Trucking companies are cautiously thinking of expansion as the U.S. economy strengthens, freight demand rises and pricing becomes firmer, but climbing operating costs and a shortage of truck drivers will keep a lid on potential growth, reports the Journal of Commerce.
Reporting on a survey by GE Capital Transportation Finance, JOC says 45 percent of trucking companies surveyed by GE indicated they plan to increase the amount of new equipment they add to their fleets this year.
More than a third of the companies surveyed — 35 percent — said their capital spending will rise in 2014, with half the carriers considering additional financing for vehicles and other equipment. In addition, 44 percent plan to add workers, with employment rising on average 3.4 percent.
Those expansion plans are driven by increased tonnage and revenue. “Freight continues to be relatively strong and the carriers are starting to get price increases,” Dan Clark, president and general manager of GE Capital Transportation Finance, told JOC.com in an interview.
However, carriers should expect to hit roadblocks as they attempt to expand, adds Clark. “These companies may want to expand, but the driver situation is such that they can’t,” Clark said. “You can buy the equipment, but if you can’t put drivers in the trucks, you can’t expand.”
Rising operational and compliance costs as well as challenges to maintain profit margins were other concerns expressed by the carrier executives surveyed.
These cost pressures are changing the ways carriers buy trucks, with more companies adding new vehicles rather than used trucks and a growing number of carriers looking to lease equipment.
John Conkin, GE Capital’s senior vice president and head of sales, told JOC that carriers are also looking to add trailers as more and more companies and shipper customers move to drop-and-hook operations at their docks. Expanding trailer pools is one reaction to changing truck driver hours of service and difficulty finding drivers, he said.
“Five or ten years ago, everyone was trying to reduce their number of trailers per truck,” Conkin said. “Now they’re adding more, so they can have trailers pre-loaded when a truck drops off a load. You can’t afford to wait for a trailer to be loaded. The clock is ticking on that driver.”
The higher number of trailers is more expensive for the trucking company, Conkin added, but that expense is “minimal” compared with the cost of keeping a driver waiting at a dock.