Saturday, March 3, 2012

Peak Trucking

The U.S. has likely seen "Peak Trucking". (Click the link for a nice graph of the "bumpy plateau" for American trucking.)

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.
Said another way... trucking has inferior margins to the other modes of shipping (unless their profit margins are significantly better, and that is not the case), or costs the shipper more... which likely means that the shipper had no other choice... it then follows that "peak trucking" means "peak tonnage shipped".

It would seem to me that with the advancements in computer processing over the past several decades that the watered down version of the "traveling salesman problem" that comes part and parcel to the shipping (trucking) industry has been improved mightily over the past several decades, and that most of the inefficiencies that existed prior to said improved technology have been wrung from the system.  The low hanging fruit has already been picked.

It will be interesting to see how that market rations available trucking tonnage with each passing year of decreasing availability.

5 comments:

tweell said...

A long-haul trucker I know has parked his truck again (he stopped hauling for over a year in 2008) because of the high fuel prices and low margins in the business. He's retired military and owns his semi, so if he's not making enough, he'll just park his rig and fish.

Greg T. Jeffers said...

Tweel:

There will likely be too many truckers for the available fuel... so the fuel will be rationed to the truckers willing to work for the least.

Anonymous said...

Up in The County (as Aroostook County Maine is known), there is a lot of truck traffic, given that Houlton, ME is the end of I-95 in the US as it enters Canada. There is a large truck stop that probably has over 100 or more tractor trailers at any given time in its back lot.

Meanwhile, the railroad connections with Canada are slowly dying. The State of Maine bailed out the one remaining railroad going to Aroostook last year.

Then too, there are 4 highways going to this rather remote county of approximately 75,000 population, mainly existing for the Canada connection it seems.

I think I've mentioned before that years ago, most of the farmers of the region, potato and grain farmers mainly, used to ship their goods by rail. This stopped, however, when a lot of potatoes in particular, were lost when thousands of tons of them were trapped in freight cars for several weeks on end, in the winter of 1969, during the Penn Central RR strike.

Trucking has become a major employer in Aroostook as drivers work, hauling goods for timbering, paper making, farming, and a great many cross-border enterprises.

It will be interesting indeed to watch what happens to truck traffic, the condition of the (to me, very overbuilt) highways up here, as well as RR traffic, as diesel prices march ever higher.

Stephen B.

tweell said...

The expeditor's shipping rule of ten still applies:

Ship = 1x cost
Train = 10x cost
Truck = 100x cost
Airplane = 1000x cost
Helicopter = 10000x cost

Here in the states we subsidize the highways so that truck cost is a bit lower, but by and large, this works.

Anonymous said...

Gasoline and diesel prices in the Northeast are about to get even higher, structurally speaking as three refineries are closed, probably permanently. http://www.bostonglobe.com/business/2012/03/05/region-added-threat-gas-prices/xWKV1Ys04XAs7NtiEmTQAP/story.html (Sorry, it's behind a pay wall.)

This further reinforces what I've been thinking that, as we get further along in Peak Oil, the numbers of filling stations and other oil infrastructure is going to decline. Not only will we have higher prices, but of course we'll have less gas stations along the way, less heating oil dealers to shop amongst, etc.

It's kind of laughable that in that Globe story, some pundits are saying that we need more petroleum pipelines being built into the Northeast to make up for the closed refineries. Like any knowledgeable petroleum investor or company is going to make a multi-billion $$ investment into new pipelines to bring oil to a part of the country that isn't even growing, population-wise.

Stephen B.

The process appears to be well under way.