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Wages Affected by Freight Slowdown

Expectations Lower for Driver Wage Increases

The fourth-quarter Transport Capital Partners (TCP) survey finds carriers predicting smaller increases in driver wages while remaining cautiously optimistic for volume growth in 2016.

The trucking industry saw a slowdown in freight over the fourth quarter of 2015. Expectations indicate that increases in driver wages will be limited in the year ahead as volume expectations were lowered for 2016.

A substantial majority, 70% of carriers surveyed, expect wage increases of only 1% to 5%. Moreover, 22% of carriers expect to see no increases at all. These expectations are similar to TCP survey results from Q4 2010 and Q4 2012, but notably more conservative than the past couple of years.

Richard Mikes, TCP Partner, states:

“Carriers are in a tactical seasonal strategy – the first quarter being weak in loads, more drivers being available from construction in northern climates, and deep cutbacks in truck purchases over the last couple of months. The longer term struggle between business caution and the need to improve driver staffing via driver wage levels will be interesting to watch in 2016.”

Volume Expectations Growth Slows for 2016

Given the poor economic results from the last quarter of 2015, it is not surprising that growth increase expectations for 2016 are at their lowest levels since the fourth quarter of 2012.

This survey found that only one-third of carriers are expecting volume increases in 2016. At this point last year, that number was almost twice as high. Furthermore, half of all survey respondents are looking toward a flat year ahead. This is the highest percentage of carriers expecting volumes to ‘remain the same’ in the history of this survey.

However, this survey’s lowered expectations do carry optimism for the year ahead. A third of carriers are still expecting increases in freight volumes, with only 1/6 expecting decreases.

“While volume and rate expectations have tumbled, there is still no fear of a looming recession in these results,” summarized TCP Partner, Steven Dutro.

Contact:

Richard Mikes
Office: (239) 395-2595
rmikes@transportcap.com

Steven Dutro
Office: (970) 204-1492
sdutro@transportcap.com

The Business Expectations Survey by TCP, now in its seventh year, has given forward-looking guidance from industry leaders through both sides of the economic cycle. Mikes and Dutro both have senior-level experience advising carriers on strategic and operational issues as well as in mergers and acquisitions in the trucking industry.

About ACT Research Co., LLC

ACT Research, a contributor to the Blue Chip Economic Indicators, has been the recognized leading publisher of commercial vehicle (CV) industry data, market analysis, and forecasting services for the North American market since 1986. Their commitment to data quality & integrity; in-depth analysis; and timeliness have made their services the industry standard.

For more information, visit www.actresearch.net.

2016 Will Be A Year of Stability for Trucking

Trucking Continues to Move Forward with Cautious Optimism

The fourth-quarter Transport Capital Partners (TCP) survey finds carriers remaining positive, despite tempered expectations, and looking toward stable growth in 2016.

Undeterred by continuing volatility around the world, the United States economy will likely continue its steady upward climb in 2016. And, as is often the case, the trucking industry presents us with an accurate mirror to movements in the economy at large.

Economic events in the 4th quarter of 2015 left expectations at their lowest levels in over 5 years. However, motor carrier executives remain optimistic that 2016 will bring solid growth for their companies.

“Expectations are lower than in recent years but are still positive for 2016. The indication is for a stable business environment and little fear of a recession,” summarizes Steven Dutro, TCP Partner.

Many, Not Most, Still Positive About Rates

At the beginning of 2015, 79% of the participants in our survey were looking forward to rate increases over the year ahead. Turning the page into 2016, that number had dwindled to 41% – the lowest percentage we have recorded since 2009.

Despite this dampened optimism, positive expectations remain strong. Forty-one percent of those surveyed still expect their freight revenue rates to rise this year.

“In this survey, and in carrier discussions with TCP, we are seeing more variation in the opinions of individual carriers than in prior years. Any further tightening, caused by a small increase in demand or driver shortages, will have a proportionally greater upward impact on spot and contract rates,” notes Richard Mikes, TCP Partner.

Carriers Most Positive About Capacity

Perhaps most telling of industry expectations for 2016 is that a strong majority – 61% of carriers – expect to expand their fleets this year.

“Growth expectations are not quite as robust as they were in 2014 and 2015. But, this number is still relatively consistent with the expectations – and the modest growth – of the past few years.” -Steven Dutro, TCP Partner

Read the full survey results here.

Contact:

Richard Mikes
Office: (239) 395-2595
rmikes@transportcap.com

Steven Dutro
Office: (970) 204-1492
sdutro@transportcap.com

The Business Expectations Survey by TCP, now in its seventh year, has given forward-looking guidance from industry leaders through both sides of the economic cycle. Mikes and Dutro both have senior-level experience advising carriers on strategic and operational issues as well as in mergers and acquisitions in the trucking industry.

About ACT Research Co., LLC

ACT Research, a contributor to the Blue Chip Economic Indicators, has been the recognized leading publisher of commercial vehicle (CV) industry data, market analysis, and forecasting services for the North American market since 1986. Their commitment to data quality & integrity; in-depth analysis; and timeliness have made their services the industry standard.

For more information, visit www.actresearch.net.