Survey Says Haulers Optimistic About Volume, Rate Increases

Carriers are increasingly optimistic that 2012 will bring both higher volume and rates, a new survey by Transport Capital Partners found.

The results of the survey that the consulting firm completed last month and released Dec. 6 found that 61% of fleets surveyed now expect higher volumes, compared with 45% in the prior survey in August. Rate increases of 5% or more next year were predicted by 70% of the companies, up from 60% in the prior survey.

“Given the near-capacity level of fleet utilization, the number of unseated trucks and pending changes in [federal] regulations, it is not surprising that carriers believe rates will increase as volumes increase and capacity is constrained,” the Transport Capital Partners survey said.

“Carriers shared a higher level of confidence despite the roller coaster ride reflected in the stock market over the last quarter,” said Richard Mikes, a partner at TCP.

“Most economists are seeing growth in the economy, albeit it’s still slow,” said Mikes. “This is pushing more freight onto a very limited truck base, with shippers and brokers scrambling for trucks as carriers phones ‘ring off the wall.’ ’’

Improving rates next year would continue the trend that was detected in recent months, in which half of the surveyed carriers said they were able to raise rates 5% or more above the year-earlier period.

“Freight rates in the spot market are generally upward, according to many sources, as capacity remains flat and volumes are pushing upward in the industry,” said Lana Batts, another partner at TCP.

One indication of that trend appears in load board operator TransCore’s rate reports, which showed dry van rates on the spot market rose 7.1% in November over last year, while flatbed rates increased 5.8% and refrigerated added 3.3%.

In a separate report on truckload rates, issued Dec. 7, TransCore noted that 87% of contract rates remained above spot rates in the third quarter, and those rates were 17% above spot pricing over the same period.

On average, the spot rates that exceeded contract pricing were about 12% higher than contract rates during the quarter.

During the third quarter, the 10 markets where spot rates exceeded contract pricing all were located in a band of states stretching from Wisconsin in the north to Missouri in the south. Those higher spot prices in those states were an indicator of stronger overall demand in the region.

TCP’s rate survey found that just 2% of carriers expect lower rates next year and a similar percentage are anticipating lower volume.

The consulting firm’s survey includes groups divided by revenue above and below $25 million. Expectations of both groups were similar on both rates and volumes.

While volume and rates are likely to rise, Batts said, carriers continue to be cautious about adding trucks to increase capacity. Current orders are primarily to replace the decline in fleet size of at least 15% during the recession, Batts said.

About 40% of carriers in TCP’s survey are dry van operators, with about 20% each in reefer and flatbed service and the rest in specialized segments, such as tank.