Subscribe to our free, weekly email newsletter!


TCP survey shows that carriers continue to be active in the spot market

By Jeff Berman, Group News Editor
April 09, 2012

Recent data from Transport Capital Partners’ (TCP) quarterly Business Expectation Survey noted that freight transportation carriers overall are using fewer brokerage services as a share of total revenue.

This survey, which TCP said polled about 120 carrier executives, found that in both the percentage of carriers using more or less brokerage services in both February 2011 and August 2011—with 12-to-15 percent using more—and 82-to-86 percent using less—was very similar. But the most recent batch of data revealed that the number of carriers saying they are using more brokerage services doubled from 15 percent in August 2011 to nearly 33 percent in February 2012, with 67 percent saying they are using fewer brokers.

TCP officials explained that load boards are indicating that spot rates in lanes are above long-term rates, with first quarter slowness possibly persuading carriers to look for broker loads to keep drivers and equipment busy.

The survey also stated that there are more large carriers—with $25 million or more in revenue—are leveraging brokers more than smaller carriers are but not by much, with 34 percent of larger carriers compared to 28 percent of smaller carriers using brokers. The firm also pointed out that is likely because carriers can get higher rates on the spot market.

“It is interesting to look at this data and think back to how things were on the brokerage side when the economy was terrible in 2009,” said Lana Batts, TCP partner. “Back then, there just wasn’t any freight and people were going everywhere they could to possibly get freight. Then when the recession was over in February 2011, carriers felt they had all the freight and customers they needed and felt they did not need to go back to brokerages. Now, they are going back to brokerages because there is a shortage of equipment and they are getting better spot market rates than they are getting out of their contract rates.”

Brokerages tend to do well when there is an imbalance, Batts explained. That imbalance is related to there not being enough freight or not enough trucks.

The 2009 imbalance was brought on by a lack of freight, due to the recession, whereas the issue less than three years later—through February 2012—has to do with a lack of trucks.

“I suspect that this number of carriers using more brokerages will be up even higher in a few months,” said Batts. “What is comes down to is carriers can get more money for non-contractual freight, given that their equipment is high-priced and driver pay rates are going up, it makes sense.”

The truck imbalance is not likely to abate anytime soon, considering that truck production is increasing on the heels of a three-year period where truck sales were low and below replacement levels.

What’s more, Batts said it will be until at least mid-2013 when there will enough trucks to overcome the fact that there is a normal attrition of trucks that come out of the market every year because they are worn out—with the current number at about 12,000 trucks per month.

“There remains a shortage of trucks and a shortage of truck drivers, and we have seen with our last few surveys that motor carriers are not interested in adding a lot of new capacity and cannot find drivers,” noted Batts. “And as long as there is a shortage rates are going to go up. Carriers would like to add capacity as long as their carriers don’t add any.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 8.2 percent from September 2013 to September 2014 at $102.2 billion.

NS said that the D&H lines it plans to acquire connect with the NS network at Sunbury, Pa. and Binghamton, N.Y. and give NS single-line routes from Chicago and the southeast U.S. to Albany, N.Y., which is in close proximity to NS’ Mechanicville, N.Y.-based intermodal terminal.

This follows a 1.6 cent decrease last week, which was preceded by a 5.4 gain the week before and stands as the first increase going back to the week of June 23, when the weekly average headed up 3.7 cents to $3.919 per gallon.

BNSF said that its 2015 capital expenditures will be allocated towards various areas of its business, including maintenance and expansion of the railroad to meet the expected demand for freight rail service, with 2015 representing the third straight year BNSF has invested a record annual capital expenditures investment.

While the ongoing labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) ostensibly going from bad to worse, following the ILWU’s announcement late last week that it was halting negotiations from November 20 through November 30, a Congressional group last week penned a letter to PMA and ILWU leadership expressing concern over the state of the negotiations.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA