Aftermarket

Survey: Truckers Rate Recovery in Full Swing; More Foreseen

September 14, 2010

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The third quarter of the year appears to have been a good one for rate increases, according to Transport Capital Partners' Business Expectation Survey. The quarterly survey found that 63 percent of responding carriers experienced rate increases, with 7 percent reporting over 15 percent rate increases.


"It is clear actual rates have finally been increasing for the last two quarters," said Richard Mikes, TCP partner. He said it is significant that 17 percent reported rate increases of 10-percent plus. More than two-thirds of respondents still expect line haul rates to go up in the next year.

With increased volumes in the last quarter, the number of carriers reporting steady rates moved to a majority after rising for four straight quarters. This quarter, for the first time, carriers were asked to quantify the magnitude of rate increases. Forty-five percent reported a 5 percent increase, 11 percent saw increases of 10 percent, and 7 percent saw increases of 15 percent or more.

TCP, a transportation mergers and acquisitions and advisory firm, uses the quarterly survey to collect the insights and opinions of executives nationwide in order to report on the current state of the industry and future expectations.

"Smaller carriers have not seen their rates increase as much as large ones," observed Mikes. "We are surprised about this, as in the spot market where backhaul rates rose first and the most dramatically, there is little differentiation between small and large truckers in this more instantaneous semi-electronic environment."

In addition to line haul rates, over two-thirds of carriers expect to renegotiate fuel surcharges, detention charges, quicker payments, and a move to practical miles.

"An example of these industry changes can be seen with shippers who have historically insisted on unrealistic shortest mileage calculations," said TCP Partner Lana Batts. "In the current climate, they will feel pressure from carriers to switch to the more realistic practical miles, which are acknowledged as the predominant routing and driver payment methods."

With many carriers opting not to add trucks, maximizing equipment utilization to move more freight becomes crucial. Mikes and Batts both conclude that this very limited capacity may be the precursor for a new era of shipper carrier coordination with improved utilization of equipment.

Batts remarks, "Carriers know that operating costs that have not been reimbursed in the past are now open for discussion and negotiation. We expect to see more merger and acquisition activity as carriers try to cope and take advantage of the new environment."


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