Optimism Builds for Volume and Pricing-Transport Capital Partners (TCP) survey

Optimism Builds for Volume and Pricing

More carriers are expressing optimism for increases in volumes and rates as steady, albeit slow, growth in the economy has led the freight market into positive territory, according to the latest Transport Capital Partners (TCP) survey.

Since a low point of 50% in third quarter 2012, positive volume expectations have risen to 61%. Larger carriers – those grossing more than $25 million per year – are much more optimistic than smaller carriers – 68% vs. 45%.

Carriers are also more upbeat about future rate growth. A majority of carriers (66%) expect rates will increase over the next 12 months. As with volumes, larger carriers anticipate rate increases more than smaller carriers this quarter (74% vs. 48%). This reverses a trend. Smaller carriers have often been the more optimistic about rates.

“Spot market trends over the summer have been positive for most carriers and this may be the precursor to continuing volume optimism,” said TCP partner, Richard Mikes

However, the economic recovery and future projections remain modest. As a result, carriers are not yet seeing their optimism on volumes and rates reflected in actual rate increases. Although the positive outlook has not been mirrored in rate reality, there are exceptions to this in rates for construction, petroleum, and seasonal freight.

“Underlying cost rate pressure is ongoing – from new truck costs and maintenance inflation to pinched driver efficiency from HOS changes and inadequate carrier returns,” Mikes notes.

For the past 15 quarters, more than half of all carriers have expected rates to increase. Actual rates, however, have only risen since February 2013.

“The stronger than expected volumes of the last few months are being reported by some carriers as boding well for the fourth quarter,” according to TCP.

TCP’s results reflect similar sentiments of Ontario carriers in the 3rd quarter OTA Business Expectations Survey.