Slow but steady growth in freight-generating sectors of the economy is raising trucking executives’ expectations for higher rates and increased shipment volume.
Sixty-six percent of the truckload carriers surveyed by Transport Capital Partners in the third quarter said they expect rates to rise over the next 12 months. Carriers with more than $25 million in annual revenue were even more confident, with 74 percent anticipating price hikes.
The percentage of truckload carriers expecting higher volumes rose to 61 percent in the third quarter, according to the survey. Among larger carriers, the percentage was 68 percent. About 45 percent of smaller truckload carriers expected more freight.
The percentage of carriers expecting increased volumes dropped throughout 2012, when the economic recovery seemed to slow to a crawl, but has been rising since. “Spot market trends over the summer have been positive for most carriers, and this may be the precursor to continuing volume optimism,” TPC partner Richard Mikes said.
Spot market loads were up 16 percent year-over-year in August, according to DAT. The dry van load-to-truck ratio was up 9.5 percent, and van spot rates were up 3.4 percent.
Speaking at the JOC Inland Distribution Conference in Kansas City Sept. 18, DAT pricing analyst Mark Montague said an increase in spot volume and rates bodes well for the contract trucking business.
Motor carriers that serve growing sectors of the economy are doing well, American Trucking Associations chief economist Bob Costello said at the TMW Systems User Conference this week in Anaheim, Calif. In particular, automotive manufacturing, housing and construction generate large amounts of truck freight.
Sales of new homes are up 24 percent, housing starts are up 23 percent, and sales of existing homes have increased 17 percent. "Those are all good numbers," Costello said.
The ATA's For-Hire Truck Tonnage Index rose 1.4 percent in August, its largest sequential monthly gain since May. The index rose 6.9 percent year-over-year, and is up 5 percent year-to-date.
Energy-related shipments and heavier shipments account for part of the increase in tonnage, he said. Truckload loads, while rising in recent months, have been flat for the year, according to the ATA.
For most of the carriers surveyed by TCP, optimism has yet to translate into higher rates, with exceptions for construction, energy and some seasonal freight.
"Underlying cost rate pressure is ongoing, from new truck costs and maintenance inflation to pinched driver efficiency from (hours of service) changes and inadequate carrier returns," he said.
That means carriers are likely to try to push pricing higher to recoup those costs and recover some lost margin ground if consumers increase spending this fall.