Rate increases boost carrier optimism

Dec. 9, 2014

The latest Transport Capital Partners (TCP) survey finds a shift in attitudes within the industry as more carriers now see their optimism also accompanied by actual rate increases. Carriers have now been optimistic about volume growth for the past eight quarters of surveys.

“While still off its peak of 92% in February 2011, carrier confidence that volumes will increase over the following 12 months has risen in the last two years, from a low of 45% to 76% today, as plans are laid by the industry for 2015,” said TCP partners Richard Mikes and Lana Batts, authors of the report.

In the fourth-quarter TCP Business Expectations Survey, trucking company executives were asked the simple question, “Is trucking starting to be fun again?” Just over 55% of carriers said, “Some days.” And one-third gave a resounding, “Yes!” Clearly, attitudes have begun to change within the trucking industry.

Following from expectations of increased volumes, 86% of carriers surveyed also expect rates to increase over the next 12 months. This continues a trend started in November 2012.

TCP partner Steven Dutro said: “Carriers are looking ahead to a positive year, though tempered by the continuing challenges of drivers, cost pressures, and hours of service.”

Has Real Growth Arrived? Of course, optimism alone is not enough. The important question is whether this carrier optimism has actually translated into higher rates. Here again, the answer is yes. With one- to two-year economic growth projections up modestly and capacity very tight, carriers are now seeing counter-seasonal freight rate increases.

“Carriers are entering the annual first quarter ‘bid season’ with a strong tailwind,” Mikes said.

Two key points clearly illustrate this return to confidence in trucking: (1) The number of carriers seeing rate increases is seven times the number seeing rates remain the same, and (2) the percentage of carriers who experienced rate increases jumped almost 50%.

However, within this newfound positivity, it appears that larger carriers are enjoying the ride more than smaller operators. They are having more “fun” by a margin of two-to-one, and are also slightly more optimistic about increased volumes and rates.

“We suspect shippers have been focusing attention on larger carriers that, in their minds, are perhaps able to commit more capacity,” said Dutro.