Truckers who were “cautiously optimistic” in 2012 are tilting toward pessimism.
For the first time since the first quarter of 2009, more motor carriers expect freight volumes to remain about the same — roughly 45 percent — than think they will increase over the next 12 months, according to Transport Capital Partners.
Remember that in early 2009, the U.S. economy was still officially in recession.
One reason for the glum outlook is that truck pricing is losing traction, increasing more slowly in 2012 than in 2011. Only 21 percent of the truckload carriers TCP surveyed in the 2012 fourth quarter said their rates had increased in the prior three months, the lowest percentage since February 2010, TCP said.
About 11 percent of larger trucking companies — those with more than $25 million in annual revenue — said their rates dropped by 5 percent in the previous quarter. Fewer than 10 percent of smaller carriers saw rates drop by that amount.
For the vast majority of companies surveyed pricing was stuck in neutral or increased slightly, as freight demand and truck capacity remained in the “tenuous equilibrium” reported by shippers and motor carriers throughout most of 2012.
The Cass Truckload Linehaul Index indicated rates rose in the last two months of 2012 after hitting a plateau from August through October. The index increased 1.4 percent from November last month and climbed 3.4 percent year-over-year.
Much of the late-year gain in truckload rates was related to recovery work in the Northeast after Hurricane Sandy, according to Cass Information Systems. Typically, rates increase 0.3 percent from November to December, the company said.
Truckers surveyed by TCP, which provides motor carrier advisory services, were divided about pricing prospects. More carriers, 46 percent, said they expect rates to remain the same in 2013 than said they expect prices to rise, 44 percent.
Uncertainty over the fiscal cliff, economic growth and regulatory developments — including the impact of new hours-of-service rules in July — could account for some of the pessimism on pricing. Carriers also expect tougher shipper negotiations.
For the first time, half the carriers surveyed said they do not expect to be able to renegotiate accessorial charges such as fuel surcharges and detention fees.
“High fuel costs, inadequate fuel surcharges, and some shippers not recognizing the impact of delays on schedules with constricted hours of service rules will force an increase in distressed situations,” said Richard Mikes, TCP partner. (TCP's advisory services include consulting on mergers, acquisitions and sales.)
More "distressed situations" could accelerate industry consolidation, as an increasing number of smaller companies exit the business or are purchased by larger trucking companies. And that’s not a happy outlook for truckers or their customers.