Werner's Leathers expects accelerated capacity reductions

Werner Enterprises CEO Derek Leathers expressed optimism Oct. 27 that trucking is entering an upcycle as industry capacity declines. The Department of Transportation accelerated an ongoing decline in capacity last year by tightening enforcement of non-domiciled commercial driver licenses and English-language proficiency standards. This came amid a prolonged downcycle that was driven by an oversupply of capacity from the last upcycle, when compared with freight demand. “We remain in the early innings of capacity reductions as a result of enforcement efforts,” Leathers said during the company’s third-quarter earnings call. “Greater agency collaboration and data sharing, combined with increased use of technology, will further accelerate capacity attrition.” Leathers added that disciplined operators are facing less of a threat from noncompliant capacity as it becomes more challenging for new supply to enter the market. He also noted that insurance premiums, carrier vetting, heightened litigation risk, high fuel costs and stringent regulatory requirements are further escalating these reductions by creating an even higher barrier to entry. “This structural floor creates a stronger, more sustainable market backdrop, paving the way for further rate increases, reduced volatility and healthier operating margins,” said Leathers, who was recently elected American Trucking Associations’ new chairman. “While there was some easing in spot rates in July and August, tender rejections remained elevated, and we’ve seen improvement in spot rates more recently.” WERN Quotes by TradingView See more transportation stock listings The National Retail Federation found in its peak-season forecast that retail sales are expected to grow 4.2% year over year in November and December as a resilient consumer base…

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