Overall Prospects for the Industry
Seventy-five per cent of carriers responding to the Ontario Trucking Association’s first quarter 2011 Business e-Pulse Survey said they were optimistic about the trucking industry’s overall prospects for the next three months – up 13 percentage points from the 4Q10 survey and the largest proportion of carriers to report optimism since OTA began the survey in the third quarter of 2008. Only 4 per cent of respondents reported pessimism about the industry’s prospects over the next three months, while 21 per cent were unsure – reflecting a degree of continued fragility in the marketplace no doubt in part due to ongoing questions about the strength of the US economy.
Overall, 61 per cent of respondents said that their freight volumes had increased compared to a year ago, up 9 percentage points since the last quarterly survey. However, freight volume improvement also softened during 4Q10 — a majority reported that freight volumes are about the same compared to three months ago within Ontario, inter-provincially and cross-border. Intra-Ontario freight volumes seem to have stayed relatively stable with 58 per cent of respondents reporting volumes are about the same, up 10 percentage points from last quarter while 33 per cent say they are improving (down 9 percentage points from the last quarter). A greater proportion of respondents reported that intra-provincial freight volumes have stayed about the same compared to three months ago, up 10 percentage points from the last survey, and 36 per cent reporting increasing freight volumes. Southbound US freight continues to be weak. Twenty-three per cent of respondents reported that volumes have decreased compared to the previous period. Respondents also reported some softening in northbound US freight. Forty-five per cent of respondents still indicate volumes are improving, but that is down 9 percentage points from last quarter. Over half (52 per cent) reported that volumes are about the same, up 17 percentage points from last quarter.
Loaded Miles/Length of Haul
The proportion of respondents reporting that loaded miles are increasing rose to 39 per cent in this quarter, with the majority (53 per cent) reporting that there was no change. Most respondents (75 per cent) said the average length of haul has stayed basically the same, while only 10 per cent said it increased, down 12 percentage points from last quarter.
Most respondents characterized the freight rate environment as “about the same” in the intra-Ontario and inter-provincial markets. The southbound US rate situation remains weak, with 32 per cent of respondents indicating the freight rate environment is decreasing (up 10 percentage points from last quarter), and 50 per cent reporting that it has stayed the same. Thirty-nine per cent say the northbound US rate environment is improving, (down slightly by three percentage points from last quarter), and 49 per cent indicate it has stayed the same.
Overall, there are continued indications of capacity tightening. Over three-quarters of respondents said that capacity had either decreased or stayed the same in the previous quarter and expected the situation to remain almost identical over the next 6 months.
It appears that carriers are at a bit of a crossroads in terms of whether to begin hiring or not, with the industry pretty much split down the middle. 53 per cent of respondents said they are not currently planning to hire new company drivers and 58 per cent said they do not plan to hire more owner-operators over the next three months. However, 47 per cent said they do plan on adding more company drivers, while 39 per cent plan on adding more owner-operators.
Similarly with equipment, the number of respondents who plan on adding more tractors over the next three months has stayed the same as last quarter, with 45 per cent indicating they plan on adding more tractors. The number of respondents who reported they plan on adding more trailers to their fleet increased 11 percentage points to 46 per cent, while 49 per cent reported they do not plan on changing the overall size of their trailer pool.
There are some other indications that shippers may be starting to see the impact of a looming capacity crunch. The majority of carriers (88 per cent) say they are satisfied with fuel surcharges. Moreover, the proportion of carriers reporting that it is taking longer for shippers to pay compared to a year ago was 18 per cent — the lowest percentage since OTA began its survey and well off the peak of 59 per cent recorded in 3Q09. Fifteen per cent said it was taking less time for shippers to pay; 67 per cent said it was taking the same amount of time. Though most report no change, almost a quarter of respondents (24 per cent) said shippers are lengthening the terms of contracts, perhaps indicating an increased desire to lock-in capacity though its too early to tell.
Access to Credit
Access to credit appears to have stabilized, with 75 per cent of respondents reporting that there has been no change in access to credit, up 11 percentage points from last quarter. However, only 13 per cent said credit is tightening (the same percentage of those who said it is easing), compared with an average of 58 per cent who reported credit tightening in the 6 quarters starting in 4Q08.
The survey was conducted electronically between January 10th and 31st, 2011 with over 75 carriers responding.