A slumping economy combined with overzealous equipment purchasing on behalf of carriers can have a measurable impact on capacity concerns among shippers and considerable downward pressure on rates. Ba...
A slumping economy combined with overzealous equipment purchasing on behalf of carriers can have a measurable impact on capacity concerns among shippers and considerable downward pressure on rates. Back in 2006 Canadian shippers believed capacity to be tight enough in most modes that they were willing to grant sizeable rate increases. Many motor carriers beefed up their fleet sizes from 2006 to 2008, adding to the excess capacity now believed by shippers to plague every mode. As a result, shippers clearly have had the upper hand in contract negotiations and will continue to do so while capacity remains abundant. Are the seeds being sown, however, for another capacity crunch, at least in the trucking sector? Canadian motor carriers have significantly reduced their purchases of Class 8 trucks during the freight recession. Last year will go down as the worst year for Class 8 truck sales since the early 90s. And only 31% of motor carriers participating in our annual research were planning to purchase new equipment in 2010. Looking at capacity additions among Canadian carriers on a regional basis as well as by size of company, it’s not surprising that motor carriers in western Canada are more willing to add capacity than those in central and eastern Canada. Large carriers also seem, in general, to have fared better in weathering the economic storm and are three times as likely to be adding to their fleet size than small carriers, who have been financially decimated by the recession and also face much greater difficulty in securing financing for new equipment purchases. For more information about capacity, rates, surcharges, freight volumes and more, see our Inside the Numbers annual report, available for just $99 on Trucknews.com .
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