Truckload rates will go up this year, but so will costs: Werner CEO
May 25, 2013
PRINCETON, N.J. -- Increasing demand and tightening capacity will combine to increase truckload rates by 1.5-2% this year, Derek Leathers, president and CEO of Werner Enterprises predicted when speaking at the recent ALK Transportation...
PRINCETON, N.J. — Increasing demand and tightening capacity will combine to increase truckload rates by 1.5-2% this year, Derek Leathers, president and CEO of Werner Enterprises predicted when speaking at the recent ALK Transportation Technology Summit.
He said demand has been increasing slowly but steadily, with a sharp uptick soon expected due to the colder than usual Spring conditions.
At the same time, truck capacity is shrinking as fleets struggle to re-invest in new equipment. The average age of fleet trucks sits at 6.6 years, he said. Overall US capacity is down 9.6% since 2008 and 17.6% from its high in 2006. Leathers pointed out impending changes to US hours-of-service rules, scheduled to take effect July 1, will further reduce capacity, essentially removing the equivalent of 75,000 trucks from the road.
Modest rate increases, Leathers said, will be offset by increasing costs, including fuel, wages, equipment and compliance. The key to improving profitability will be improving efficiencies and maximizing the benefits of technology, he told the Summit.
“The world we live in today is much more designed around how do we move less freight and how do we do it more efficiently?” Leathers said. He advised carriers to maximize opportunities to convert truck shipments to rail, specifically using double-stacked container on flat car (COFC). “Our job as logistics providers is to look every single day for increased opportunities to save our customers money,” he added. “If we don’t, someone else will.”
For more information on ALK’s Summit, visit www.alk.com/techsummit.
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