Fleet Failures Increase Despite Higher Freight Demand
Despite improved freight demand, ongoing cost and regulatory pressures are to blame for the highest level of fleet failures in more than three years, according to Avondale Partners analyst Donald Broughton.
A total of 335 fleets with 7,775 trucks failed during the fourth quarter, the highest since the third quarter of 2010 and more than double the 150 carriers and 2,515 trucks in the final quarter of 2012.
“In the past, we haven’t had a period where demand is growing and capacity is coming out of the industry at meaningful levels,” Broughton said. “If that continues, it could be very powerful for pricing for truckload carriers.”
If demand and capacity trends continue, truckload pricing may rise later this year by “strong single digits,” he said, suggesting 6 to 8 percent.
That would be a sharp increase from the 1.8 percent pace shown for the past 12 months in his report.
Broughton also emphasized a push toward continued pay increases.
Wage increases in 2012 and 2013 “have brought wages back to more competitive levels relative to other industries,” Broughton said. “Expect pay increases in 2014 to be more geared towards ‘gain sharing,'” the report said, referring to “bonus pay related to fuel economy, utilization, safety and service.”
