Transport Capital Partners’ (TCP) fourth quarter Business Expectation Survey shows how carriers are adapting to the pressures of slowing receivables coupled with ongoing demands of equipment payments and truck utilization. TCP uses the quarterly surveys—as well as conversations with personal contacts—to collect the insights and opinions of the nation’s transportation industry.
“Over 50% of carriers responded that their receivables are still increasing,” Richard Mikes, a managing partner of TCP, said. “The numbers are about the same as our survey six months ago, with the greatest pressure on large carriers (with over $25 million in revenues). Almost 60% reported this trend.”
“The number of carriers using brokers has dropped dramatically from two quarters ago, with only 40% saying they are using more broker freight, compared to 65% in February,” Lana Batts, a managing partner at TCP, said. Fifty-nine percent of larger carriers are using less broker freight, while only 49% of small carriers are doing so. Mikes noted that overall, carriers are bringing their capacity more in line with demand, but smaller ones have fewer options and therefore appear to be relying more on brokers.
“The cash pressure is reflected in only 80.2% of carriers, who report they are current on equipment payments, and an additional 11% that have had lenders modify payments,” Batts said. “Six months earlier, 90% were current and 4% were current after modifications.” Carriers also report making some adjustments in their type of business, but two-thirds indicate they are generally the same in type of haul, type of equipment, and commodity.
About half as many carriers as were considering leaving the industry in February are considering leaving now. “The bottom line is that one in eight carriers have given serious consideration to leaving the industry if tonnage does not increase in the next six months, with 1 in 4.5 carriers under $25 million in revenue considering it,” Mikes said. Truckers historically experience cash tight first quarter with lower freight tonnage, higher operating costs due to weather, coupled with cash for licensing and insurance.
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