Buoyed by stronger confidence in business trends, truckload carriers plan to add capacity — but not too much capacity, according to a second quarter survey.
The majority of truckload executives — 65 percent — surveyed by Transport Capital Partners in the second quarter said they plan to increase capacity.
However, 76 percent of the trucking executives surveyed said they planned to increase capacity 1 to 5 percent, or not at all, based on whether rates rise, TCP said.
Only 24 percent planned to increase capacity more than 5 percent, according to the trucking industry advisory firm, which specializes in acquisition consulting.
“Carriers continue to voice concerns about the ‘headwinds’ impacting operations and returns,” said Richard Mikes, a TCP partner. Those headwinds include new hours of service rules that cut into driver productivity and raise costs.
TCP surveys show many carriers expect utilization to drop more than 5 percent as carriers struggle to get drivers home in time to use a 34-hour restart.
Low interest rates and aging truck fleets, however, are encouraging carriers to invest in new equipment, if only to replace older trucks needing more maintenance.
Larger carriers, which TCP defines as those with more than $25 million in annual revenue, are more cautious in their equipment purchasing plans, TCP said.
Just 19 percent of large truckload carriers plan to increase their capacity by more than 5 percent, compared with 36 percent of smaller truckload operators.
The Journal of Commerce Truckload Capacity Index remained flat over the last two quarters at 79.7, indicating capacity is 20 percent below its 2006 peak.
Most carriers plan to add capacity by purchasing or leasing new trucks. Low-mileage used trucks “are practically nonexistent,” TCP partner Steven Dutro said.
Since the end of the recession, truckload carriers have held onto used trucks longer, often until higher maintenance costs for older trucks force replacement.
The percentage of carriers looking to bring on owner-operators to add capacity decreased 50 percent over the past three years, TCP said, falling to 15 percent.
“Contractors left the industry as their profits and cash flows were depressed in the recession, and many are not interested in returning,” Mikes said.