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Trucking Trends: The Future of Trucking? Plastics

By Mark Montague, DAT Solutions

The Dakota Access Pipeline (DAP) and proposed XL Pipeline extension have garnered headlines in recent months but they're only part of the story. There are 21 pipeline projects in the United States right now and numerous construction projects for refineries and supporting infrastructure, especially along the Gulf Coast.

To satisfy demand here and outside the U.S., there's a push to capture a higher percentage of extracted natural gas and change it to liquid form (LNG), which reduces its volume 600 times and makes it easier to transport by road, rail, or ship.

This activity is having a noticeable effect on the trucking spot market, with new construction adding to the stronger-than-usual start to the year for flatbed freight. The impact on the Gulf Coast especially stands out.

The Houston Hub

Three LNG export terminals in are operation along the Gulf Coast and construction has started on three more, with two more proposed. Houston is in the middle of all of it.

Construction and the oil industry are major drivers for flatbed freight, and the Houston market already holds the No. 1 position for spot flatbed loads.

In fact, Houston is the No. 1 market for all load posts—van, refrigerated, and flatbed—this year.

Compared to 2016, the number of available van loads on the Houston to New Orleans lane are up more 292 percent and flatbed load posts on that lane have doubled. Similarly, flatbed load posts on the Houston to Dallas lane are up 306 percent, while van load posts have risen 128 percent.

In terms of inbound freight, there's been a surge in flatbed load posts on the lane from Decatur, Ala., to Houston. Decatur is a steel-producing market, so that's another indication of how the new construction and infrastructure is creating demand on the spot market.

Changes in Capacity

The tank trucks and trailers that carry processed LNG don't often move on the spot market, and raw

plastics move in rail hopper cars. Still, the finished goods consisting of films, pellets, and resins do move on vans and flatbeds.

Let's look at a freight pattern in Texas.

Hopper cars will carry the plastics to packaging facilities around Dallas-Fort Worth. From there, the output can move on trucks and trains, with Dallas serving as the hub that connects the Gulf Coast to West and East Coast ports as well as Chicago and other Midwest destinations.

Those volumes will be welcomed by truckers accustomed to strong intrastate volumes from Dallas but relatively weak interstate lane rates.

We should get used to it. Polyethylene production is expected to increase 45 percent nationally by 2019. An estimate by Trains magazine predicts that this may require as many as 75,000 more railcar shipments per year.

As construction continues, we should see this cycle repeat in the truckload spot market: spot market freight increases during the construction phase, which involves movement of steel and other construction materials; next, there is transport of raw materials via truck and train, both domestically and for export; and finally, there will be increased transportation of finished products, as the U.S. becomes the world leader in low-cost industrial plastics.

This provides one solid example why the future for trucking looks strong for years to come.

Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.