TORONTO — The Ontario Trucking Association’s (OTA) 1Q12 survey found that confidence among carriers rebounded after a dip in 2011.

The increase in optimism occurred at the same time growth in freight volume is muted, OTA said, suggesting a modest but steady economic outlook and continued capacity control.

Sixty-seven percent of carriers said they were optimistic about the industry’s next three months — up from 55 percent in 2011’s final quarter.That’s the highest level since reversing a trend for three straight quarters where carriers expressed pessimism about the short-term outlook, OTA noted.

Although 67 percent was the highest percentage since 2Q11, it was still well down from the second and third quarters of 2010 when carrier optimism peaked at 73 percent.

The number of carriers who said they were pessimistic about the industry’s prospects remained relatively flat, rising modestly from 5 percent to 8 percent.

Freight Volumes Muted

Fewer carriers reported that freight volumes were improving in all areas of domestic and international transport over the last three months. Last quarter, 36 percent of respondents indicated that intra-Ontario freight volumes were improving; only 24 percent of respondents reported improvements this quarter.

The percentage of respondents that said freight volumes are the same rose from 57 percent to 67 percent.

Inter-provincially, the number of carriers who said freight volumes are improving plunged to 21 percent from 39 percent in the last quarter and a massive drop from the 60 percent high in 2Q11. Seventy-two percent said inter-provincial volumes stayed the same — a significant increase over the 49 percent who said the same thing 4Q11.The large majority of carriers who said southbound US volumes remained unchanged held steady at 65 percent, the exact same reported last quarter. Fourteen percent said southbound US lanes had increased, down 7 points from three months ago.

The percentage reporting an improvement in the northbound US market dropped from 35 percent to 30 percent.

Carriers are cautiously anticipating a rebound, OTA said. Even though most carriers indicated freight volumes would remain relatively similar in all categories when asked of their expectations:

• 38 percent did say they thought things would improve intra-Ontario (up from 33 percent last quarter)
• 40 percent said the same for inter-provincial (up from 33 percent)
• and for northbound US, 34 percent expected an improvement (up from 28 percent).
  
  

The percentage of those who expected southbound US volumes to improve was 26 percent, exactly matching the same rate in the last quarter.

Rates Improve Slighty Inter-Provincially

Rates were about the same in each geographic market, according to most respondents. Although, OTA notes, there were improvements reported by some carriers inter-provincially — 28 percent compared to 19 percent last quarter.

While the number of carriers who indicated improvement on southbound rates was steady quarter-to-quarter, there was some softening in northbound rates, with the rate of carriers reporting an improvement falling from 44 percent to 30 percent from the previous quarter.

Accessorial and Fuel Surcharges

After a 14-point dip last quarter from 3Q11 in the number of carriers that are applying accessorial charges, the percentage of carriers who said they are successfully applying a surcharge to most of their customers rebounded from 27 percent to 43 percent.
The percentage of carriers who indicated customers are paying a reasonable fuel surcharge fell slightly from the last quarter, but stayed in-line with the 80-90 percent range since 2008.

Labour Largest Operating Cost

Costs are increasing, too. According to the survey, carriers continue to face increases across the board. Nearly 90 percent reported fuel cost increases over the past year, with 44 percent reporting increases of 10 percent or higher.
The costs of maintenance and tires are both on the rise with about 95 and 90 percent of respondents, respectively, reporting increases.

Labour costs — the largest component of operating costs — are also on the upswing, with 67 percent of carriers reporting increases in driver wages, most of which being in the 2-5 percent range.

Employee benefits costs are under upward pressure with 65 percent of respondents reporting increases of between 2 percent and 15 percent.

Seventy-two percent of carriers reported higher tractor-trailer purchase prices, with 25 percent indicating price increases of 10 percent or more.

Capacity

Forty-six percent of carriers expect capacity in their segment to stay level, but tight, over the next six months. The percentage of those who expect capacity to decrease or increase was relatively split 30 percent and 24 percent, respectively. OTA noted that while the percentage of those who expect capacity to decrease is consistent with the last two quarters, there are 13 percent fewer carriers who predict capacity expansion compared to 2Q11.

Drivers/Owner-Operators

Forty-six percent of respondents said they plan to add more company drivers while 50 percent said they have no planned changes. Similarly, 40 percent said they plan to add more owner-operators, down from the 51 percent who indicated the same thing 4Q11.

Regulatory Concerns

OTA said that for the first time, the survey asked carriers what top three major industry issues and/or concerns they were watching closely.

Changing U.S. hour-of-service came in at number one, the process of mandating electronic onboard recorders was number two, and the CSA rating system came in at number three.

Carriers also noted the driver shortage, capacity, increased border security, “trivialities” during roadside inspections, and retesting drivers over 65 in Ontario. Fuel and insurance costs also made the list, as dod empty trailer moves in the U.S.

For more from the survey, visit the OTA.