Truckload carriers, encouraged by first quarter tonnage trends, are increasingly optimistic that rates will rise and shipments increase in 2013, a survey finds.
Although 77 percent of the carriers surveyed by Transport Capital Partners said rates were flat over the last three months, 59 percent expected pricing to rise.
About 11 percent of the carriers said their rates had climbed higher in the past three months, with another 12 percent, mostly small carriers, saying prices dropped.
But despite pricing seemingly stuck in neutral and forecasts of sluggish economic growth, more truckload operators now see better days down the road in 2013.
TCP’s trend line for truckload carriers expecting rates to increase went up for the first time in five quarters, with large and small carriers expecting price hikes.
That’s a reversal from TCP’s last quarterly survey, which showed 46 percent of carriers expected rates would remain flat rather than rise over the next year.
Past the 2012 election, so-called fiscal cliff and sequestration, trucking executives apparently have shaken off some of the pessimism reflected in the last report.
In the latest survey, 37 percent of respondents said they expect rates to remain the same over the next 12 months. Only 4 percent expected truckload rates to fall.
Other measures of truck pricing already show rates heading up from 2012. The Cass Truckload Linehaul Index increased 4.3 percent year-over-year in February.
Equity research firm R.W. Baird predicts truckload freight rates, excluding fuel surcharges, will rise 1 to 3 percent in 2013, as rising costs push prices higher.
“With the present tight slight supply of trucks, an increase of just 1 to 2 percent over forecast GDP could spike rates upward,” TCP Partner Richard Mikes said.
That tight supply of trucks is getting tighter. The Journal of Commerce Truckload Capacity Index fell to a four-year low reading of 82.4 in the fourth quarter.
That reading indicates available truckload capacity at the large carrier group tracked by the JOC is 17.6 percent below its peak level at the end of 2006.
As freight demand rises, shippers may run into a capacity barrier more quickly than expected, and that would push rates higher, according to many sources.
Demand rose measurably and significantly in January, with the American Trucking Associations’ For-Hire Truck Tonnage Index leaping 6.5 percent year-over-year.
On a sequential monthly basis, the measure of truckload and less-than-truckload shipping volumes rose 2.9 percent in January and 2.4 percent in December.
Spot market demand was even stronger, with DAT’s North American Freight Index surging 42 percent in January. Spot volumes leaped 24 percent from December.
The best January tonnage report in five years was driven in part by inventory restocking, the ATA said, after a fourth quarter drop in inventory spending.
The year-over-year tonnage gain is remarkable, considering the first quarter of 2012 was an exceptionally strong quarter for trucking, with perfect “freight weather.”
That strong start to the new year obviously raised spirits and expectations among the truckload carrier executives contacted by TCP for its first quarter survey.
The TCP quarterly survey found 52 percent of truckload operators — both large and small companies — expect freight volumes to increase during the next 12 months.
“We see this reversal of volume expectations assisting carriers battling against the headwinds of driver shortages, adverse regulations and cost pressures,” Mikes said.
Those cost pressures, which some analysts say will mount if new federal hours-of-service rules take effect in July, could push truckload rates even higher this fall.
That, in turn, could lead more shippers to investigate alternatives to long-haul truckload, spurring the shift of more over-the-road freight to intermodal rail.
However, that depends on steadier growth than the economy, and shippers and carriers, have seen since the recession came to an end in 2009.
In 2013 and previous years, the economy slid into a "soft patch" that never quite turned into a "double-dip recession" after a stronger-than-usual first quarter start.
That recurrent softness prevented a much-anticipated "capacity crunch" in 2011 and 2012 that would have sent rates upward more rapidly.