TCP Survey: Truckers throw brakes on new truck plans in year ahead
Oct 4, 2011 8:57 PM
The recent Third Quarter 2011 Transport Capital Partners (TCP) Business Expectations Survey found that only 5% of carriers are planning to add 16% or more capacity in the next year, down from 29% that had such plans six months ago.
Now, 73% of carriers say they either plan to not add capacity or to only add 5% or less. The dampened volume and rate expectations reported in the same survey have injected a lack of confidence in equipment investment.
“The possibility of a double dip, high volatility in the stock market, lack of political leadership, and uncertain regulatory and tax policies all play into this,” says Richard Mikes, TCP Partner and survey director.
Adds Lana Batts, TCP Partner: “Last quarter’s survey showed that carriers were split 50/50 as to whether profits were sufficient to justify new equipment. The continued poor economic news is likely to dampen new truck orders over the next year unless freight demand picks up.”
The carriers planning to add capacity has continued a shift toward company-owned equipment, and away from contractors almost every quarter since a year ago, from 13.5% to 26.2% currently. Likewise, fewer carriers (4.7%) indicate adding capacity by purchasing used trucks this quarter, likely reflecting the scarce supply, higher mileage on used trucks, and 20% to 30% higher prices.
Mikes says “It appears contractors still are a constraint, used equipment is scarce, and pressure is mounting to refresh fleets more than to grow fleets. TCP believes the truck replacement decisions are more complex than ever to weigh increasing repair costs against higher capital demands with new trucks and technology.”
Batts notes that “truckers who began to see freight moving are now questioning our firm about what direction to turn regarding equipment purchases since capacity is still tight in a 1% GDP growth reality.”
More information on truck life cycles is available at TCP’s website: www.transportcap.com/advisory.
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