Average freight rates continue to rise, according to the First Quarter Business Expectations Survey by Transport Capital Partners, with larger carriers reporting smaller increases than the smaller companies.
Most of the rate increases were less than 5 percent. The larger carriers reported seeing more rate increases in the 1-5 percent range than did smaller carriers. Smaller carriers reported more rate increases in the 5-15 percent range.
Rates are not the complete picture, however. Seventy percent of the respondents said fuel surcharges are not covering costs.
“This was up substantially from the first quarter last year when half said they were not,” said Richard Mikes, TCP partner. “This is not surprising given that during the time period the DOE reported fuel prices increasing on a daily basis and up 70 plus cents over the year.” Carriers with over $ 25 million in revenue by a slightly bigger percentage reported that fuel costs are out stripping fuel surcharge recoveries.
The other side of line-haul rates are accessorials. Eighty percent of the respondents said that accessorials would be on the table as well as rates in their renegotiations with shippers.
“Not surprisingly, the largest category targeted by carriers was fuel surcharges. which rose from 13 percent saying this would be a topic in August 2010, to 30 percent saying it would be now,” said Mikes.
Detention times were the second most mentioned accessorial by 15 percent of the carriers. With equipment utilization tight and increased emphasis on compliance with hours of service, shippers are going to have to pay for tying up equipment and drivers. According to TCP, carriers more likely to assign trucks to shippers who will work with them to minimize turn around times and improve asset utilization.
The TCP survey also found that 40 percent of the carriers report that broker freight services account for less than 5 percent of their revenues and that 35 percent report 6-15 percent of their revenues from brokers. Only a quarter of carriers rely on brokers for over 16 percent of their revenues.
“This reflects the traditional reliance on brokers by smaller carriers for return hauls as their outbound length of haul increases and improved technology such as electronic load boards on cell phones, and laptops are available,” said TCP partner Lana Batts. She noted that the survey shows that carriers under $25 million in revenue size use more brokers. Both Mikes and Batts envision a potential shift over time to a more direct connection between carriers, shippers and brokers with the advent of real time electronic bidding on loads by pre-qualified carriers.
For more information: www.transportationcap.com
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