Carriers Slightly Less Hesitant to Add Capacity
March 28, 2012
The Transport Capital Partners
' 1Q 2012 Business Expectations Survey found that while carriers still seem hesitant to add capacity, they are less hesitant than last quarter.
In November of 2011, 73% of carriers indicated that they are planning on adding little to no capacity. This quarter, the number has dropped down to 65%. One-fourth of carriers are planning to add 6% to 10%, compared to only 18% 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 an upward trend in carriers saying they will add 6% to 10%," says Richard Mikes, TCP partner. "The generally rising rates over the past quarters is sparking carrier confidence."
For carriers who are planning on adding capacity, it is primarily through company equipment either financed (24.6%), leased (9.6%), or with cash (7%) with fewer choosing independent contractors (19.3%) during the past 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," says Lana Batts, TCP partner.
When carrier size is examined, 25% of carriers with less than $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," says Mikes.
"It may be that the growth in dedicated demands, by its nature," says Batts, "the favoring of company trucks and the backing of a long-term contracts and like-term loans is an ideal fit."