subject: Trucking Prices Expected to Rise in 2011 [print this page] Trucking Prices Expected to Rise in 2011 Trucking Prices Expected to Rise in 2011
Trucking capacity has been in short supply since last spring when inventories were being reestablished. Demand decreased over the next couple of months because consumers were not spending, but that has since turned around. Trucking companies have been enjoying a long-awaited increase in demand for the last half of 2010, but equipment and capacity are already tight and are expected to slowly get worse as demand continues to grow.
Michael White, Maersk Line's President for North America said, "It depends on how the volumes come back after the Chinese New Year. There's potential for increased pressure in the second half of the year." Trucking, railway, air, and ocean shipping companies generally agree that a slow and steady rise is preferable over a sharp increase that sends them scrambling for supplies and drivers. Rising truck prices could start to put pressure on the capacities of other modes of transport, namely railway.
Ocean freight, truck and rail carriers alike are not looking to be hindered by increasing demand as they have been in the past. They're keeping a close eye and managing tonnage using strict guidelines so that they'll be better able to maintain flexibility as the demand rises and falls. This, however, could lead to volatile pricing as seemingly minor fluctuations in demand affect costs.
Trucking companies are preparing for the future by investing in new trucks to replace their old ones and looking for higher quality drivers. A driver shortage may be in the future, but they don't want to hire drivers that have bounced around from company to company, leaving a trail of failure and disappointment in their wake. Trucking companies are doing what ocean shipping companies have modeled and tightening up on procedures. They may be buying new trucks to replace old ones, but they're not necessarily investing in more trucks than they had before.
Christopher Lofgren, President/CEO of Schneider National explains that, "There's a discipline coming into the industry that says, You can't build the church for Easter Sunday'. How we think about pricing is going to have to change. We've probably got one more cycle of pain to go through before we realize we have to move out of this very schizophrenic relationship we're in."
Truck, rail, air, and ocean shipping companies are all hoping to get out from under the burden of volatility that the wavering demand puts on them. Ocean freight, truck freight, and all other modes of transport are becoming more aware of the long-term management benefits of balancing their operations to ensure profits without rocking that pricing boat too hard.
