Trucking Industry Holds Steady in Face of Uncertainty -Source Trucking Today

Trucking Industry Holds Steady in Face of Uncertainty 11/09/2011

TORONTO — The latest Ontario Trucking Association (OTA) quarterly survey of Ontario's trucking industry shows a higher degree of uncertainty as they head into the fourth quarter of 2011. The number of carriers who reported they were unsure about the industry's prospects jumped from 26 percent last quarter to 40 percent in the 4Q2011 survey. That's the highest level of uncertainty since the second quarter of 2008. The glass is half-full camp registered at 55 percent, a decrease from the 64 percent recorded in OTA's 3Q2011 survey. This is the third consecutive quarterly drop in the percentage of carriers who said they were optimistic moving into the current quarter — and the lowest level since the start of 2010. However, notes the OTA, the number of carriers who said they were pessimistic about the industry's near future fell from 9 percent to 5 percent. Steady as she goes Freight volumes are also holding steady with 57 percent of respondents indicating that intra-Ontario freight volumes are roughly the same as volumes three months ago. Thirty-six percent of respondents reported an improvement in volumes — up 4 percent from the 3Q2011 survey. The interprovincial market had 49 percent of respondents reporting no change in freight volumes from the third quarter, and 39 percent saying that volumes had improved — down 5 percent from last quarter. There were modest improvements in the southbound US markets, with 21 percent of carriers reporting that volumes were improving. Only 14 percent of carriers surveyed said southbound US volumes had dropped, down 17 percent from three months ago, and 65 percent said volumes were the same compared to the 50 percent recorded in the third quarter. Fifty-eight percent of carriers said the northbound US market were about the same, up from 37 percent. The percentage of respondents reporting an improvement declined from 51 percent to 35 percent. Rates The majority of respondents reported that rates were roughly the same in each of the geographic markets, with some softening being reported in terms of those who felt the rate environment was getting better. An exception to this, said the OTA, was the southbound US rate environment where a growing proportion of respondents said things were improving. Costs up across the board Costs are increasing across the board compared to last year. Sixty-four percent of those surveyed reported fuel costs of more than 10 percent over the past year, maintenance and tires costs are on the rise with 86 percent and 80 percent of carriers reporting increase, respectively. The biggest bill to pay are labour costs, said the OTA, with 88 percent of carriers reporting swells in driver wages, most of which being in the 2 percent range. Fifty-three percent of respondents reported increases in employee benefit costs. Thirty-one percent of carriers reported a 2 to 5 percent increase in owner-operator compensation. In regards to the price of equipment, 52 percent said that tractor purchase prices have climbed somewhere between 2 and 10 percent compared to a year ago, and 26 percent of carriers reported a 26 percent increase in trailer price tags. Miles are staying the same, said 55 percent of respondents. That's up 47 percent from Q3. A smaller proportion said that loaded miles increased — 27 percent in the 4Q compared to 45 percent from last quarter. The percentage of carriers reported a decrease in loaded miles went up to 18 percent from third quarter's 8 percent. Seventy-two percent said that average length of haul has stayed the same while 18 percent said it has increased. Capacity capped Carriers appear to want to keep a lid on capacity, the OTA said. Fifty percent of respondents — up 33 percent from last quarter — expect capacity to stay roughly level over the next six months, with 29 percent seeing capacity decrease (marking no change from 3Q survey). Down 37 percent from last quarter are the 21 percent of respondents expecting an increase. Drivers/owner-operators It's no surprise that given the outlook, carriers are split on whether to deepen their driver pool: 49 percent said they plan to add more drivers while 44 percent said they have no plans to bring in more people. The result was the same for adding owner-operators, with 51 percent planning to add and 47 percent having no plans to change. No plans to add equipment The 73 percent of carriers who said they have no plans to add new additions to their fleet of tractors is an indication of carriers' desire to manage capacity, said the OTA. Fifty-six percent said no to more trailers, while 38 percent said they have plans to add more trailers over the next three months. Shippers Most shippers appear willing to accept fuel surcharges, according to the survey, with 91 percent of respondents reporting that customers are paying a reasonable fuel surcharge — up 6 percentage points from last quarter. Carriers that said they are charging all of the customers accessorial changes increased to 46 percent from last quarter's 31 percent. Only 2 percent said they are not using accessorial charges, the lowest reported level since 2008. A slightly higher proportion of respondents — 33 percent compared to 3Q11's 27 percent — said they are collecting accessorial charges from all of their customers. According to 75 percent of carriers surveyed, shippers are taking about the same length of time to pay freight bills compared to the previous quarter, but the percentage that reported it's taking shippers longer to pay their bills dropped from 3Q11's 33 percent to 23 percent. The electronic survey was conducted in October, with 55 carriers participating.

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