Truckload Carriers Increase Class 8 Purchasing Plans

Truckload Carriers Increase Class 8 Purchasing Plans

An increasing number of truckload carriers plan to add capacity over the next 12 months, but not too much capacity, according to Transport Capital Partners.

Nearly two-thirds of the truckload operators surveyed by TCP in the first quarter said they will increase capacity, up from 51 percent in the fourth quarter.

However, 38 percent of the carriers said the increase in trucks would be less than 5 percent, and 20 percent said they would boost capacity 6 to 10 percent.

“The industry has historically responded to more freight with more trucks, somewhat to its own detriment,” said Richard Mikes, TCP partner.

But the rising cost of Class 8 tractors, difficulty hiring and keeping truck drivers, federal regulations and thin profit margins now place a cap on quick growth.

In the recession, “publicly owned (truckload) carriers cut trucks 20 to 25 percent and they have not added back more,” TCP partner Steven Dutro said.

The fourth quarter JOC Truckload Capacity Index hit a record low of 82.4, indicating capacity at carriers tracked by the JOC was down nearly 18 percent from 2006.

TCP’s capacity report follows an earlier survey showing truckload carriers are increasingly optimistic about their business and the economy in 2013.

Survey respondents who were gloomy in late 2012 were buoyed by stronger freight volumes, manufacturing and consumer confidence in early 2013.

Although 77 percent of the carriers surveyed by TCP said rates were flat over the previous three months, 59 percent expected prices to rise in 2013.

Only 37 percent of respondents said they expect truckload rates to remain the same over the next 12 months, and only 4 percent expected truckload rates to fall.

That may lead carriers to believe they can afford to increase capacity — even if only slightly — over the year, as higher rates support internal reinvestment.

Class 8 truck orders increased year-over-year in February, the first month in 14 months when sales topped year-ago levels, according to ACT Research.

Orders for heavy-duty tractors have topped 20,000 per month for the past five months, rising to more than 23,000 orders in February, ACT said.

Smaller carriers were more aggressive in their buying plans than larger truckload competitors, the TCP survey found, planning for a larger increase in tractors.

Larger carriers will most likely add capacity in specific business lines, such as dedicated and intermodal operations, rather than increase capacity across the board.

The TCP Business Expectations Survey also found more truckload carriers installing electronic onboard recorders in their trucks for hours-of-service compliance.

The percentage of carriers using electronic duty status records or e-logs jumped from 25 percent in May 2012 to 35 percent in February 2013, TCP said.

The split between large and small carriers was evident: 43 percent of large carriers already used e-logs,  while 71 percent of small carriers did not.

Contact William B. Cassidy at wcassidy@joc.com and follow him at twitter.com/wbcassidy_joc.