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March 14, 2013 - Increasing Rates and Profits Likely, Say Analysts

According to multiple trucking industry researchers, economy conditions point towards an increase in rates and profitability. According to the Business Expectations Survey, conducted quarterly by consulting firm Transport Capital Partners, two-thirds of respondents are “optimistic” that volumes and rates will increase over the next year.

“With the present tight supply of trucks, an increase of just 1% to 2% over forecasted GDP growth could spike rates upwards at any time, which would help to cover costs,” noted TCP partner Richard Mikes.

On the other hand, TCP partner Steven Dutro suggested that the limited availability of drivers and impending HOS rules could damper the benefits of a slowly recovering economy.

Read the full article at FleetOwner.com.

March 14, 2013 - Freight Rates Stable but Increases are Expected TCP Survey Finds

BulkTransporter.com reports on the most recent trucking industry survey by Transport Capital Partners. The survey found that for the first time since February of 2012, the trend line for carriers expecting rates to increase over the next twelve months went up. While freight rates remained the same for a majority of carries over the last three months, there are optimistic expectations for increases in both business volumes and freight rates in the next 12 months. For more information, click here to read the full article.

 

March 5, 2013 - Batts quoted about trucking acquisitions on the increase

Lana Batts, Partner with Transport Capital Partners (TCP), was recently quoted in an article by TruckingInfo.com about the increase in fleet acquisitions and mergers in recent months.  TCP is an advisory firm that facilitates merger and acquisitions for trucking companies. According to Batts, “we are just at the beginning of the cycle” for M&A activity.  There are a number of businesses that are currently looking to sell, and it looks like this will continue for the forseeable future. Batts also says that the “uncertainty about the number of taxes that carriers pay, such as the ‘Obamacare’ tax increase, fuel taxes, tolls, etc., have many carrier executives scratching their heads and wondering if they should stay in the business.”

TCP recently conducted its first quarter Business Expectations Survey which included questions about carriers’ expectations for buying or selling a company in the next 18 months. These results will be released in the next few weeks.

To read the full TruckingInfo.com article, click here.

February 18, 2013 - Reflections from the Stifel Transportation Conference 2013

Richard Mikes of Transport Capital Partners (TCP) recently attended the Annual Stifel Transportation and Logistics Conference held in Key Biscayne, Florida, chaired by John G. Larkin, Managing Director at Stifel. About 40 publicly-held transportation and logistics companies were in attendance, presenting information on their firms and trends affecting the industry to a larger than last year investor group. Here are his observations from the conference.

 Truckload Carriers Volumes

The general consensus among the presenting carriers is that volumes began flattening in the last half of 2012 and have not recovered in the seasonally slow first quarter. Retailers remain cautious and inventories are managed tightly. The uncertain economic recovery makes future volumes hard to predict. However, there are bright spots in ag equipment, energy exploration and chemicals with construction showing some life. Dry van business remains slow with the seasonal restocking from clothes to turf supplies/equipment and summer recreational merchandise about to begin.

Efficiency and New Strategies

Companies emphasized ongoing and new initiatives in most areas of operations. Most publicly held truckload carriers are no longer “just truckers” but also offering logistics, transportation management, dedicated carriage, 3PL initiatives, and intermodal options.

Focus included reducing costs, enhancing efficiencies, aerodynamics for equipment, and watching natural gas as a potential game changer. Deeper customer interfaces with cross-selling of the increasingly broader array of services were highlighted by many. Collaborative activities with shippers are gaining efficiencies and other mutual benefits.

Equipment Purchases Cautious by Public Carriers

Publicly held carriers in aggregate have reduced their tractor fleet 20% from pre-recession peak levels and are not gaining tractor count, which is in line with TCP quarterly surveys of both private and public firms showing little fleet addition or interest in expansion. While investors favor “asset light” models, discussions of “someone must own assets” were common.  Small fleets, 6 trucks or less, account for 88% of the carriers. Smaller fleets are pressured by aging tractors and tight credit. New tractors have improved miles per gallon (mpg), but at a high capital cost with used trade-in prices flat for the past year.

Rates

Generally, carriers anticipate single digit increases for rates assuming stable capacity and loads “in balance”. However, we may be subject to a freight spike environment pushing them upward. A shipper panel declined to provide much information on rates. The uncertain economy remains the gorilla in the room as an uptick of 3 to 5% in GDP growth will push higher rates.

Drivers the Constraint?

Carriers mentioned driver staffing issues are becoming more critical for the variety of reasons (demographics, lifestyle, wages, and HOS/CSA regs), and are directly now impacting carrier capacity along with a stable fleet base. Driver wages must, and will, increase, but the only question is timing. If construction ramps up this could be sooner rather than later.

Brokers and 3PL Providers

Volumes have recovered and general outlook is for a slow growth environment. The focus appears to be on small to mid-size shippers along with broadening international exposure and competition. Growth rates of 3PL’s were reported at 11.6% over the past 15 years in North America contrasted with 30% in South America and 15% in Asia Pacific markets. Over the same time dedicated carriage grew 7.5% in the US.

 

Have questions?  Contact Richard Mikes at  239-395-2595 or [email protected] for more information or to learn more about the Stifel Transportation Conference 2013.

Interested in learning what other carriers are expecting in the coming months?

Click here to participate in TCP’s First Quarter Business Expectations Survey. 

February 5, 2013 - Natural gas engines starting to catch fire in the truck-fleet market

Natural gas engines, both compressed natural gas (CNG) and liquefied natural gas (LNG) are gaining traction with carriers who are interested in “going green” and spending less on fuel. A recent article by Fleet Owner cites the findings from the 2012 survey on natural gas engines conducted by TCP and ACT Research. Over half of the carriers surveyed are considering at least some natural gas engines in their next purchase.  The article goes on to discuss many of the truck makers and engine builders who are meeting the demand for natural gas.

Want to learn more about the growing trend of natural gas engines? Click here to read the full article.

 

February 4, 2013 - More Carriers Willing to Hire Younger Drivers to Combat Driver Turnover

Transport Topics recently reported on the findings of TCP’s fourth quarter Business Expectations Survey that found that 51% of carriers are planning to hiring younger drivers to offset recruiting difficulties and driver turnover. Recent reports from the American Trucking Associations show that driver turnover is at 100%. Over a third of carriers responding to the survey already hire younger drivers and “carriers are looking for ways to attract quality, long-term drivers”. Click here to read the full article. 

January 24, 2013 - Carriers Hesitate to Replace Equipment

As reported by Truckinginfo.com, the Fourth Quarter 2012 Business Expectations Survey by Transport Capital Parters finds that most carriers plan to be very conservative when it comes to replacing fleet equipment. The survey found that 60% of smaller carriers and 45% of larger carriers plan to replace less than 10% of their fleets. TCP Partner Richard Mikes noted, “Capacity additions have been constrained for some time and linked to shippers’ desire to add dedicated capacity to assure service.” Larger carriers with “adequate profit margins” are more likely to grow, remarked TCP Partner Steven Dutro.

Click here to read the full article.

January 16, 2013 - Carriers Uncertain About Year Ahead

As Washington continues to muddle through the fiscal crisis, carriers are unsure about how government policies might affect them in 2013. The latest Business Expectations Survey from Transport Capital Partners shows that 45% of carriers believe that volumes will remain flat, whereas 44% believe rates will increase and 46% predict that rates will stay the same.

TCP Partner Richard Mikes notes that “continued high fuel costs, inadequate fuel surcharges, and some shippers not recognizing the impact of delays on schedules with constricted hours-of-service rules will force and increase in distressed situations.”

Read the full article at TruckingInfo.com.

January 16, 2013 - Sluggish Economy Continues to Weigh on Carriers

As reported by FleetOwner Magazine, a large number of trucking companies believe that freight volumes are likely to stay flat for the coming year. Carriers are split, on the other hand, as to whether rates will increase or stay the same, indicating uncertainty in the market. These findings come from the Fourth Quarter 2012 Business Expectations Survey, conducted quarterly by consulting firm Transport Capital Partners.

TCP Partner Richard Mikes notes, “Their volume and rate outlook does not bode well for cash flows and profits in 2013 for an industry under costs and availability pressure for drivers.”

TCP Parter Steven Dutro explains how this might effect wages: “Driver pay increases will be constrained by stagnant rates [so] it will be a tough balancing act for carriers to keep drivers.”

Read the full article here.

January 9, 2013 - Carriers Willing to Hire Younger Drivers

Truckinginfo.com reports that that more than 80% of carriers would consider hiring younger drivers. This data comes from the Fourth Quarter 2012 Business Expectations Survey, conducted quarterly by the transportation consulting firm Transport Capital Partners. The study also found that larger carriers are three times as likely to invest in training entry-level drivers compared to smaller carriers. TCP Partner Richard Mikes notes the importance of driver retention, while TCP Partner Steven Dutro acknowledges that “those who are successful in properly training and developing loyalty will gain a real competitive advantage.”

Read the full article here.