Part 2 of 2

Rate Environment

After about a year of modest rate improvements, OTA’s survey results show rates holding steady (particularly in the inter-provincial market) but there is some softness creeping into those markets where volumes are weakest.

Over half of carriers reported the current rate environment as being “about the same.” But the percentage of carriers reporting the rate environment in the intra-Ontario market as decreasing rose 5 percent, up from 23 percent in 1Q12.

Forty-five percent of carriers described the southbound US rate environment as decreasing, up sharply from 28 percent in the first quarter survey.

Northbound rates continue to be strong with 43 percent OTA members reporting improvements, compared to 30 percent in the previous quarter.

Labour Costs Leading Operating Expenses

All major operating costs increased, with labour topping the list of expenses. Seventy-one percent of carriers reported an increase in driver wages, a significant increase over the 45 percent reported in 4Q11. Wage increases were typically in the 2-5 percent range, OTA said. Thirty-six percent of carriers reported increases in owner-operator compensation, also in the 2-5 percent range.

Ninety-five percent of survey respondents said that fuel costs have increased over the past year, with 67 percent reporting a 10 percent or higher increase.

Maintenance and tires increased, with 75 and 81 percent of respondents reporting increases.

Seventy-three percent of carriers reported higher tractor-trailer purchase prices, with 24 percent indicating price increases of 10 percent or more.

Sixty-seven percent of carriers said they are paying more for trailers, up from 45 percent six months ago.

Capacity Stays Tight

Carriers who reported capacity stayed level increased from 43 to 55 percent. However, OTA said, capacity remains “extremely tight as only 22 percent report they’re increased capacity.” That’s down from last quarter’s 27 percent and 33 percent average throughout 2011. Carriers planning to expand capacity came in at 28 percent.

No Drivers Needed, Retention Good

Don’t look for the industry to start adding drivers, OTA said. Carriers are continuing to be cautious – resistant even – about adding to their driver pool. That’s been the trend since mid-2010, OTA pointed out.

Forty-three percent said they plan to add more company drivers, down from 46 and 49 percent in the last two quarters. Fourty-four percent said they are planning to add more owner-operators, up four percent from last quarter. Fifty-two percent said they have no planned changes.

Retention looks good, as 75 percent of respondents reported a turnover rate of 20 percent or less.

Equipment

While 70 percent of carriers said they will increase the size of their tractor pool, those who said they have plans to add to their number of power units dropped 9 percent from 1Q12 – the lowest level since 4Q09. Plans to add trailers also dropped from 35 percent to 28, with the majority of respondents reporting no planned changes in trailer acquisitions.

Top 3 Issues to Watch For

Asked what are the top three industry issues/concerns, respondents said:

1. Capacity-rate situation
2. Fuel prices
3. Economy and Driver Shortage

OTA president David Bradley gives his take: