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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.

Capacity Growth An Inevitable Result of Lowered Utilization

Commercial Carrier Journal (www.ccjdigital.com) and TruckingInfo.com both recently ran stories highlighting TCP Survey data from the 4th Quarter Business Expectations Survey.

The survey showed a large majority of carriers expecting to grow capacity, and many moving to replace their aging vehicles.

The new hours-of-service rules have resulted in lower utilization of equipment. As a result, carriers are being pushed to increase capacity and raise driver pay.

The number of carriers indicating they are not going to add capacity has been trending down, and is now at its lowest level yet for the TCP survey, at just 27 percent.

Larger carriers expected to be more aggressive in adding equipment than smaller carriers. Thirty-nine percent of larger carriers expected to add between 5% to 15% compared with only 27% of smaller carriers.

“We suspect that all the 2007 pre-buy tractors are being traded out. If smaller carriers are not able to replace older, less fuel-efficient equipment (and their higher maintenance costs), those carriers will not be well positioned to benefit from looming good times,” says TCP Partner Richard Mikes.

TruckingInfo.com Article: http://www.truckinginfo.com/news/story/2014/01/capacity-growth-an-inevitable-result-of-lowered-utilization.aspx

Commercial Carrier Journal Article: http://www.ccjdigital.com/monday-money-carriers-to-add-capacity-freight-indices-mixed-union-votes/

Carriers Finding Re-Negotiation of Accessorials Challenging

TodaysTrucking.com shared TCP survey results (from the 4th Quarter BES) that show 42% of carriers expecting their customers to resist re-negotiating accessorials.

Fifty percent of smaller carriers and 38 percent of larger carriers expressed pessimistism about accessorials. However, carriers small and large were more positive about re-negotiating detention times – 43 percent expected to re-negotiate.

“Credit availability and carrier profitability go hand–in-hand, both are essential to replace aging fleet assets and to grow capacity. Carriers with stronger profitability and cash flows will find credit available and affordable and will be better positioned to gain market share,” said Steven Dutro, TCP Partner.

Full article here.

Entry-Level Drivers Will Be Sought

With the many changes taking place in the regulatory and economic environment, many carriers are reviewing their labor policies. Highlighting 4th Quarter BES results, Commercial Carrier Journal (ccjdigital.com) recently reported on these trends.

The TCP survey showed less than 30% of carriers hiring inexperienced, entry-level drivers. But that number is set to grow. Slightly over half of all carriers expect to soon be training and utilizing inexperienced, entry-level drivers.

While this majority is slight, a stunning 84 percent of carriers are willing to support allowing younger, properly trained drivers to enter the driving pool.

“We believe this means they support other carriers hiring and training younger driver so that they can then poach them later,” says Richard Mikes, TCP Partner.

Read the article here.

What Are Your Hot-Button Issues This Fall?

The TCP 4th Quarter 2013 Business Expectations Survey is open.

We’d like to invite all carriers to participate. Help us bring you the most accurate picture of trucking industry hot topics and trends.

Click here to take the survey.

Get the answers you need – ONLY survey respondents will get the full results, complete with our expert analysis.

Contribute to the industry’s only survey which asks carriers what they think will happen in the future. Your ideas and opinions will be kept confidential.

This survey takes less than 5min. And it closes soon.

Take the Survey.

Shippers Indifferent to CSA Scores, Carriers Focused on Safety

TruckingInfo.com echoes third quarter TCP survey results that say shippers are still largely unconcerned by carrier CSA scores. However, the use of e-logs continues to grow among carriers, and truck speeds are controlled.

Operating at posted speed limits is an essential aspect of truck and driver safety, and very important for managing fuel costs. Nearly half of carriers (46%) indicated their speed limit was set at 65 mph. Thirty-one percent indicated it was set at 63 mph.

Fifty-seven percent of carriers are now committed to using e-logs. Significantly more larger carriers than smaller carriers are committed to e-logs, 71% vs. 27%.

This may be a result of larger carriers having the necessary resources to fund, train and manage compliance and dispatch. Smaller carriers, on the other hand, continue to postpone the expense.

“Many carriers, on e-logs, tell us driver acceptance is good, HOS compliance is better, and CSA scores have improved since full implementation,” noted Steven Dutro, TCP partner.

Read more here.

Capacity Additions Remain Moderate

Carriers are adding capacity but the growth remains conservative, says a recent article from TruckingInfo.com.

Using current TCP survey results, the article states that carriers expecting capacity additions of under 5% have increased, from 22% in February 2011 to 45% today. Carriers intending to add more capacity – i.e. 6-10% – have decreased, from 25% in February 2011 to 15% today.

In this quarter’s survey, smaller carriers were more conservative than larger carriers in their buying plans. Only 15% of smaller carriers intend to add more than 6% capacity, compared with 23% of larger carriers.

Smaller carriers are also less optimistic about volumes. It is thus unsurprising that they are less likely to add capacity. These smaller carriers may also be having a harder time finding financing for expansion than their larger competitors.

“Tight credit remains a challenge for a lot of businesses, particularly for truckers, and especially those not well positioned,” observed Steven Dutro, TCP Partner.

Full article here.

Smaller Carriers May Be Disadvantaged Under ACA

According to a recent Transport Topics article citing TCP survey results, smaller carriers are more likely to report adverse effects from the Affordable Care Act than larger carriers. Thirty percent of smaller companies are considering dropping health coverage for employees compared with only 10% of larger carriers.

The article quotes TCP partner Richard Mikes, ”Smaller carriers are at a disadvantage to find and retain drivers if they cannot compete with the health packages offered by larger carriers.”

The new health care law will require most companies with more than 50 employees to provide health insurance to workers.

Read more here.

TruckingInfo.com Shares Survey Results on Health Care Changes

Carriers are gradually coming to terms with the effects of the new health care law, and what they must do to comply, according to TCP’s third quarter survey.

Thirty-six percent of carriers last year indicated that the new law had made no difference to their business. This quarter, that number dropped to just 8%.

Carriers have also shifted their strategies for dealing with the increased costs. In the fourth quarter of 2011, 43% of carriers indicated they were likely to have employees contribute more toward health costs. Now, carriers are more likely to implement wellness programs (44%) and health savings plans (30%).

Read the article here.