William B. Cassidy | Jun 28, 2011 10:42AM EDT
Smaller shippers plan to increase transportation spending this year despite economic uncertainty, according to a customer survey conducted by Saia.
The less-than-truckload carrier’s first online survey of small to mid-sized shippers found 46 percent of the respondents plan to spend more on LTL trucking.
“There’s an acknowledgement that rates will be rising, and that’s why they’re increasing their budgets,” said Rick O’Dell, president and CEO of Saia.
Among Saia’s small shippers, 20 percent expected to spend more on truckload carriage, and 19 percent will spend more on expedited transportation.
O’Dell said the survey results indicate shippers understand “rates will have to come back up” from the depths they plunged to during the recession in 2009.
Saia’s revenue per hundredweight, a reflection of pricing, fuel surcharges, length of haul and other factors, rose 8.2 percent in the first quarter from a year ago.
“As an industry, we’ve recovered from a time when we had overall operating losses, but rates are still not robust enough” for carriers to be sustainable, he said.
The state of the economy was the top concern of 65 percent of the shippers, far outstripping fuel costs, which were cited as the top concern by 23 percent.
Fifteen percent of the shippers rated health insurance costs as their greatest concern, while 14 percent said the U.S. budget and 12 percent healthcare.
“Due to the depth of the downturn, people are still shocked,” O’Dell said. “There’s concern about the longevity of the recovery and how strong it will be.”
The company surveyed its smaller customers in May. “There’s not much difference between their concerns and those of our larger customers,” said O’Dell.
Hiring will be on hold at 72 percent of the companies surveyed. Only 17 percent said they were hiring, while 11 percent said they would shrink their workforce.
“While that’s not great, it’s more favorable than negative,” O’Dell said. “As things pick up, people tend to reevaluate hiring decisions based on opportunities.”
The most-valued carrier services were on-time delivery (65 percent), competitive transit times (49 percent) and real-time routing and tracking (44 percent).
Saia selected shippers for its survey based on their number of employees, rather than revenue, with 69 percent of the shippers employing 25 or fewer people.
The rest of the shippers surveyed had 26 to 500 employees, according to Saia.
Retailers accounted for 45 percent of the shippers included in the survey, followed by manufacturers, 29 percent, and wholesale trade industries, 19 percent.
Saia’s customers are giving the LTL carrier more freight. Its LTL tonnage per day rose 3.9 percent in the first quarter, while shipments rose 2.2 percent.
“We’re out of a crisis management mode and we’re back into doing the things we need to do to run our business,” O’Dell told The Journal of Commerce.
“I get the same feeling when I talk to customers and to other businesses.”
-- Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter @wbcassidy_joc.