Print Page   |   Contact Us   |   Sign In   |   Join NASSTRAC
Industry News
Blog Home All Blogs
Search all posts for:   

 

View all (52) posts »
 

Analysts Report Capacity At Equilibrium

Posted By Administration, Thursday, June 21, 2012
Updated: Tuesday, August 27, 2013

Analysts at the NASSTRAC Shippers Conference & Transportation Expo last month reported demand and supply are at equilibrium. With the economy growing moderately at 2% this status should remain unchanged for now.


"There is a structural element for capacity being tight. The fleet age is at a generational high. The size of fleet is shrinking one to 2% over the course of next two years," said Benjamin Hartford of Robert W. Baird & Co. This has implications to all freight since truckload represents 70 percent of total domestic freight spend.


According to Derek Leathers, President and COO, Werner Enterprises' 19% - 20% of the truckload capacity that existed in 2007 has left the market. Companies that are merging or acquiring others are openly saying they are going to sell equipment because it's too old. Trucks are leaving the market. On the other side, demand is down 17% bringing the supply and demand of the market to equilibrium. Now as economy shows signs of life, capacity is getting tight.


Yet, there are no signs of capacity coming online any time soon. Equipment costs have increased 35% to 40% and access to capital is difficult. It is estimated that 200,000 to 220,000 trucks are needed annually to keep the U.S. trucking fleet constant. Combining that with the average age of today's fleet at 7 years only increases the number of units needed.


John Barnes of RBC Capital Markets made these highlighted observations per each mode:

  • Truckload: Volumes are stable. Capacity is tight. Supply and demand at equilibrium. Carriers are not adding capacity. The driver shortage is worsening. If the GDP grows faster than its modest 2% capacity will be further constricted.
  • LTL: There is ample capacity. Public fleets could handle 10% - 20% more today.
  • Intermodal: Abundant capacity. Expect continued market share gain from truckload.
  • Air: Ample capacity. Demand sluggish. Tonnage down 1.5% year-over-year.
  • Ocean: Too much capacity.

This post has not been tagged.

Permalink | Comments (0)
 
Membership Management Software Powered by YourMembership  ::  Legal