Subscribe to our free, weekly email newsletter!


Transport Capital Partners survey shows confidence among carriers for future volume and rate gains

By Jeff Berman, Group News Editor
December 17, 2013

Spurred by signs of future positive growth, recent data released by Transport Capital Partners (TCP) points to increased optimism for motor carriers in the form of increased volumes and rates.

In its fourth quarter survey of up to 200 carriers, TCP found that positive volume expectations among carriers are currently at 61 percent compared to 29 percent during the fourth quarter of 2012.

What’s more, TCP noted that expectations for volume gains were intact regardless of carrier revenue. Sixty percent of larger carriers (with more than $25 million in revenue) and smaller carriers (less than $25 million in revenue) each expect volumes to grow in the next 12 months compared to the previous 12 months, with less than ten percent of carriers at more than $25 million in revenue expecting volumes to decrease. Slightly more than 20 percent of carriers at more than $25 million and nearly 40 percent of carriers at less than $25 million expect volumes to remain the same for that period.

As for rates, TCP said smaller carriers are eyeing rate increases at roughly 65 percent compared to 60 percent for larger carriers.

TCP officials said that volumes and rates appear to go hand in hand, with solid GDP numbers in tandem with effective capacity are lowered due to regulations like CSA and drivers’ Hours-of-Service (HOS).

TCP explained in the report that if 5-to-10 percent of driver hours are reduced in carriers’ systems, then 5-to-10 percent more drivers are subsequently required to fill the gap—and with increased compensation. On top of that, TCP said carriers need to add more trucks, which in turn raises their level of fixed costs.

“You can measure capacity by a number of things,” said TCP Partner Richard Mikes in an interview, “but in a tight market if drivers are losing 5 percent of their time that is being conservative—and they then need to be paid 5 percent more. That is a real cost driver and carriers cannot simply hire 5 percent more drivers to drive the same truck. There is a real possibility that some portion of that some capital needs to be allocated to new trucks for future investment and growth. “

Carriers at the moment, explained Mikes, are of the mindset that current conditions really look good, but with the caveat that drivers and driver availability—and CSA and HOS—are the controllers of capacity in the trucking sector.

And with the increased pressure coming from government regulations, carriers really have no choice but to increase driver compensation, which will serve as a major catalyst for rate increases, he said.

With the new HOS rules only having been intact since January 1, Mikes said shippers have been receiving calls from carriers that previously were able to make previous delivery schedules on time and now they are either getting delayed or carriers are being forced to turn down the load. 

Even with the optimism provided in the survey’s data, TCP said that going back the last 16 quarters to February 2010, a large percentage of carriers have expected rate hikes but rates have only seen gains since the first quarter of 2013.


 

 

 

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 Coalition for Transportation Productivity (CTP)called on Congress to take a close look at data recently issued by the Department of Transportation (DOT) in its “Comprehensive Truck Size and Weight Limits Study, ” and focus on reforming Interstate vehicle weight limits for six-axle trucks.

A recent report published by The Boston Consulting Group (BCG) and the Grocery Manufacturers Association makes clear the supply chain challenges consumer packaged goods (CPG) shippers are up against, with some of these challenges, specifically transportation-related ones, gaining traction in recent years.

Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk. Using the precise metrics captured in Armstrong’s most recent study, he'll demonstrate how shippers can measure ROI and plan for the future.

At $2.832 per gallon, the average price per gallon was down 1.1 cents, following drops of 1.6 and 1.1 cents the previous two weeks and a cumulative 8.2 cent cumulative drop over the last six weeks.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.0 in June, which edged out May by 0.3 percent.

Article Topics

News · Trucking · HOS · Rates · CSA · All topics

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA