Did you know?: The impact of capacity concerns on rate increases
March 1, 2007
With the global and North American economy decelerating, shipper concerns about capacity in trucking as well as every other mode are easing. In the late fall, our annual Transportation Buying Trends S...
With the global and North American economy decelerating, shipper concerns about capacity in trucking as well as every other mode are easing. In the late fall, our annual Transportation Buying Trends Survey, polled more than 700 shippers across Canada to gain a read on the depth of their concern about capacity by mode going into 2007. In the accompanying chart, a score of 5.0 designates balanced capacity. Any score below that indicates shipper perceptions of over capacity and any score above that indicates shipper perceptions of a shortage in capacity. As shown, TL trucking, rail and marine were all perceived to still have a slight shortage of capacity. But LTL trucking along with several other modes was perceived to be plagued with slightly excess capacity.
Easing capacity concerns among shippers is expected to place downward pressure on rates. Our previous year’s survey found enough lingering concern among shippers about a shortage of capacity that more than 40% of them reported accepting increases to their truck transportation services (exclusive of fuel surcharges) of more than 4%. A year later, only about 27%-28% of shippers responding to our survey and using truck transportation anticipate accepting such price hikes for 2007. The pattern is the same for the other modes.
Our annual Transportation Buying Trends Survey is conducted by our research division BIG Transportation Media Research in partnership with the Canadian Industrial Transportation Associa-tion and CITT.
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