US truck rates expected to continue increasing in 2011

THE US trucking industry is expected to achieve rate increases of more than five per cent this year on the back of shrinking capacity, upcoming regulatory changes and higher fuel expenses, according to industry analysis.


A report by UK's Transport Intelligence said that supply and demand appears to have balanced out this year, after an estimated 18 per cent of short-term truckload capacity and eight per cent of less-than-truckload capacity was removed from the market between 2006 and 2009.


It said Avondale Partners LLC estimated that 33,660 trucks in the first quarter of 2010 were taken out of service, followed by 11,000 trucks in the second quarter. It also said large motor carrier, JB Hunt, reduced its tractor base in its truckload, intermodal and dedicated divisions by 18.4 per cent between 2006 and 2010.


More capacity cuts are expected to follow regulatory changes in the industry, pushed down by the number of qualified drivers potentially falling by between five and 10 per cent.


The report also noted that diesel prices have risen by more than a fifth since September 2010, and analysts are predicting that diesel fuel prices will remain high for a while owing to political turmoil in the major oil producing regions of the Middle East and North Africa.


It cited figures from Transcore as showing that rates on the spot market for all types of trucks rose in January compared to the previous year, with dry van rates up by 14 per cent, flatbed rates up 11 per cent and refrigerated rates up six per cent.


The report said: "For 2011, the trucking companies will successfully raise rates as shippers are faced with little alternative but to accept these rates and pass them along to their customers. It appears the spot rate market will not be kind to customers either as oil prices continue to remain high.


"The use of rail and/or intermodal services may be a viable option to some shippers who are looking for potential cost savings however, these services are also increasing rates as well."
(Source:http://www.schednet.com)