US: Freight carriers hold off adding capacity

According to Transport Capital Partners’ Third Quarter 2012 Business Expectations survey, the number of freight carriers who expect to add little or no capacity in the next year has remained fairly constant at around 70-74% for the last five quarters. Nearly one-third of carriers do not expect to add capacity at all, while the number … Continued

According to Transport Capital Partners’ Third Quarter 2012 Business Expectations survey, the number of freight carriers who expect to add little or no capacity in the next year has remained fairly constant at around 70-74% for the last five quarters.

Nearly one-third of carriers do not expect to add capacity at all, while the number expecting to add 6-10% has decreased for the last three quarters.

Truckinginfo.com quotes Richard Mikes, TCP Partner and survey leader as saying: “Carriers are not adding capacity as the economy remains relatively flat and used equipment prices go up and conservative equipment plans boost used demand. In fact, merger activity indicates the demand for drivers is a prime acquisition motive, and used equipment is attractive as well.”

Fewer carriers expect to add capacity through independent contractors – the number expecting to grow with such contractors has dropped 43%, from 30% in February of 2011 to 17% in August of 2012.

Mikes added: “Long-term dedicated equipment is a win-win as shippers assure capacity and carriers can pass through current low interests rates, and hedge future costs through adjustment provisions. Indeed, longer term (five year plus deals) are replacing some annual negotiations as the national truck fleet is stagnant.”

Carriers are also reported to be unwilling to add capacity because of insufficient drivers to fill seats. 75% of  carriers surveyed reported unseated trucks. Of the larger fleets, 60% have 1-5% of the trucks unseated, while 36% of the smaller fleets report 6-10% of their trucks lack drivers.

Lana Batts, TCP Partner, noted: “Drivers are clearly a controlling input in equipment plans. Long-term demographics still portend a shrinking driver pool, and current CSA and HOS regulations remove drivers and shorten effective hours (and pay cheques) for existing drivers. Some runs that were doable in a day are requiring a sleep break.”

Welcome back , to continue browsing the site, please click here