Carrier rates rising

A majority of carriers reported that average freight rates in the past quarter continued to rise, according to the recent First Quarter Business Expectations Survey completed by Transport Capital Partners, LLC (TCP)

A majority of carriers reported that average freight rates in the past quarter continued to rise, according to the recent First Quarter Business Expectations Survey completed by Transport Capital Partners, LLC (TCP). The survey found that most of the rate increases were less than 5%, however, with larger carriers reporting seeing more rate increases in the 1-5% range than did smaller carriers. Smaller carriers reported more rate increases in the 5-15% range.

Eighty percent of respondents also said that accessorials would be on the table as well as rates in their renegotiations with shippers. “Not surprisingly, the largest category targeted by carriers was fuel surcharges,” said Richard Mikes, TCP partner. Thirteen percent of respondents said this would be a topic of discussion with shippers in August 2011; 30% of carriers responding to the current survey said it would be a point of negotiation, Mikes noted.

Seventy percent of respondents also said fuel surcharges are not covering costs. This was up substantially from the first quarter last year when half of the survey respondents reported that surcharges were not covering costs. “This is not surprising given that during the time period the DOE [Department of Energy] reported fuel prices increasing on a daily basis and up 70 plus cents over the year,” said Mikes.

“This is obviously a direct operating cost increase that carriers are paying daily at the pump but not seeing adequate compensation for in a timely manner,” observed Lana Batts, TCP partner. Larger carriers (over $25 million in revenue) reported by a slightly larger percentage that fuel costs are out-stripping fuel surcharge recoveries.

Detention times were the second most mentioned accessorial-- listed by by 15% of the carriers. “With equipment utilization tight and increased emphasis on compliance with hours of service, shippers are going to have to pay for tying up equipment and drivers,” noted Batts. Batts and Mikes both noted that carriers are saying that they are more likely to assign trucks to shippers who will work with them to minimize turn -around times and improve asset utilization.

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