As the traditional bid season heats up, some shippers are trying to take early advantage of the loose capacity from earlier in 2016, rather than base negotiations on tighter capacity in the fourth quarter and expectations of a more robust 2017, say some trucking execs.
Transport Topics reports that while most industry analysts have said they expect 2017 contract rates to go up in the low single digits, trucking executives believe shippers are trying to use the lag effect between spot and contract rates hikes to their advantage.
“We saw a bunch of touch-feely bids go out in November and December to see how high the rates were going to go,” said Bo Keith, president of FirstExpress in a conference call with investment bank Cowen and Co. “Anyone who is thinking or asking for a 5% reduction this year has lost their minds … We’re not giving you a 5% reduction, so there’s no sense in wasting my time.”
Some people are quoting some rates that really shocked me,” said Joseph Cowan, CEO of Cowan Systems. “We have not experienced flexibility by the shippers to pay us what we need to get.”
On driver pay, the trucking executives expected a 5% increase in the first quarter due to the anticipated rebound and growth opportunities ahead. “That’s our No. 1 problem, bar none. It’s heads and tails above every other issue we have in the business,” said Keith. “Our market is available to get; it’s all going to be dependent on drivers. No longer are we searching for areas to grow into where there is freight. We are searching for areas where there might be a mass of drivers to hire.”