Transport Capital Partners, LLC (TCP) recently released its Business Expectation Survey for the third quarter of 2010. Of carriers surveyed, 68% reported that they expect freight volumes to increase over the next year, but 72% expect to add little or no capacity anyway.
A third of all the carriers said they will not add any capacity in the coming months, while another third will add between 1-5%. Almost 2/3 of fleets report they will acquire fewer than 10% of their fleets' tractors in the next year, noted Lana Batts, managing partner for TCP.
“When asked specifically about how they intend to add capacity, over a fourth of carriers reported they plan to rely on independent contractors despite high cost and their limited ability to finance,” Batts said.
According to TCP, about 1 in 10 carriers are also considering acquiring used trucks, which have recently become scarce on dealer lots.
“At this time last year, only 20% of carriers expected volumes to increase in the third quarter, but in the second quarter of 2010, over 80% expected increases in the third quarter,” said Richard Mikes, TCP partner. According to Mikes, the reading reflects the general uncertainty in the economy that exists even though freight volumes and rates are up.
“Both large and small carriers are hesitant to add capacity in this environment,” he pointed out. “In particular, the spot markets continue to reflect a truck shortage with rising rates and
narrowing broker margins, while contracts also continue to be negotiated upward.”
“TCP’s surveys from the last seven quarters show carriers have become more confident that volumes and rates will increase during the next year, despite a tempering of expectations in the last quarter,” added Batts.
