Shippers have begun getting squeezed by truck capacity, according to an industry note by Cowen and Company.
The firm said that during the South West Association of Rail Shippers Conference, a lot of the talk centered around truck capacity, with shippers saying that these fears have presented themselves after years of anticipation. The firm reported that spot rates have been increasing and that shippers said they were having a hard time finding trucks in some markets.
The firm related an anecdote told by one carrier who told a shipper there were no trucks available even after he offered to pay however much was needed to secure capacity.
"If the supply/demand imbalance continues as we enter into the seasonally stronger periods of the year, we believe there will be significant increases in truckload spot pricing as well as intermodal spot prices," Cowen said.
Due primarily to the rough winter weather, truck spot rates have recently been on the rise, according to DAT. In January, the company reported that spot-market capacity remained flat from December, but decreased by 18 percent when compared to January 2013.
In January, van rates were up by 13 percent, year over year, as reefer rates experienced a 3-percent increase, and flatbed rates ticked up 2.5 percent.
For the penultimate week in February, capacity fell by 3.8 percent when compared to the preceding week. During that same timeframe, van rates rose by 0.5 percent, and flatbed rates were up by 1 percent. Reefer rates declined by 0.9 percent during the period.
Attendees at the conference were also concerned about the time table for implementing new regulations on railroad tank cars, which will force the replacement of older DOT-111 cars. Cowen said that a timeframe of five or seven years might not be enough time to prepare all the cars because of concerns over the “limitations on shop space” that has been voiced by some in the industry.
"The regulators are set to come out with a ruling on retrofitting these cars, and all eyes are focused not only on the severity of the retrofit but how much time the regulators give the industry to comply," the firm said.