Capacity at a group of seven large truckload carriers dropped 0.6 percent from a year ago in the first quarter and only 0.3 percent from the fourth quarter, the smallest annual and sequential quarterly decline in their tractor count in a year.
The tractor count at those seven trucking companies, which had more than $10 billion in combined revenue last year, has dropped only 1.7 percent since the end of 2009, but is now 15.9 percent lower than it was at its peak at the end of 2006.
The data compiled and analyzed by The Journal of Commerce supports anecdotal claims by carriers and shippers that truckload capacity,measured by the number of available tractors, and freight demand were roughly balanced in the first quarter.
The carrier group’s capacity slipped 1.1 percent year-over-year in the fourth quarter of 2011 and 0.5 percent in the third quarter after rising 1.1 percent in the second quarter, when truck freight pent up by first quarter storms surged onto highways.
Trucking executives warn their freight-handling capacity could shrink more if economic growth picks up pace in the second and third quarters. That capacity is not only limited by the number of available tractors, but available drivers.
A 17 percent surge in the TransCore DAT North AmericanFreight Index in April could indicate shippers are running up against the limits of capacity at large truckload fleets, said David Schrader, senior vice president at TransCore.
“Freight flows to the spot market when shippers hit tight capacity,” Schrader said in an interview. “What we’ve seen so far in 2012 is some of the heaviest freight volumes we’ve ever seen” on DAT’s spot market load boards, Schrader said.
“As the economy shows signs of life, it (truckload capacity) is getting very tight,” said Derek Leathers, president of $2 billion truckload carrier Werner Enterprises. Truckload capacity lost from 2007 through 2010 “isn’t coming back,” he said.
Leathers spoke to shippers and suppliers in May at the NASSTRAC 2012 Logistics Conference in Orlando and the ALK Transportation Technology Summit in Princeton, N.J. Overall, he said, the recession cut truckload capacity 20 percent.
“We're right on the razor's edge right now in terms of supply and demand,” Leathers said at the ALK summit. “Inventories are leaner than they’ve ever been.” The U.S. retail inventory to sales ratio dropped from 1.41 in February to 1.29 in March.
The large truckload carrier group tracked by The Journal of Commerce, which includes Werner, saw its combined tractor count drop 2.7 percent in 2007, 6.2 percent in 2008, 6.3 percent in 2009, 0.3 percent in 2010 and 1.1 percent in 2011.
Werner’s truck capacity has ranged between 7,200 and 7,400 tractors since the end of 2008 after dropping about 18 percent from 9,000 units at the end of 2006, according to reports filed with the Securities and Exchange Commission.