Carriers hesitant to add capacity, TCP survey finds

For the last two quarters, over half of the carriers have reported inadequate rewards from their investment to be able to grow their fleets dramatically.

The Trucker News Services

1/10/2012

CHATTANOOGA, Tenn. — A survey by Transport Capital Partners (TCP) has found carriers hesitant to add capacity.

The company’s Fourth Quarter Business Expectations Survey results showed returns were viewed as inadequate by over half the respondents.

The total number of carriers who expect to add 0-5 percent capacity has remained steady at 73 percent for the last two quarters.

“Carriers tell us that rates are not covering investment risks nor are they close to covering the cost of the record prices of new trucks,” Richard Mikes, TCP Partner and survey leader, said.

For the last two quarters, over half of the carriers have reported inadequate rewards from their investment to be able to grow their fleets dramatically.

For six quarters in a row carriers have given relatively the same desires in how they expand, except for decreasing reliance on owner-operators.

“It will be some time before the specter of bankruptcies and repo’s from the past couple of years will be forgotten, and this will happen if, and only if, rates go up substantially,” Lana Batts, TCP Partner, said.

“Clearly, carriers are reacting to the moves by the Federal Reserve Board saying that interest rates will remain the same into 2013,”  Mikes said.

Both Mikes and Batts agreed that with a low 2 percent GDP growth environment forecast for 2012 by most pundits, the 15-20 percent reduction in the truck fleet (by not buying new trucks over the recession) will not be replaced until carriers see a clear path ahead of higher rates to compensate for escalating costs and regulatory constraints of  CSA and Hours of Service

TCP uses this quarterly survey along with partner conversations with carriers to provide a meaningful insight into future industry expectations.

Both Mikes and Batts have long-term experience in the transportation industry. 

TCP provides advisory services related to transportation mergers and acquisitions, capital sourcing, operations and strategy with regional offices in Florida, Iowa, Colorado, Pennsylvania, Tennessee and Virginia.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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