Trucking news: Transport Capital Partners survey points to heightened future expectations for trucking market

A recent quarterly survey from Transport Capital Partners indicates that expectations for trucking carriers are lifting across several key metrics.

These metrics, according to TCP, include freight volumes, freight rates and credit, among others.

In terms of freight volumes, TCP found that expectations for increases over the next year rose up to 37 percent in the second quarter, a sharp increase from 17 percent last November, as well as a 6 percent bump from the first quarter’s 21 percent.

Freight rates also appear to be stabilizing, according to the survey, with 54 percent of respondents stating they expect rates to remain the same over the next 12 months, compared to 30 percent in the first quarter. Meanwhile those respondents that expected rates to decrease fell to 29 percent in the second quarter from 58 percent in the first quarter.

“Earlier in the year, we were wondering when the other shoe was going to drop, due to many factors like a slow fourth quarter and a new White House, and people were somewhat scared,” said Lana Batts, a partner at TCP. “Now, people have reached the conclusion that we will get through this, but it will be different, and ‘normal’ is the new normal.”

Batts added that in the trucking industry there is a sense the worst may be over, although it will take a while, given that freight volumes are still sluggish. But at the same time, most carriers are not expecting a major future decrease either.

With more respondents now indicating they expect freight rates to remain the same compared to February, when more expected a decrease in rates, it stands to reason that the trucking market is one in which carriers have stripped away a significant amount of capacity and are competing fiercely for whatever freight they can move.

Batts maintains that the trucking industry still has too much capacity, and rates would be going up has more capacity already been removed.

“Normally when you have this kind of dramatic drop in tonnage and the supply and demand drop in rates, you see a lot of carriers go out of business,” Batts said. “And while more carriers left the business during the fourth quarter of 2008 and the first quarter of 2009, it was not anywhere near where we thought it would be. The reason more carriers have not left the market is because carrier’s lenders were not pulling the plug for non-payment of trucks, because the price of used equipment has dropped so dramatically that lenders are willing to have truckers make every other payment, as long as they don’t get too far behind.”

Read the rest of the logisticsmgmt.com article here.