Transport Capital Partners’ fourth-quarter survey shows a higher percentage of carriers who report adequate rates of return, but many remain prudent in their plans for capacity growth.
“Volumes and rates are up. Accessorials are being re-negotiated. But, are carriers also earning a sufficient rate of return to invest in new equipment?” the survey asks.
About three out of four carriers answered positively, response in the latest Transport Capital Partners (TCP) survey.
Despite better rates of return, however, carriers are still being judicious about the amount of capacity they intend to add. Forty percent indicate they intend to add 1-5% over the next 12 months while 25% indicate they will add 6-10%. About a quarter of carriers indicate they intend to add no capacity.
Larger carriers are more likely to add no capacity than smaller carriers (28% vs. 18%). But, larger carriers are also more likely to significantly increase capacity (by 6-10%) than smaller carriers (35% vs. 20%).
In this survey, the most popular method (32% of carriers) for adding capacity is through company equipment. The number expecting to add capacity through independent contractors dropped to an all-time low of 14%, continuing a trend we have seen since late 2010.
Smaller carriers for the most part are either buying with cash or buying used trucks as they tend to be more risk averse over time, based on their experience in recessionary cycles and wanting to conserve capital, says TCP Partner and survey coauthor, Richard Mikes.