Decrease in volume and increase in rates continue to be the norm, according to TCP survey

As the economy continues to show continued evidence of slower-than-expected growth, that same trend is evident in the trucking market based on the results of the Third Quarter 2011 Transport Capital Partners (TCP) Business Expectations Survey. 

In the survey, TCP found that 45 percent of the 125 carrier executives polled indicated that they expect volume increases over the next 12 months. This is a steep drop-off from 92.4 percent in February. Another 46.7 percent expect volumes to remain the same, and the percentage of respondents that think volume will decline went from 0 percent in February to 7.5 percent in August.

Among the reasons for this decline cited by TCP were the general malaise in the economic outlook and a lack of consumer and business confidence, too.

“This is pretty low compared to what we were seeing before, but it is also not as bad as it was in early 2009,” said Lana Batts, TCP partner, in an interview. “If carriers can at least maintain current volume levels, that is somewhat of a positive. If you look at tonnage numbers, the spot market and other indices like the UCLA-Ceridian PCI and Cass Freight Index in recent months, it is easy to see that they are all sideway, especially over the last four months.”

Of the carriers surveyed, nearly 60 percent of small carriers—with revenues under $25 million—expect volumes to increase, while slightly less than 40 percent of larger carriers—with revenues over $25 million—feeling the same way. For those carriers that think volume levels will remain the same, larger carriers led the way at slightly more than 50 percent, and smaller carriers checked in at slightly less than 40 percent.

With such a dramatic drop on display, Batts noted that it was not a surprising one either.

Looking at the current rate outlook, TCP found that the percentage of carriers expecting rates to increase over the next 12 months fell from 89 percent to 60.7 percent and the number expecting rates to remain the same was up from 10.6 percent to 33.6 percent, matching up closely with the survey’s volume expectations.
“There are more people expecting rate increases than volume increases,” said Batts. “This addresses the capacity issue. There is an expectation that rates will increase, because the trucks won’t be there. It has been that way for a while. Rates will continue to go up; new truck sales just cannot make up the losses over the last four years.”