Carriers planning capacity increases

Tonnage inches up in February

As tonnage continues to edge higher, a new survey from Transport Capital Partners (TCP) suggests carriers are increasingly looking to increase capacity over the next year.

TCP’s First Quarter 2013 Business Expectations Survey found nearly two-thirds of the carriers surveyed indicate that they plan to increase capacity in the next 12 months, up from 51% last quarter. While there are plans to add capacity, the survey also found that the majority of those expect to add 10% or less.

Thirty-eight percent of carriers report that their capacity additions will be 5% or less, while only 20% plan to increase capacity by 6-10%, TCP said.

“The industry has historically responded to more freight with more trucks, somewhat to its own detriment. With the driver issues, regulations and tight profit margins of this cycle have been been different so far,” said Richard Mikes, survey leader and TCP Partner.

TCP said it expects most of the capacity increase to be in specific business lines, such as dedicated carriage and intermodal, rather than across the board.

“Going into the recession, publicly owned carriers cut trucks 20-25% and they have not added back more. Most trucks are being sold as replacements,” Steven Dutro, TCP partner added.

The latest survey also reflects a reversal of previous findings. For the first time since February of 2011, 22% of carriers plan to add capacity with contractors, up one-third from the all-time low of 17% percent in the fourth quarter of 2012, the firm said.

The most commonly reported method for adding capacity is through company equipment that is either financed or purchased on a lease (29%). 

“More carriers report interest in lease programs for new independent contractors, and some carriers are also looking at complimentary strategic acquisitions of fleets with newer trucks,” Mikes said.

On the same day that TCP announced its survey results, the American Trucking Assns. (ATA) released its seasonally-adjusted (SA) For-Hire Truck Tonnage Index.

February’s Index rose 0.6% after increasing 1% in January, which was revised downward. Tonnage has now increased for four straight months, which hasn’t happened since late 2011, ATA said.

Over the last four months, tonnage gained a total of 7.7%.  In February, the SA index equaled 123.6 (2000=100) versus 123.0 in January. The highest level on record was December 2011 at 124.3. Compared with February 2012, the SA index was up a solid 4.2%, just below January’s 4.6% year-over-year gain. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.4%. In 2012, tonnage increased 2.3% from 2011.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 113.5 in February, which was 5.5% below the previous month (120.1).

“Fitting with several other key economic indicators, truck tonnage is up earlier than we anticipated this year,” said Bob Costello, ATA chief economist. “While I think this is a good sign for the industry and the economy, I’m still concerned that freight tonnage will slow in the months ahead as the federal government sequester continues and households finish spending their tax returns. A little longer term, I think the economy and the industry are poised for a more robust recovery.”

 

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