Adverstise with us

10.4 C
Vancouver
Monday, March 1, 2021

Capacity Growth to Remain Flat…..

In light of the dampened expectations about volumes, the number of carriers that expect to add little or no capacity in the next 12 months has remained fairly constant around 70-74 percent for the last five quarters.

According to Transport Capital Partners’ (TCP) Third Quarter 2012 Business Expectations survey,  nearly one-third of carriers do not expect add capacity at all. The number expecting to add 6-10 percent has decreased for the last three quarters.

“Carriers are not adding capacity as the economy remains relatively flat and used equipment prices go up and conservative equipment plans boost used demand. In fact, merger activity indicates the demand for drivers is a prime acquisition motive, and used equipment is attractive as well,” says Richard Mikes, TCP Partner and survey leader.

For those expecting to add capacity, the most popular means is through financed company equipment, a trend that has been increasing over the last several quarters. Fewer carriers expect to add capacity through independent contractors. In fact, the percent expecting to grow with I/Cs has dropped 43 percent, from 30 percent in February of 2011 to 17 percent in August of 2012.

“Long term dedicated equipment is a win-win as shippers assure capacity and carriers can pass through current low interests rates, and hedge future costs through adjustment provisions. Indeed longer term (five year plus deals) are replacing some annual negotiations as the national truck fleet is stagnant,” notes Mikes.

Carriers are also unwilling to add capacity when they can’t find drivers to fill the seats. Seventy-five percent of the carriers surveyed are reporting unseated trucks. Sixty percent of the larger fleets have between 1-5% of the trucks unseated, while 36% of the smaller fleets report 6-10% of their trucks lack drivers.

“Drivers are clearly a controlling input in equipment plans. Long term demographics still portend a shrinking driver pool, and current CSA and HOS regulations remove drivers and shorten effective hours (and pay checks) for existing drivers.  Some runs that were doable in a day are requiring a sleep break,” states Lana Batts, TCP Partner.

by: Canadian Trucking Alliance