Transport Capital Partners LLC (TCP) has completed its Business Expectation Survey for the fourth quarter of 2010 and found that those carriers surveyed have shifted to more aggressive acquisition/replacement plans compared with the previous four quarters.
“These acquisition plans are principally replacements for aging fleets, but expected freight volume increases have acquisition plans ramping up modestly.” said Richard Mikes, TCP partner. This quarter, carriers shifted to higher acquisition rates, as only 40% said they would acquire (or replace) more than 10% of their fleet this quarter compared to 30% in the last survey.”
“Most carriers have not purchased new equipment for some time, and the pool of used equipment has been diminished by exports and scrapage while fleet utility is picking up,” said Lana Batts, TCP partner.
While carriers appear ready to replace an aging fleet, they have less appetite to expand their fleet capacity. Fewer are planning capacity increases than a quarter ago, with 41% saying they have no plans to add capacity up from 34% last quarter, while a quarter of the carriers plan to add only 1% to 5%.
Mikes said, “Carriers have stifled expansion appetites because of increased equipment costs, looming driver shortages, and poor financial returns.” Those expanding rank first utilize independent contractors. However, it was down to 21% from 28% just a quarter ago.
“Essentially, this means one-fifth of the carriers who plan to expand intend to do so by changing the color of the checkers on the board, and not by buying more checkers,” said Batts.
More than two-thirds of the carriers said they expect credit availability to remain the same. Thirteen percent of the under $25 million revenue carriers expect credit to tighten over the next 12 months versus only 4% of those with revenues above $25 million.