Overview
Data released in the latest week shows that the labor market remains quite strong, and that resiliency applies to trucking as the industry saw its largest increase in payroll employment since September, according to preliminary figures.
The week also brought encouraging data related to manufacturing and some major new regulations for trucking and rail to digest, although in the case of trucking the effects are several years away.
ISM manufacturing index
After 16 straight months in contraction territory, the Institute for Supply Management’s manufacturing index crossed into expansion territory – barely – by rising 2.5 points to 50.3% in March.
The components of the ISM that correlate mostly closely with freight demand were among the strongest factors in March’s gain. The production component jumped by 6.2 points to 54.6% while the new orders component increased 2.2 points to 51.4%.
Another strong contributor was imports, which did not change m/m but were strong at 53%. A minor weakness in the ISM index from a future freight demand standpoint is that backlogs of orders are in contraction territory, although they did not contract at any faster of a rate than they did in February.
Employment situation
The U.S. economy added 303,000 payroll jobs, seasonally adjusted, in March, according to preliminary figures from the Bureau of Labor Statistics. Earlier estimates for January and February were revised upward by a total of 22,000 jobs.
For-hire trucking added 5,100 payroll jobs, seasonally adjusted, in March following an upward revision of February’s estimate by 2,600 jobs. Employment was down 1.2% y/y, which is the least negative comparison since July – the last month before Yellow Corporation shut down.
March’s increase was the largest since September when the industry saw a relatively small rebound of 8,000 jobs following the 31,600 jobs lost in August due mostly to Yellow’s demise. Payroll employment has recovered 15,800 jobs – more than half of the August loss – since August.
EPA GHG reduction rule
The Environmental Protection Agency late last week announced its final rule requiring reductions in greenhouse gas emissions in new medium- and heavy-duty trucks. The regulations kick in as early as model year 2027 for smaller classes of vehicles and require reductions in GHGs by MY 2032 of 25% to 60% in vehicles brought to market, depending on vehicle type and application.
For over-the-road vehicles, the rules begin in MY 2028 for Class 8 day cab tractors and in MY 2030 for Class 8 sleeper cab tractors. The GHG reductions required by MY 2032 compared to existing rules are 40% for day cabs and 25% for sleepers.
EPA is not requiring any specific technological path for achieving GHG reductions but presumes a combination of technologies, such as battery electric trucks, hydrogen fuel cell, hydrogen combustion, hybrids, and plug-in hybrids.
Reduced GHG emissions in diesel trucks also would count toward the mandates, although the scope of GHG reductions that EPA is requiring presumably could not be achieved without more fundamental changes in technology for many of the vehicles produced in 2032.
FRA Train crew staffing rule
As expected, the Federal Railroad Administration this week announced a final rule on train crew size. The rule requires railroad operations to have a minimum of two crewmembers except for certain identified one-person train crew operations that do not pose significant safety risks to railroad employees, the public, or the environment, as deemed by FRA.
The Association of American Railroads criticized the final rule. AAR President Ian Jeffries said that it “is an unfounded and unnecessary regulation that has no proven connection to rail safety.” AAR said that it will diminish the importance of collective bargaining by inserting the regulator between parties.
