Truckload Rates Seen Rising 5 to 10 Percent

Truckload carriers are seeking rate hikes ranging from 5 to 10 percent as annual contracts come up for renewal, Wall Street firm Longbow Research reports.

Carriers have "a high degree of confidence" that they will get those percentage increases, Longbow analyst J. Douglas Woodrich said in a Feb. 16 note to investors.

The investment research firm said tight control over capacity, federal safety regulations and lack of financing for new trucks will keep pressure on rates.

By The Numbers: Cass Freight Index

"First quarter 2011 contracts so far have been getting 4 to 6 percent increases, with higher expectations as capacity tightens," Woodrich said.

"We also expect another round of rate hikes in 2011 of 4 percent plus, given our view that supply will remain constrained," he said.

Truckload supply and demand reached "equilibrium" in January, according to Longbow. Demand was up 3.4 percent in the first month of 2011.

That's slow compared with double-digit increases for much of 2010, but an improvement over a 1.6 percent decline a year ago, the research firm said.

"February volumes appear to be picking up, and have shown more consistency than in the past couple years," Longbow reported.

-- Contact William B. Cassidy at wcassidy@joc.com.