Truck Capacity Remained Tight Through 2011
The good news for the transportation industry was that freight volumes increased in 2011. The bad news for shippers….truck capacity remained tight throughout 2011. According to industry analyst Donald Broughton of Avondale Partners, the trucking industry lost 325,000 trucks from 2007 to 2010, representing a whopping 18% of available capacity. What does this mean for the industry? Continued rate increases due to the capacity shortfall. One might surmise that this means higher profit margins for carriers but surprisingly that was not the case. Costs continue to outpace revenue growth for 97% of the for-hire carriers who have 20 trucks or fewer, according to the Stephens Truckload Index. What does this mean for 2012? The outlook for the industry is mixed. Carriers ARE buying new trucks and trailers again; Class 8 truck sales rose 46% in December, bringing the expected total to 312,000 units for 2011. Even small economic growth will squeeze capacity further, driving freight rates up even higher.