Trucking companies eyeing a potential driver shortage will also have to account for the cost of keeping up with more onerous federal truck safety regulations.
According to a recent survey of over-the-road carriers by the advisory firm Transport Capital Partners, three quarters of trucking companies believe their costs per driver to adhere to new Carrier Safety Administration (CSA) standards will be more than $500.
More than a third of respondents saw the costs as likely being between $500 and $1,000, 15 percent seeing it as $1,000 to $1,500 per driver, and another 10 percent pegging it between $1,500 and $2,000. Slightly less than 10 percent saw it as costing more than $2,000 per driver.
The figures were explained in a state of truckload conference call last week, hosted by the investment bank Stifel Nicolaus, with Richard Mikes, Transport Capital Partners' managing partner.
In addition to regulation of the trucking industry, more than half of carriers said they are not getting adequate return on investment to justify purchase of new trucks, Mikes said.
Yet 70 percent believe that volumes will grow over the next 12 months, and pricing trends remain strong despite decelerating volume growth. More than 70 percent of carriers will add less than 5 percent of capacity in the coming 12 months. Two-thirds said rates will rise over the next year.
Mikes said capacity is pretty much in line with demand at present.
“Rates will go up,” he said. “The only way rates will go down is if we have a double dip economy. While this is one of the diciest times for overall economy that I’ve seen, it’s one of the better times for the overall trucking industry, mainly because companies have held off on adding capacity. Marginal carriers have been pretty much weeded out. The challenge in the industry is how to get enough margin to pay for the new trucks that have to come in.”
Stifel Nicolaus Managing Director John Larkin noted on the call that the survey seemed to indicate a receding role for brokers, with around two-thirds of respondents saying they had used broker services less in the last three months. But Larkin said there’s been a rise in brokerage activities and asked whether brokers will be “tripping over themselves” for business.
“There’s a real question of how much disintermediation will occur,” Mike said. “We’ll see more people participating with shippers in true auction environments. There are lots of things with e-commerce that can be adapted to load boards. That’s a long run concern I have with the broker industry.” - Eric Johnson