Trucks at Work

Freight in a good place … so far

Despite the obvious “headwinds” (as analysts like to say) created by $4 per gallon (and higher) diesel, freight volumes so far are staying strong this year – which is fueling quite a bit of optimism in trucking’s ranks right now about gaining freight rate increases.

According to the most recent quarterly Business Expectations Survey compiled by Transport Capital Partners (TCP), some 77% of the carriers polled by the firm expect freight volumes to increase in the year ahead, with only 2.6% expecting them to fall.

Larger carriers are much more optimistic this quarter by a factor of almost 25%, noted Richard Mikes, one of TCP’s partners. “As the economy recovers with increasing consumer confidence buoying retail growth the first quarter, carriers are seeing earlier volumes and tight capacity boding well for the next year,” he said.

[That spike in freight tonnage will also help support robust sales of Class 8 trucks; a scenario painted by Market Lampert, VP-sales and marketing for Daimler Trucks North America, during a press event back in January.]

As a result, the firm found that carriers showed a very similar buoyant outlook for freight rate increases, with 77% of those polled expecting to gain them.

Yet Mikes stressed that expectations are not exactly even with reality as since January this year only 45% of carriers in TCP’s survey said they’d actually gained rate increases, compared to 50% in November of 2011, and nearly 60% in August of 2011.

Still, Mikes is confident those rate increases should occur if freight keeps to its current upward trend line. “If volumes follow the same pattern as 2011, the possibility of a generally upward rate trend over the coming year with a rate spike in early summer seems likely,” he said.

Benjamin Hartford, a transportation analyst with Wall Street investment firm Robert W. Baird & Co., noted in the firms’ latest “Freight Flow” brief that freight indeed seems to be on upswing – and that truckers are indeed gaining pricing increases.

Hartford noted that, “2012 has gotten off to a start generally consistent with our expectations in early January. [Though] international demand trends remain weak, but stable, domestic freight trends are improving consistent with seasonality.”

He added that tight truckload capacity is supporting positive pricing growth, too. “Our spot demand indicator reflects a strengthening in demand into March, consistent with seasonality,” he said. “Bid activity is underway but shippers appear to be mindful of the tightness to truckload capacity, supporting 2% to 4% year-over-year gain (sans fuel surcharges) in contractual rate gains.”

Hartford pointed out that the recent rise in fuel prices has introduced new uncertainty to the economic recovery, and remains a primary headwind to any inventory restocking catalyst. “But we remain optimistic that the seeds of a sustainable – albeit slow and choppy – economic recovery remains in place,” he said.

Not a bad forecast to have in hand as the 2012 Mid America Trucking Show kicks off. 

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