Sluggish rates, accessorials holding back equipment investment

| July 15, 2013

Owner-operators aren’t the only carriers who’ve seen a somewhat a sluggish rate environment throughout the calendar year thus far. The second-quarter industry survey by Transport Capital Partners (TCP) shows many are still not getting enough to justify adding equipment, regardless of freight volume.

Just more than 50 percent of carriers believe they are getting the rates of return needed to justify further investment in new equipment. That’s up just four percentage points from November 2012.

One third of carrier respondents reported no intention of adding equipment.

“Higher equipment costs in recent years, combined with the lower utilization resulting from new [hours of service] rules, will continue to make adequate returns on investment a challenge,” says Steven Dutro, TCP Partner.

The bright side of the rate situation could be in growth long-term, as we reported previously — 73 percent of all carriers see rates rising over the next year. Large carriers, however, remain more optimistic than small multi-unit fleets and owner-operat0rs.

Click through the image for more rates and accessorials analysis from Transport Capital Partners Q2 2013 Business Expectations Survey.

Click through the image for more rates and accessorials analysis from Transport Capital Partners Q2 2013 Business Expectations Survey.

Most likely in response to pending changes in hours of service, 43 percent of all carriers believe they will be able to address renegotiate detention pay, up significantly from the previous November 2012 survey. Small carriers, overall, however, were more pessimistic on accessorials. Sixty-four percent of smaller carriers see no relief in charge negotiations.

“As freight demand grows shippers who need consistent service will need to assist carriers in gaining operational efficiency and adequate compensation,” says TCP Partner Richard Mikes. “Larger carriers are more confident they are positioned to achieve this customer cooperation.”

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