Transport Capital Partners’ (TCP) 1st Quarter Business Expectations Survey has determined that “while carriers still seem hesitant to add capacity, they are less hesitant than they were during the last quarter.” In November of 2011, 73% of carriers indicated they were planning on adding little to no capacity. This quarter, though, that number has dropped to 65%. And 25% of carriers are planning to add 6 to 10%, compared to only 18% adding back in November of 2011.
“One quarter does not make a trend, but since November 2010 there has been a general decline in carriers saying ‘no’ to adding capacity, and upward trend in carriers saying they will add 6 to 10%,” said TCP partner Richard Mikes. “The generally rising rates over the past quarters is sparking carrier confidence.”
For those carriers planning on adding capacity, it is primarily through company equipment either financed (24.6%), leased (9.6%) or purchased with cash (7%) with fewer choosing independent contractors (19.3%) than over the last seven quarters.
“The lack of independent contractors readily available due to being ‘driven out’ by the Great Recession has, by necessity, forced carriers towards company equipment along with low interest rates and the rising reports of growth again in dedicated fleets,” pointed out TCP partner Lana Batts.
When carrier size is examined, 25% of carriers doing under $25 million in revenue select independent contractors as a means to expand, compared with only 15% of larger carriers.
“We are seeing very attractive interest rates in the marketplace for larger, profitable carriers as well as more lenders contacting us; this makes truck ownership more attractive,” said Mikes.
“It may be that the growth in dedicated demands -- by its nature -- the favoring of company trucks and the backing of a long term contracts and like term loans is an ideal fit,” added Batts.
TCP provides advisory services related to transportation mergers and acquisitions, capital sourcing, and operations and strategy with regional offices in Florida, Iowa, Colorado, Pennsylvania, Tennessee, and Virginia.