"Not since deregulation in 1981 has the trucking industry faced the degree of growing demand coupled with unbridled opportunity, over-written with the degree of uncertainty of new regulations, rising costs and an economy emerging from a recession," begins a new white paper from Richard Mikes and Lana Batts of Transport Capital Partners.

The most recent TCP survey of fleets showed 2/3 of the carriers currently have high confidence in rising volumes and rates for the future.

Buy Interest Rises: In November, almost half the carriers surveyed reported an interest in buying another trucker in the next year and a half, continuing an upward trend beginning in 2009. "Not since deregulation has the industry faced the degree of growing demand and opportunity coupled with the plethora of forces raising challenges in a post recession economy," Mikes said.

Current Demand is Strong: Demand is expected to rise in the next two years, as projected by most accounts in the range of 4 to 5 percent. "While we are in the middle of a seasonally down first quarter, carriers see strong freight and remain optimistic about the year ahead," Batts said. "Truckers are convinced they must receive rates to compensate for rising costs across the board with the need to replace the aging tractor fleet."

Capacity Tightens, Costs Rise: Key metrics show capacity has dropped 12 to 16 percent according to varied sources from the peak to now. Price increases in new trucks, fuel, tires, and drivers' wages are current factors, but yet to be seen is the capacity lowering impacts of the CSA program and proposed new hours of services, the white paper notes. Lack of buying new trucks, used truck exports and bankruptcies are cited in the analysis as reducing capacity. Future bankruptcies will likely be coupled with capital constraints on purchasing new trucks to keep checks on capacity.

Fuel Costs: Rapidly rising diesel fuel prices, now exacerbated by the crisis in the Mideast, without compensatory fuel surcharges are a cash flow drain on carriers. Adding to the problem are shippers who want to change the base rate for fuel surcharges from $1.15 per gallon to over $2.; demand that the average fuel consumption increase to 7 mpg for surcharges, and delay paying their bills in a timely manner.

Regulatory Issues: "The dual forces of CSA and hours of service clearly will reduce the supply of drivers and their driving hours over the week, while at the same time some carriers CSA scores will cause them to be passed over by concerned shippers," Mikes said. CSA will also affect drivers.

Rates: Both Mikes and Batts anticipate that these issues will be brought to the table with shippers with more resolve than at any time in the past decade. The consequences of all these factors will result in second half of the year rate increases of middle to upper single digits plus equitable compensation for fuel, they predict.

Mikes and Batts pointed out that "the escalating trucking demand coupled with a decreased fleet means carriers are literally in the driver's seat if demand is to be met by an adequate supply of drivers and a modern fleet of vehicles."