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Home » Truckers boosting rates but not capacity, survey finds
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Truckers boosting rates but not capacity, survey finds

September 15, 2010
Mark B. Solomon
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Truckload carriers are pushing through significant rate increases—some by double-digit amounts—as freight demand picks up and capacity additions grind to a halt, according to a report issued Tuesday by an advisory firm specializing in transport mergers and acquisitions.

A survey of 140 carriers conducted by Transport Capital Partners LLC (TCP) found that 63 percent of respondents raised rates in the third quarter, with 17 percent reporting increases of 10 percent or more, and 7 percent pushing through rate hikes of 15 percent or higher.

At the same time, 72 percent of the carriers surveyed expect to add little or no fleet capacity in the next 12 months, even though about the same percentage expect volumes to increase over that period, the report said.

One-third of the carriers surveyed said they would add no capacity in the coming months, while another third will only add 1 to 5 percent, according to the report. About 25 percent of carriers say they will rely on independent contractors to supplement their fleets, while 10 percent are considering buying used trucks.

Of the 140 carriers participating in the survey, about 20 percent reported annual revenues of more than $100 million, with 17 percent reporting revenues of between $51 million and $100 million.

Lana Batts, TCP's managing partner, said in an environment of limited supply, it will be critical for shippers and carriers to maximize the use of existing equipment. Batts said the industry might be on the cusp of a "new era" of shipper-carrier cooperation to squeeze the most out of existing equipment.

"Carriers know that operating costs that have not been reimbursed in the past are now open for discussion and negotiation," Batts said in a statement.

More than two-thirds of the carriers surveyed expect to renegotiate such items as fuel and detention charges, insist on quicker payments from their customers, and demand to be paid under a formula known as "Practical Miles," which might not be shortest distance between two points but actually takes less time because the driver operates over more modern interstate highways.

Truckers are often paid under a formula known as "Shortest Distance Miles," which may be a shorter distance but takes the driver more time to deliver the load because the rig is running over less-hospitable pavement.

Transportation Trucking Truckload
KEYWORDS Transport Capital Partners
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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