Study Shows Trucking Industry Benefits from Shale
CLEVELAND -- The shale industry’s increasing use of horizontal drilling to retrieve oil and natural gas once beyond reach has greatly benefited the domestic trucking industry, a study by Benesch reports.
The benefits go well beyond eastern Ohio and western Pennsylvania, extending to North Dakota, Texas and Louisiana, reports Benesch, a business law firm with offices in Cleveland, Columbus, Indianapolis, Philadelphia and elsewhere. Overseeing its gas practice are Orla E. “Chip” Collier III in Columbus and Kevin D. Margolis in Cleveland.
Collier and Margolis, in conjunction with the National Tank Truck Carriers, Washington, D.C., and the Ohio Trucking Association, Columbus, attempted to quantify the effects of energy exploration on the trucking industry. Surveys were sent to all members of both trade associations.
Trucking activity “is an important harbinger of economic vitality and change,” says Richard Plewacki, a partner with Benesch. “Increases in trucking activity signal corresponding changes in manufacturing and industry.”
The Benesch survey found activity in shale plays across the United States “is having a positive impact on the trucking industry, that this increase in opportunities and presumably profits is expected to continue and significant job growth will be a byproduct of the trend.”
Among the survey findings:
- Huge optimism for continued growth with 97% of respondents believing the shale exploration will continue and 91% of Ohio truckers believing shale will benefit their business.
- Ohio has different worries for the future of shale economy than the rest of the nation.
In Ohio, what truckers deem “overly burdensome regulations” -- primarily mandatory hours of service limitations on truck drivers -- are seen as the most significant barrier to capitalizing on shale opportunities. The recruitment and retention of qualified drivers and mechanics was a close second.
Nationally, the greatest barrier to capitalizing on shale opportunities in the trucking industry is the recruitment and retention of qualified drivers and mechanics. Close to half cited this as their primary business worry.
Hours of service (total shift time drivers may work before taking required rest periods) is a federal requirement of all commercial truck drivers.
So why did Ohio drivers cite hours of service, and regulation in general, as an impediment to future growth, Benesch asked.
The answer might be oil field exemptions, the authors of the study say. Limits on hours of service have been promulgated to keep tired (and, therefore, compromised) drivers from posing a danger on public roadways.
Often drivers who haul supplies to oil and gas drilling sites are required to wait long periods of time to unload or load. Such waits are unavoidable and therefore oil field drivers are exempt from the hours of service regulation. Several Ohio respondents reported they felt this practice was unfair.
While not specifically studied in the Benesch survey, the authors suggest the possibility that Ohio truckers balked at regulation more than their counterparts in other states because Ohioans are new to the shale energy industry. As they become more familiar, their views on such regulations might change.
The trucking industry has been an early beneficiary of the shale activity with 55% of national respondents reporting they have experienced some growth since 2009 because of shale. In Ohio, 27% of trucking companies report shale activity has driven grown since 2009.
2009 was selected as the target date because it was one year after yield estimates for the Bakken and Marcellus shale plays were made public and, therefore, roughly mark the beginning of development. The Haynesville and Eagle Ford plays were already in production by this year but the Utica shale play had yet to be identified.
It’s a trend that is expected to continue as 95% of national respondents anticipate growth over the next five years and predict “especially robust activity” in tank trucking and bulk trucking, the survey found.
In Ohio, 92% expect business growth over the next five years. These companies anticipate opportunity in dry van trucking and specialized trucking.
Across the country, 97% anticipate growth in revenues over the next five years while 95% of Ohio companies anticipate the same.
Job growth in the trucking sector of the economy is “explosive,” Benesch said, with 45% of national respondents expect to increase their workforces between 5% and 15%. Another 11% said they plan to hire between 50% and 100% more employees
The survey was conducted via email last November and December with a cutoff date of Dec. 18. Benesch developed the questions in partnership with NTTC and OTA. All members of both associations were given the opportunity to participate in the survey.
Published by The Business Journal, Youngstown, Ohio.
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