The Future of Capacity and Freight Rates


If there have been any benefits of the great recession, it has been the ease with which one can find a truck and the resulting downward pressure on trucking rates for the shipping public.  As we say ‘goodbye’ to the recession, we say ‘hello again’ to some challenges we have met in the past.  All sources agree that this year will usher in a climate of tightening capacity and upward rate pressure.

The general economy, projected to grow at a rate of 4% this year and up to 5% in 2012, will be the baseline driver.  Having streamlined their operations during the past two years, trucking companies are already running at maximum efficiencies.  Recruiting drivers, a dormant practice, has returned in full force as volume of freight rises.

The cost of fuel has risen steadily this year, taking a drop this past week as the result of our commitment to stabilize Libya.  However, political unrest in oil producing countries continues to be a wild card the can dramatically and suddenly impact fuel prices.  Summer travel will hike demand for fuel as many travelers, tired of being pent-up during a long, brutal winter, will act on feelings of relative security as the economic rebound takes stage.   Japan will increase its consumption both to rebuild its infrastructure and to replace the downed nuclear power plant.

Our industry will start to feel the repercussions from new federal regulations which will peak in 2012.  In the coming months, the CSA will begin to reveal its impact on the driver pool and gain momentum through the year.  If approved, New Hours of Service legislation will reduce driver productivity and add to the capacity deficit.  Some one-day runs will become two-day runs.  Driver wages and trucking company expenses will go up to meet the productivity pullback.

We have already experienced a tightening of availability, leading us to believe that we are at the beginning of the uphill slope.  The days of battling for capacity and the need to attract carriers with every enticement have returned.  Carriers will expect faster pay, greater ease of doing business, a mix of freight and, of course, a real-world freight rate.