Majority of carriers expect recent rate increases to continue

Majority of carriers expect recent rate increases to continue

Despite the relative sluggishness of the economy, 70% of carriers are still expecting volumes and rates to rise, according to the latest report from Transport Capital Partners (TCP). Of note, however, is the fact that while a large percentage of carriers are still expecting increases, similar to past surveys, the numbers reporting increases are nearly identical to those reporting no change.

“Future rate expectations are not matching current rate experiences, as closely as they have been correlated in past years,” said Lana Batts, TCP partner.  In fact, the Second Quarter 2012 Business Expectations Survey noted that since February 2010, more carriers have expected rates to increase over the next 12 months than to remain the same, yet the percent actually experiencing rate increases has been about the same as those seeing no change in rates. 

Overall, the latest survey is showing a little more hesitancy on carriers’ parts, notes Richard Mikes, survey leader and TCP partner.

“It is interesting that there is currently a shortfall between actual past quarter rate experience moving upward for half the carriers, yet 70% expect rates to rise in the coming year,” said Mikes.

According to the survey, carriers reporting that their rates actually increased (48.4%) was nearly identical to those with unchanged rates (49.2%).

One carrier that recently announced a rate increase is Con-way Freight. The less-than-truckload carrier is bumping rates 6.9% on average, effective July 9, it said. The rate increase will be implemented for customers on the company's CNW 599 tariff and will apply to general LTL rates, minimum charges and accessorial or supplemental fees for special services associated with LTL shipments moving within the United States and Canada, as well as cross-border shipments moving between the U.S., Puerto Rico and Canada.

YRC Worldwide , FedEx Freight, and ABF Freight System also announced 6.9% rate increases recently.

Rate increases are occurring in the spot freight market as well, according to DAT. The company’s latest DAT Truckload Rate Index showed linehaul rates for van, refrigerated and flatbed loads rose a penny for the week leading up to June 16. Spot van rates are at $1.41, that’s up from $1.36 a few weeks earlier. Spot reefer rates have risen from $1.63 the week of May 26 to $1.78 and spot flatbed from $1.74 to $1.81.

DAT noted that rates on the spot market are expected to remain firm through the end of this month before settling a bit in July before another buildup in August as back-to-school shopping boosts freight volume.

The TCP survey found larger carriers (those over $25 million in annual revenues) are more optimistic over continued rate increases than their smaller counterparts. Regardless, though, the survey is finding a growing uncertainty among carriers.

“Our partners are seeing a general hesitation in the industry, similar to the economy as a whole where a high degree of uncertainty exists as growth has been anemic and spotty. The industry also has experienced heightened regulation and costs thereof during the past few years which only further compounds concerns,” said Mikes.

TAGS: News
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