The deregulation of the trucking industry in 1980 resulted in a flood of new TL firms, but the prohibitive costs of entry limited the number of new carriers in the LTL segment. A national LTL carrier must be able to finance a large sales force, expensive technology, and approximately 500 distribution terminals.

Shorter routes and increased use of information technology had the greatest impact on the for-hire trucking segment of the industry. Shippers continued to streamline product manufacturing cycles and required just-in-time delivery schedules. This, in turn, placed greater demand for shorter, more reliable truck supply routes. For-hire trucking firms were also faced with growing competition from doublestack rail. It forced many of them to surrender a number of long-haul routes to the railroads. Acknowledging the trend, a growing number of trucker-railroad alliances were formed. Under these partnerships, truckers handled pick-up and delivery.

TL carriers haul shipments of 10,000 pounds or more from origin to destination. In 1992, roughly one-quarter of the non-local trucking industry's general freight tonnage was hauled by about 40,000 direct origin-to-destination TL carriers. With an onslaught of mergers, in 1995 there were some 20,000 truckload providers in the country. The TL segment hauls about 80 percent of all intercity freight and includes for-hire and private carriers. Because TL firms do not need to maintain intermediate freight consolidation facilities, the TL segment has historically been characterized by comparatively low start-up costs. When deregulation removed restrictions on new businesses entering the trucking industry, the TL segment experienced fierce competition among a large number of new, poorly capitalized firms. About two-thirds of the trucking industry consisted of such new, often high-debt, low-income firms. The largest TL carriers had low profit margins, market shares of only 1 percent to 3 percent, and revenues that ranged between $30 million and $40 million (compared with the several billion dollar revenues of the largest LTL carriers).

Common Carriers.
Common carriers are "for-hire" public truckers whose operating authority is conditioned on the availability of their services to any shipper who buys them. Historically, common carriers have been categorized according to the cargo they carry and the routes they cover: "regular" (or specific, limited routes) and "irregular" (unrestricted routes).

Contract Carriers.
Contract carriers provide trucks, equipment, and services (such as fleet maintenance or customer billing) on an exclusive, guaranteed basis for shipping customers who prefer the convenience of leasing trucks to owning them. As dedicated contract carriers, truck leasing firms (such as Ryder Systems) may lease drivers in addition to trucks. Such firms may also provide fuel, safety training, insurance, maintenance and other services to their customers. Contract carriers are often common carriers with an additional operating authority that allows them to contract out their services and have historically transported TL shipments. The growth of just-in-time inventory management techniques, however, has created a niche for contract carriers to haul lighter LTL "time-sensitive" parts or materials from warehouse to plant for primarily large industrial firms.

For-hire carriers offer their services either impartially to all shippers (common carrier authority) or exclusively for specific shippers (contract carrier authority). In 2004, distribution of goods by the non-local for-hire trucking segment represented nearly 47 percent of the total industry by weight and 60 percent by value of good shipped.

Private Carriers.
The private carriage market consists primarily of manufacturers, builders, retailers, or other firms (such as Sears Roebuck and Wal-Mart Services) who own, lease, or control truck fleets for the exclusive transport of their own goods or products. Many older private trucking fleets were created as alternatives to the inflated shipping costs charged by truckers in the industry's preregulated, heavily unionized years. Private fleets were maintained by 33 percent of manufacturing firms, 55 percent of food processing companies, 65 percent of the wood and lumber industry, and 75 percent of the construction materials industry. Private carriage allows shippers to maintain greater control over scheduling and freight handling and to customize service for specialized equipment or products.

Types of Freight.
Although the trucking industry hauled 67 percent of total U.S. freight tonnage in 1994, that tonnage represented nearly 75 percent of the total dollar value of U.S. freight, reflecting the dominance of the trucking industry in the transportation of high-value goods and commodities.

Traditionally, the types of freight truckers are authorized to transport have been classified in three ways: "specific" commodities (in which a trucker is authorized to carry only certain, specified goods); "specialized" commodities (in which the commodities truckers are authorized to carry are classified in broader but still limited terms, for example, "iron or steel articles"); and "general" commodities (which includes all goods except "household goods, heavy and bulky articles, new automobiles, dangerous or explosive articles, livestock, articles of unusual value and articles injurious or contaminating to other commodities"). More narrowly classified, non-local trucking freight can be further divided into general freight or packaged merchandise; agricultural goods; hazardous materials; and miscellaneous goods. The majority of steel, sheet metal, wire pipes, rods, semifinished metal products, and lumber and wood products are shipped by truck, as well as food, furniture, rubber products, fixtures, appliances, and plastics goods. The non-local trucking industry also hauls bulk commodities, automobiles, glass products, industrial water, heavy machinery, refrigerated liquids and solids, liquid petroleum products, building materials, synthetic fuels, and cargo requiring flatbed or specialized trailer transport.

Household Moving.
The trucking industry includes more than 3,300 (local and non-local) household goods moving establishments such as North American Van Lines, Mayflower Group, and Allied Van Lines. In the 1980s and 1990s, many household goods movers began to break out of the static, seasonal residential moving market by providing warehousing, logistics, LTL, and even intermodal service. In the mid-2000s the household goods industry accounted for approximately 7 percent of the industry's revenues.

Industry firms distinguish themselves from their competitors through financial strength, quality of sales force, shipment tracking technology, breadth of route coverage, efficient claim settlement, delivery performance, proper billing, size and quality of fleet, insurance coverage, and superior safety records. Larger national carriers can also provide the benefits of economies of scale including lower equipment, advertising, and insurance costs as well as sophisticated management techniques, more efficient administrative procedures, and extensive financial resources. Many of the large national carriers have also entered into logistics services, whereby they offer customers the ability to track their shipments as they travel from point of departure to destination.

From a manufacturer's perspective, the biggest advancement in trucking industry came when truckers began entering into alliances with railroads in 1990. Among them were J.B. Hunt Transport Services Inc. and Schneider National, which formed alliances with Conrail, Norfolk Southern, Southern Pacific, Union Pacific, and Burlington Northern. Such alliances offered manufacturers the speed and flexibility of trucks and the low cost of rail service. As a result, trucking companies began to use equipment that accommodated intermodal containers rather than tractor trailers so that containerized cargo could be easily moved between both transportation modes. In intermodal arrangements, truckers team with rail or maritime freight carriers to haul goods in generic dual-use containers.

The trucker supplies the shorter origin-to-railhead and railhead-to-destination portions of the transport and splits the revenue from the haul with the railroad according to an agreed-upon formula. The percentage of general freight truckers' vehicle-miles transported using intermodal rose from 1 percent in 1970 to as high as 15 percent for some TL carriers in 1991. By the mid-2000s intermodal use was at an all-time high. In 2004 the number of intermodal units was 10.99 million, up 10 percent from 2003.

The advantages of container freighting--decreased theft, lower transport and handling damages, better driver retention through assignment of long hauls to railroads, and new markets for trucking companies--were virtually doubled with the introduction of "double stack" intermodal transport in 1984. In double stack arrangements, containers are "piggybacked" on top of each other on a rail car to increase hauling capacity.

Background and Development

The invention of the combustion engine and the automobile in the nineteenth century and the development of the first public highways mark the origins of the modern trucking industry. The first transcontinental transport of freight by truck took place in 1912, and within five years the U.S. Army's request for a vehicle capable of hauling troops and war materials led to the creation of a fleet of trucks and specially trained drivers that formed the core of a new civilian trucking industry after World War I. While the industry began to establish itself as a serious competitor to the railroads, the Federal Highway Act of 1921 laid the groundwork for a national highway system that by the early 1990s stretched 45,000 miles.

Several factors contributed to the rise of the trucking industry in the following half century: a shift of population and industry away from cities and railheads to suburban locations accessible only by truck; a continuing federal mandate for a network of national highways; the inherently superior cost efficiencies of trucks relative to railroads with respect to loading facilities and shipment packing and handling; and the greater flexibility of trucks in providing specialized routes and delivery schedules.

Faced with increasing competition from the trucking industry, the rail industry pushed for legislation that resulted in The Motor Carrier Act (MCA) of 1935, which gave the Interstate Commerce Commission broad powers to approve acquisitions and mergers; classify commodities that are covered by and exempt from regulation; and govern the routes, services, and rates charged by the trucking industry. The 17,000 truckers in the industry during that period were granted perpetual "grandfather" operating authority, while potential new entrants had to meet restrictive requirements regarding the "public convenience and necessity" of proposed services. The MCA also guaranteed all communities route service regardless of the cost of such service to the trucking industry.

Over the years, federal regulation emerged as an artificial structure for maintaining wages and profits above natural market levels. Under ICC protection the trucking industry's share of total national intercity freight ton-miles (a measure of freight traffic expressed as one ton multiplied by one mile) grew from 9.7 percent to 22 percent between 1939 and 1974, and its share of the dollar value of U.S. freight began to surpass the railroads for the first time.

Although deregulation of the trucking industry had been contemplated as early as the Truman administration, it was not until the late 1970s that significant reform of the industry began to appear possible. When it passed, the Motor Carrier Act of 1980 radically altered the non-local trucking industry by eliminating ICC control over companies' abilities to enter the industry, determine their rates and routes, and enlarge their operations through acquisition, merger, or route extension.

The most immediate impact of the MCA of 1980 was seen in the number of failures of poorly capitalized new firms and noncompetitive existing firms, and the influx of new carriers in the TL segment where start-up costs were less prohibitive. The number of trucking business failures jumped from about 400 in 1980 to over 1,561 in 1986 with a total of 11,000 failures were recorded between 1980 and 1989. However, 19,000 new firms entered the industry between 1980 and 1982 alone, and the number of for-hire carriers with ICC-granted operating authority grew from less than 20,000 in 1980 to almost 50,000 in 1992.

Rate Bureaus.
Trucker's rates are determined by nine regional rate bureaus that meet on a regular basis to determine rate increases for the carriers in their region based on those firms' revenue needs. Rate bureaus also provide legal services, disseminate financial reports and market information, categorize shipments, and provide smaller carriers with rating software. Deregulation permitted carriers to publish rates independently of the Interstate Commerce Commission (ICC), and as a result the majority of large carriers withdrew from the rate bureaus between 1991 and 1992.

Rate bureaus continued to play a role in the non-local trucking industry, however, because international and intrastate rates could not be published independently and smaller carriers' budgets prevented them from performing the kinds of services provided by the bureaus. In the early 1990s, 25 to 30 percent of all general freight was transported under rates published by rate bureaus. Historically, two or more general rate hikes (of between 3.5 percent and 4.8 percent in 1992, for example) are implemented per year, but truckers' discounts (often ranging between 30 and 50 percent) reduce the de facto rates charged to shippers. Before industry deregulation in 1980, the ICC monitored rates more closely. However, because deregulation brought free market forces into play, new rates that did not reflect economic realities tended to regulate themselves down to natural levels by way of rollbacks and discounts.

Rate Undercharging.
Since deregulation, industry firms began resorting to broad discounting programs to provide customers with rates more attractive than published tariffs. In the early 1990s, bankrupt truckers began suing brokers and their shipping customers for the difference (estimated at more than $2 billion) between these unfiled discount rates and official published rates. In 1990, the U.S. Supreme Court ruled that shippers were obliged to pay the difference between filed tariff rates and rates negotiated with defunct truckers. Two years later, the ICC eliminated all regulations covering motor carrier contracts, making binding agreements between shippers and truckers easier to enforce and thus reducing the future likelihood of undercharge disputes.

Although some rail hauling of empty and loaded truck trailers existed in the 1950s and truckers subsequently began buying "piggyback" services from railroads, it was not until 1989 that the trucking and rail industries formally recognized the importance of intermodal transport with the signing of the first major intermodal agreement between a trucking firm (J.B. Hunt Transport) and a competing rail carrier (Atchison, Topeka and Santa Fe Railway). Between 1970 and 1991 alone, the percentage of vehicle-miles transported using intermodal by some TL carriers rose from 1 percent to 15 percent. In 1991, the Intermodal Surface Transportation Efficiency Act (ISTEA) was adopted, with the goal of reducing the amount of paperwork required by forcing states to adopt uniform measures, such as making fuel tax payments to a single state.

While the long-distance LTL segment experienced decreased revenues, regional LTL carriers experienced double digit growth by encroaching on the overnight delivery market once monopolized by small-package ground couriers, which are covered in SIC 4215: Courier Services Except Air. This trend was fueled by the widespread adoption of so-called "zero-inventory" production techniques by U.S. manufacturers, which entailed the creation of distribution centers or parts storage facilities within a delivery zone of two days or less in traveling distance from manufacturers' sites. The growing emphasis on regional markets was also enhanced by the industry's need to retain drivers by offering them shorter hauls, the rail industry's increasing competitiveness in long-distance freight, and growing emphasis by shippers on on-time delivery guarantees.
Congress passed the International Registration Plan and International Fuel Tax Agreement, which took effect in 1996 and 1998, respectively, to allow truckers to avoid repetitive state-by-state vehicle registration requirements and fuel tax payments. The Clinton administration's gasoline and diesel fuel tax ratified in 1993 added 4.3 cents to per-gallon fuel costs, raising industry operating expenses by an estimated $3 billion annually.

Additionally, several federal programs continued to affect the trucking industry's response to safety concerns. The Motor Carrier Safety Assistance Program, for example, gave the Federal Office of Motor Carrier Safety and relevant state agencies greater latitude in carrying out annual vehicle safety inspections. The resulting $6,000 to $9,000 per truck spent annually by the industry on maintenance and repair was expected to be offset by lower insurance premiums and cost savings derived from fleets maintained in optimal operating condition.

A lack of demand during the early 2000s caused by a slowdown in consumer spending, combined with rising fuel costs and insurance premiums, led trucking companies to tighten their belts, suspend orders for new equipment, and pushed tens of thousands of companies into mergers and bankruptcy. Freight levels fell an estimated 5 to 15 percent in 2001 and remained flat throughout 2002. Diesel fuel hit a two-year high in 2003, running $1.542 a gallon in February 2003, while insurance rates increased as much as 15 percent. High driver turnover rates, which can run in excess of 100 percent annually, and driver shortages were also a consistent problem in the industry. The biggest hauler to stumble was Consolidated Freight, a long-standing leader in the industry, filing for bankruptcy in September 2002, leaving 15,000 workers suddenly unemployed and a gap in the LTL market. Many other smaller companies also closed their doors or sold out to bigger firms.

A turnaround came in 2004 when the national economy picked up and trucking companies found themselves with more freight than they could handle. The for-hire, TL, and TLT sectors were running at near capacity into 2005. The overall transportation industry's operating revenues jumped 24 percent in 2004 to $198 billion.

Capacity had been reduced during the lean years of the recession, and trucking companies had not replaced or expanded fleets, waiting for better economic conditions. Once conditions improved, the companies found that their main obstacle in expansion was the shortage of qualified drivers. While the lack of drivers affected the industry, other significant costs also were prohibitive of new businesses entering the market, including a 10 percent average increase in insurance costs and record-high diesel prices.

In the mid-2000s TL business accounted for almost 55 percent of the long-distance trucking industry's revenues. LTL generated about 23 percent of revenues, specialized freight long-haul (including hazardous materials and agricultural products) 15 percent, and used household goods and furniture long-haul 13 percent. While the number of establishments involved in the general freight business, including both TL and LTL, increased, the number of establishments involved with specialized freight were declining. Of the 38,423 general freight trucking long-distance establishments in the United States in 2005, more than 31,000 were truckload establishments. At that time, there were 8,711 used household and office goods moving establishments and 11,688 specialized freight trucking establishments.

The American Trucking Association predicted that trucking would continue to dominate the nation's freight movement for the next decade. Trucking carried 69 percent of domestic freight tonnage in 2006, a number that was projected to rise to 69.7 percent by 2012 and 70 percent by 2018.

The trend in the mid-2000s for the largest firms was to enter into the next-day and second-day transportation arena. In 2005 Yellow Roadway announced that the company would enter the expedited delivery sector in an attempt to develop into a "one-stop shopping" firm. "We can do just about anything the customer needs today," Bill Zollars, Yellow Roadway's chairman, president, and chief executive officer told Traffic World in January 2005. "We can provide expedited service, time-definite service, we can provide short length-of-haul service, we can do transcontinental, we can do international." Two shifts in the manufacturing environment have pushed trucking companies toward this expansive business model. First, businesses do no like to maintain high inventory levels and use "just-in-time" delivery from suppliers to keep inventory from stagnating on their shelves. Second, the globalization of the marketplace has expanded business across regional and national borders. In the mid-2000s managers were working to make their fleets flexible and responsive to customers' changing needs.

Current Conditions

In the late 2000s a total of 4,493 trucking companies failed forcing 174,000 trucks out of circulation. The American Trucking Associations (ATA) warned of the real possibility of a shortage of drivers may likely end up as the trucking industry's largest hurdle in the years to come.

The ATA approached Congress with its concerns about the increasingly higher cost of doing business, especially when it came to rising fuel costs in the weakened economy. The national diesel fuel price climbed more than $4.70 per gallon in July 2008, and by the end of the first quarter of 2008 a reported 935 trucking companies had gone belly-up. Simply stated, when the price of diesel fuel rises by five cents per gallon it cuts into the trucking company's annual profits by $1,000. The trucking industry had a strong argument considering they were faced with diesel fuel costs that were on track of reaching a historical $148.6 billion in 2008, compared to $112 billion in 2007 and $106 billion for 2006. The industry further argued that since trucking has such a minute profit margin it was becoming extremely difficult to turn a profit.

Elsewhere, the Freight FOCUS Act of 2010 was introduced intended to improve freight transportation. "This legislation will go a long way addressing critical bottlenecks on our nation's most important highway corridors," Bill Graves, ATA president and CEO told the Bulk Transporter in October 2010, adding that "These chokepoints cost the trucking industry tens of billions of dollars each year, and force trucks to waste a tremendous amount of fuel."

Despite high U.S. unemployment figures, many of those drivers that left during the prolonged economic downturn may never return to driving over the road. The trucking industry's fears were realized by March 2010 when volume began to increase with some trucking companies reporting they had already began to experience a driver shortage. Adding to the problem, was the large number of trucks that have exited the trucking industry that created a "´┐Żover-capacity and an economic environment in which it has little pricing leverage," cited from The Journal of Commerce Online in March 2010.

During November 2010 it appeared as if trucking industry prices were beginning to stabilize from the erratic price fluctuations experienced when trucking prices reached a record 11.1 percent from the first quarter of 2007 to the third quarter of 2008 followed by a 7.6 percent plunge by the second quarter of 2009. TL prices grew 1.3 percent compared to the previous month, as did LTL prices by 2.2 percent. At years end, industry watchers predict trucking prices would have increased 1.7 percent followed by a 2.8 percent increase for 2011.

Industry Leaders

With its acquisition of major rival Roadway Express, Inc. in 2003 for $1.05 billion, Yellow Freight became Yellow Roadway Corporation and dominated the national LTL general freight market with 60 percent of the market share. The company's subsidiary Yellow Transportation had a fleet of 8,400 tractors and 33,000 trailers, and subsidiary Roadway Express maintained 9,200 tractors and 32,000 trailers. In 2005 Yellow Roadway acquired USF Corporation (previously USFreightways), which posted revenues of $2.39 billion in 2004. Yellow Roadway Corporation has become YRC Worldwide, which posted revenues of $9.9 billion and a net income of $276.6 million in 2006. YRC operated about 12,900 tractors and 53,300 trailers from a network of 340 service centers. The company's revenues began to trend downward throughout the mid- to late 2000s with a reported $8.9 billion in 2008 before plummeting to $4.3 billion in 2010 with 36,000 employees in 2009.

FedEx Freight Corporation is a subsidiary of express delivery giant FedEx. In fiscal 2006, FedEx freight reported revenues of $3.65 billion for a sales growth of 13.3 percent. During 2009 the company's 26,828 employees moved more than 90,000 shipments daily through 470 terminals. Arkansas Best Corporation had revenues of $1.86 billion and a net income of $84.1 million in 2006, and Con-Way Freight had estimated revenues of $1.4 billion. Arkansas Best Corporation's revenues fell to $1.47 billion with a net income of -127.9 million in 2009 before rebounding to $1.65 billion in 2009 with 10,347 employees.

Although no national TL carrier claimed a monopoly of the TL market, several firms, including Schneider National ($3.7 billion in 2006 sales), J.B. Hunt Transport ($3.3 billion in 2006 sales), Swift Transportation Co., Inc. ($3.2 billion in 2006 sales), and Werner Enterprises, Inc. ($2.1 billion in 2006 sales) have historically led that industry segment. The contract carrier/truck leasing sector is dominated by Ryder System, Inc. ($6.3 billion in 2006 sales) and Penske Truck Leasing improved its market share by acquiring rival Rollins Truck Leasing in 2001. Penske reported revenues of $2.15 billion in 2006. Historical leaders in the non-local household goods moving segment include SIRVA, Inc. with subsidiaries North American Van Lines, Allied Van Lines and Global Van Lines; and UniGroup, Inc. with subsidiaries Mayflower Transit and United Van Lines.

Schneider National with a fleet of over 12,000 tractors and 33,000 trailers has been able to maintain its revenues with a reported $3.7 billion in 2008 with 21,400 employees. J.B. Hunt Transport Services, Inc.'s revenues fell to $3.20 billion in 2009 before rebounding to $3.79 billion in 2010 with 14,171 employees. Swift Transportation Co., Inc., a hauler of building materials, paper products, and retail merchandise saw its revenues plunge to $2.1 billion in 2007 from $3.2 billion in 2006 before rebounding to $3.3 billion in 2008 only to fall to $2.5 billion in 2009 with a net income of -114.7 million. The company employed 15,800 workers in 2009. Werner Enterprises, Inc. who operated about 7,250 tractors and 23,800 trailers reported revenues of $1.8 billion in 2009 with 9,094 employees. Ryder System, Inc.'s revenues fell from $6.2 billion in 2008 to a reported $5.1 billion in 2010 with 22,900 employees in 2009. Penske Truck Leasing with about 200,000 vehicles has grown its revenues upwards to $4 billion by 2009 with 20,000 employees. SIRVA, Inc., while no sales figures were available emerged from Chapter 11 bankruptcy protection in mid-2008.


The trucking industry employed well more than one million drivers of heavy trucks or tractor trailers in 2005, with the general freight trucking long-distance truckload drivers making up 562,116 of that amount. There were more than 250,000 LTL drivers in 2005. Used household and office goods moving drivers and specialized freight trucking long-distance drivers combined for about another 260,000 drivers.

Truck driving is consistently ranked as one of the most hazardous jobs in the United States, due to highway crashes, loading/unloading injuries, and crimes against drivers. Long-haul drivers spend extended periods away from home, leading to a higher-than-average divorce rate among drivers. Finding, training, and retaining qualified drivers is one of the biggest challenges in the industry.

According to the American Trucking Associations, driver turnover was highest during 2006 for large TL companies, who experienced an average turnover rate of 121 percent. Small TL companies (with less than $30 million in revenues) had a 114 percent average driver turnover. LTL carriers had the lowest rate with an average turnover of just 14 percent of drivers. The association also predicted that the driver shortage, estimated at approximately 20,000 in the mid-2000s, would grow to 111,000 by 2014.

Salaries, wages, and benefits combined to create the single largest operating expense for trucking companies, accounting for over 53 percent of the operating budget in the mid-2000s. Large LTL freight carriers with unionized employees often pay out 60 percent to 65 percent of their revenues in wages and benefits (including wages to independent drivers) compared with 40 percent to 45 percent in the mostly nonunion TL segment. Long-distance truckers are usually paid by the mile and receive increases based on seniority.

Although the International Brotherhood of Teamsters (IBT) has historically been the most effective and politically influential union in American industry, it has been plagued by a long tradition of scandal involving organized crime connections, racketeering, pension fund dipping, insurance abuses, and federal investigation. In the 1970s, the IBT represented about 500,000 drivers, but by 1980 that number had declined to 300,000. After deregulation allowed scores of nonunionized carriers into the industry, the number of Teamster drivers continued to decline. Between 1981 and 1991, Teamster representation in the regulated for-hire sector alone fell 50 percent.

Nondriving Positions.
Dispatchers are responsible for notifying drivers assigned to them (or traveling in their zone) where and when to pick up and deliver freight. They routinely juggle a continuously changing roster of drivers, destinations, routes, schedules, and freight categories to determine the most efficient distribution of the company's fleet resources.

Raters determine the minimum amounts a company can quote its customers for shipping freight based on such variables as the type of commodity to be shipped, current shipping rates and discounts, competitors' rates, and the relative profitability of the shipment.

While dispatchers focus on specific shipping zones and individual drivers, planners are responsible for the efficient distribution of drivers throughout whole regions and must take into consideration such factors as fluctuating seasonal shipping levels or mistaken sales of company services to unserviced areas.

America and the World

U.S. involvement in foreign trucking has historically centered primarily on the Canadian market. The degree of internationalization in the industry was expected to grow, however, as a result of the ratification of the North American Free Trade Agreement (NAFTA) in late 1993, the implementation of new phases of the General Agreement on Tariffs and Trade, the emergence of a formally unified European economy, and the openings to trade offered by the democratization of the former Soviet Union and Eastern Europe.

The United States and Canada trade more goods with each other than with any other economies, resulting in transportation costs--including trucking--of $4 billion to $7 billion a year. In 1989, Canada and the United States signed a trade agreement to promote cross-border commerce, which was expected to be further bolstered by the gradual implementation of NAFTA throughout the 1990s. The NAFTA agreement opened cross-border traffic in the U.S. and Mexican border states by 1996. The trade value of North American surface transportation in 2006 was up 38.9 percent since 2001, and up 85.2 percent since 1996, for a total value of $760 billion. Of all trade with these two countries, 90 percent was land-based, with trucks hauling three times as much as rail and five times as much as pipelines.

Before NAFTA, Mexican cross-border trucking was highly restricted. Mexico required foreign shippers to use Mexican drivers and Mexican equipment to handle shipments there. This forced U.S. shippers and carriers to form alliances with Mexican carriers. In response to the restrictions, the United States established an embargo in 1982 that limited Mexican access to U.S. markets. U.S. certificates of registration restricted Mexican carriers' access to a border zone generally ranging 10 to 25 miles north of the U.S. border. But just before NAFTA's passage some 4,354 Mexican carriers held registration certificates. Only three Mexican motor freight carriers, however, held broader authority and none held 48-state authority.

U.S. trucking companies sending freight to Mexico were especially subjected to lengthy delays at border crossings since their trailers had to be unloaded from their tractors and re-loaded onto Mexican tractors. With NAFTA's passage, American truckers won access to all of Mexico in 1999, and Mexican truckers were granted full access to the United States.

NAFTA was regarded as bad news for U.S. trucking companies that faced difficulties retaining drivers for long hauls. Mexico lacked good roads, hotels, communications, and gas and repair stations--four requirements of most truckers. Meanwhile, the Mexican government began efforts to build a 7,240-mile network of superhighways that would crisscross the nation and connect most of Mexico's major ports with its principal commercial and industrial centers. As more American and Asian manufacturers began using Mexico for assembly of products, and trade increased with all of Latin America, many executives began seeing the traditional East-West trade routes replaced with an emphasis on North-South routes. The devaluation of the peso in 1995, however, had devastating effects on U.S. truckers operating there, causing many to rethink their involvement in Mexico.

Amendments to Mexico's federal weights and measures law in 1994 were met with enthusiasm by U.S. truckers. The new law lowered Mexico's weight limit for trucks to just under 90,000 pounds for an 18-wheel tractor-trailer, only 10,000 pounds shy of U.S. limits. Trucks from Mexico had been weighing in excess of 140,000 to 160,000 pounds, an amount considered unsafe in the United States. Prior to the amendment, many Mexican vehicles weighing high amounts came across the border into the United States since resources to monitor all vehicles at border crossings were lacking.

In 2004 the U.S. Supreme Court ruled that Mexican trucks could run freely on U.S. highways. Until the ruling, Mexican trucks had been limited to within 20 miles of the border, where goods would usually be off loaded to an American truck. The safety of Mexican equipment was still a concern but initial traffic of Mexican trucks deep into U.S. territory was expected to be light at first.

With the advent of the European Union in 1992, U.S. carriers quickly established a presence to control the European leg of their shipments. European operators like steamship line Nedlloyd began offering land-based transportation in Europe and employed the services of U.S. trucking companies to provide the U.S. leg of the shipment. Nedlloyd Road Cargo signed a contract with Consolidated Freightways' subsidiary Con-Way in 1992 to provide door-to-door LTL service between the United States and Europe, with Nedlloyd handling the European part of the venture. Carolina Freight opened an office in Rotterdam, The Netherlands, to provide faster service for its customers' European needs. Dutch motor carrier Bleckmann B.V. handled sales and marketing for Carolina's transportation services within the Dutch market, served as its general agent within the United Kingdom, and provided international trucking services within Europe. In 1993, Yellow Freight and The Royal Fran Maas group in Europe entered into an agreement to provide transatlantic LTL shipments.

The trend in the European trucking industry was toward increased concentration of business activities within the industry, decreased border restrictions, harmonization of excise duties and value-added taxes, and increased grants of operating authority for trucking firms.

New Markets.
The number of trucking companies with international operations has grown, and American non-local truckers have been among the most active global firms. Expanding and potential markets included South America (arrangements by Consolidated Freightways and Carolina Freight, for example, with Argentina/Chile and Colombia, respectively), the Pacific Rim (direct service by Roadway Express to Australia, New Zealand, and ten Asian countries), Russia (joint marketing agreement by Mayflower Transit with SovTransavto in 1990), and China (U.S.-China shipping accord signed in 1992).

Research and Technology

The non-local trucking industry has not historically been associated with advanced technologies. Reliable braking and cab heating systems did not come into use until the 1940s, the diesel engine was not common until the 1950s, and as late as 1971 few trucking companies used computers for even basic office-related administrative applications. By the early 1990s, however, a typical heavy truck featured 3 to 20 forward gears, electronically controlled fuel-injection systems, aerodynamic airfoils, and roof-mounted satellite antennae linked to computers inside the cab and remote data storage centers.

The areas of technology with the greatest potential impact on the non-local trucking industry were vehicle and freight tracking systems and information storage and interchange systems. Because these technologies enabled industry firms to increase productivity, enhance responsiveness to customers, and distinguish themselves from competitors, they played increasingly critical roles in the industry's profitability in the early 1990s.

Tracking technologies use sophisticated computer systems to record the progress of freight from origin to destination and satellite technologies to provide precise locations of fleet trucks. Bar code labels on freight packages and portable bar code scanners permitted industry firms to process extensive data on individual loads and monitor the movement of those loads during transport. Such electronic data interchange (EDI) systems allowed truckers to "capture" data automatically and permitted shippers to link up with a carrier's computer to access data on proof of delivery, invoices, shipment routing, and freight consolidation in "real time" with greater accuracy, and with reduced administrative paperwork and storage.

Handheld, laptop, and dashboard-mounted computers let truckers communicate with company computers, keep track of information on fuel taxes and fuel management performance, store navigational maps and information on truck stops and repair facilities, record departures and arrivals, send and receive messages, monitor vehicle speed and engine conditions, and register mileage or the results of trailer inspections.

Although satellite technology for vehicle tracking and navigation has been available since the early 1980s, active industry interest began only in 1987 when the first LT carriers began installing satellite tracking equipment. These systems enabled trucking firms to locate trucks to accuracies of 300 yards by linking on-board computers with company dispatchers via specialized satellites. Less expensive "meteor burst" systems bounced VHF radio waves off meteor trails to obtain the same positioning coordinates offered by satellite signals.

Using satellite tracking equipment, C. R. England and Sons achieved 98 percent on-time performance in the early 1990s. Although satellite tracking systems can add as much as 2 percent to operating costs, 2,000 U.S. trucking fleets had two-way satellite data links in 1992, and 30,000 trucks were equipped with position location systems. By 2005 approximately 50 percent of all trucks were equipped with a wireless communication system, and the number of trucks equipped with vehicle tracking equipment was expected to continue to grow.

Several industry innovations have been direct responses to government regulations in the areas of vehicle emissions, radar evasion devices, and highway safety. Environmental Protection Agency pollution mandates and related clean air laws drove industry firms in the 1980s and 1990s to explore alternatives to diesel and gasoline fuels. In 1993, for example, all trucks were required to begin using low sulfur fuels. Although the practicality of other fuel sources such as compressed natural gas and liquid petroleum was unclear in the early 1990s, research breakthroughs in fuel modification, exhaust after-treatment, and engine redesign resulted in reductions in diesel engine emissions of 40 percent over preregulatory levels.

So-called "double-bottoms"--trucks hauling two trailers--were estimated to increase truckers' load capacity by 35 percent, offering the industry improved ability to compete with rail carriers' stacked container methods. In the early 1990s, industry firms continued to push for legislative reforms permitting them to use double- and triple-trailers and other "longer combination vehicle" arrangements more widely.

Controversial during the mid-2000s was the impending plan to mandate the use of "black boxes" in all trucks. The systems are designed as a safety measure because they monitor drivers' activities. In the United States, drivers are only allowed to drive 11 hours or work 14 total hours before taking off ten consecutive hours. Drivers record their work time in paper logs. Black boxes, standard on all trucks in Europe, would keep track of drivers' work hours electronically. While some drivers consider it an invasion of privacy and trucking companies baulk at the expense of installation, matters of safety and accountability will likely eventually win.

Other Technologies.
A wide range of technology applications were introduced or were under development, ranging from "early warning systems" that use radar technology to inform drivers when they are approaching a vehicle too quickly; cab-mounted computers that reduce accidents by enabling dispatchers to remotely monitor the status of the driver and vehicle; electronic systems for registering automatic payment of tolls without requiring trucks to stop; systems for automatically monitoring freight and engine temperatures and setting temperature levels in refrigerated vehicles; and diagnostic and prognostic software packages that allow engine computers to predict component failure based on engine performance trends.

Trucks themselves have been subject to technological research and advancement. German truck manufacturers Freightliner and Mercedes Benz tested a second generation of truck design that uses an interactive video computer system. Called Vector, the system videotapes the highway as the truck drives along, interprets data such as speed and traffic, and directs the truck as to what speed it should operate. Application of this technology was implemented in some areas in the early 2000s.

Potentially important technologies outside of the truck cab included laser image-processing and optical character recognition devices for speeding up paperwork using electronic scanning techniques; driver training simulators based on aerospace industry designs; shipment planner software to allow truckers to reduce "deadhead" (or empty trailer) miles; and fax and voice response systems that provide shippers with constantly updated rate quotes, transit times, and locations of in-transit shipments.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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