Results from Transport Capital Partners’ (TCP) First Quarter 2013 Business Expectations Survey found that nearly two-thirds of the carriers surveyed indicate that they plan to increase capacity in the next twelve months, up from fifty-one percent last quarter. Carriers remain conservative, however, in estimating how much capacity they will add. Thirty-eight percent of carriers report that their capacity additions will be 5% or less, while only twenty percent of carriers plan to increase capacity by 6-10%. “The industry has historically responded to more freight with more trucks, somewhat to its own detriment. With the driver issues, regulations and tight profit margins of this cycle have been been different so far,” reflects Richard Mikes, survey leader and TCP Partner. (Click here to read TCP’s recent survey release regarding carriers’ expectations for volumes and rates).
For those who are planning to add capacity, larger carriers are more conservative than the smaller carriers in their buying plans. TCP believes most of this capacity increase will be in specific business lines (e.g., dedicated carriage and intermodal) rather than across the board general fleet increases. “Going into the recession, publicly owned carriers cut trucks 20-25% and they have not added back more. Most trucks are being sold as replacements,” Steven Dutro, TCP partner emphasizes.
For the past several quarters, there has been a downward trend in carriers who plan to add capacity with independent contractors. However, for the first time since February of 2011, this trend ticked upwards: twenty-two percent of carriers plan to add capacity with contractors, up one-third from the all-time low of seventeen percent in the fourth quarter of 2012. The most commonly reported method for adding capacity is through company equipment that is either financed or purchased on a lease (29%). “More carriers report interest in lease programs for new independent contractors, and some carriers are also looking at complimentary strategic acquisitions of fleets with newer trucks,” Mikes says.