Load Volume Soars 39%… Feeling the Pinch Yet?

03/10/2011

Load Volume Soars 39%… Feeling the Pinch Yet?

According to information released today by TransCore, a key provider of transportation technology, freight volumes are up 39% in February over January’s already record highs! Feb 2011 was 64% higher than load volume in Feb 2010. If you haven’t felt the pinch, you’re going to soon.

Not Captain Crunch, it’s “Capacity Crunch”
Capacity crunch is industry speak meaning there are fewer trucks available for hire. If you think of capacity as a pool of motor carriers in our country, the crunch occurs when the pool becomes dimished for any reason. For example, the annual produce season affects the capacity pool, soaking up many for hire truckers from March to August as they clamber to haul the higher paying produce loads shifting up the east coast. The difference this year? The crunch started so much earlier (beg of Feb) due to other circumstances in our industry paired with the economic recovery. Other sources call it a driver shortage, but that has more to do with the problem trucking companies are having hiring and affording qualified drivers with clean records.

Load-to-Truck Ratio
February’s load-to-truck ratio increased by 62% over January and a whopping 94% over Feb 2010! With freight this abundant, trucking companies are enjoying the pendulum swinging into their favor.Honestly, you can understand (a little) why they are rejoicing. So little is going in their favor these days, what with the rising cost of fuel, increased regulations (CSA), and pending legislation attacks (hours of service and electronic onboard recorders). At least they are able to fill their trucks and keep rolling, unlike the last few years when the number of loads fell drastically. The problem lies with unethical carriers that will essentially auction off their truck to the highest bidder, throwing relationships and customer service to the wind.

What’s Next?
Don’t get me wrong, even the most ethical motor carriers are raising prices. You don’t have to be an economics major to know what happens to price when supply doesn’t fulfill demand AND the cost of fuel spikes. Price goes up! A recent article in USA Today featuring an analyst from R.W. Baird predicted rates to increase up by 5% in 2011, the largest increase in 6 years! There are steps you can take as a shipper to win the fight for capacity, and we encourage and welcome you to comment here, share your experiences, and feel free to connect with us on our facebook and we’ll be happy to answer additional questions.