May 20, 2010 - 9 years ago
By Supply Post
Seventy-two per cent of the carriers who completed the OTA’s second quarter 2010 Business e-Pulse Survey said they were optimistic about the trucking industry’s overall prospects for the next three months – up a significant 20 percentage points over the 1Q10 survey. The survey was conducted electronically between April 5th and April 20th, 2010. Only 10% of respondents indicated they were pessimistic. The proportion of carriers who are optimistic about the industry is now at its highest level since OTA began conducting the quarterly survey of its members in the third quarter of 2008. At that time only 17% of carriers were optimistic about the industry’s prospects. Since 2Q09, the share of carriers who were optimistic about the industry has grown steadily in each of the five quarters since then from 27% to 72%. It was only in the third quarter of last year that the number of optimists outweighed the number of pessimists for the first time. It wasn’t until the first quarter of this year that the optimists were in the majority, so the level of optimism evident in the most recent survey is very impressive.
Most of the optimism appears to be based on a revival of the domestic economy where 58% and 65% of the survey respondents said that intra-Ontario and inter-provincial freight volumes where on the rise compared to three months ago. This is well up from 29% and 26%, respectively in the previous quarter.
The laggard continues to be US freight – particularly freight heading to the United States, where only 26% of respondents said they have seen volume improvement over the past three months and 57% said that volumes were about the same. Even so, these results are an improvement compared to the previous eight quarters’ results. Relatively speaking, northbound freight volumes continue – as they have for some time – to show some strength with 44% of respondents saying that volumes are up over three months ago, while 49% said there had been no change. The carriers’ six month outlook was stronger.
The proportion of carriers saying that loaded miles are increasing jumped to 35% from 16% in the previous quarterly survey. Sixty-seven per cent said the average length of haul is basically the same.
With regard to the rate environment, the mood of the carriers suggests that rates are currently stable with modest upside for improvement over the next six months. The survey also indicates that most carriers remain satisfied with fuel surcharges and the collection of accessorial charges. Also, encouraging is that a lower proportion of carriers (18%) say that it is taking longer for shippers to pay their bills than at any time since the survey has been undertaken. The proportion reporting longer payment terms peaked at 48% in 3Q09 and was still 39% in the 1Q10 survey. About a third (35%) of carriers indicated that their banks were changing their practices with regard to asset based lending/borrowing, particularly with respect to interline arrangements (59%) and owner-operators (35%).
In terms of capacity 82% responded that capacity either decreased or stayed the same in the last quarter. 72% anticipate that capacity will either decrease or stay the same over the next six months. A third of respondents said their customers were locking in capacity by lengthening the terms of contracts, compared to 16% in the last quarter.
Forty per cent of the carriers said they were planning to add to their net compliment of company drivers over the next three months, compared to 27% last quarter. The majority – 57% -- said they would be keeping the size of their driver pool the same. Sixty-five percent said they would maintain the current number of owner-operators they are contracted with; 33% said they would be increasing the net number of owner-operators they hire, compared to 27% last quarter. Similar numbers were recorded for anticipated purchases of tractors and trailers, indicating that despite the signs of increased optimism and growth in volume, carriers are being cautious in terms of adding to their fleets.