TORONTO – The latest Ontario Trucking Association (OTA) quarterly survey of the pulse of the trucking industry in Ontario shows a higher degree of uncertainty amongst carriers heading into the last quarter of the year, no doubt reflecting the growing storm clouds over the global economic outlook. The number of carriers who reported they were unsure about the industry’s prospects increased sharply from to 26% last quarter to 40% in the 4Q11 survey – the highest level since the second quarter of 2008. A slimmer majority (55%) of responding carriers were optimistic about the industry’s overall prospects for the next three months, compared to 64% in the 3Q11 survey. This is the third consecutive quarterly decline in the percentage of carriers who said they were optimistic heading into the current quarter and the lowest recorded level since the beginning of 2010. However, the number of carriers who said they were pessimistic about the industry’s prospects also fell from 9% to 5%.
Freight volumes appear to be holding their own. Fifty-seven per cent of respondents indicated that intra-Ontario freight volumes are about the same as volumes three months ago (down 5 percentage points), while 36% of respondents indicated volumes had improved, up 4 percentage points from 3Q11. In the interprovincial market, with 49% of respondents reported freight volumes had stayed the same (the same as the previous quarter) and 39% indicated volumes had improved, down 5 percentage points from last quarter.
Carriers reported some modest improvement in the southbound US market. Twenty-one per cent reported that southbound volumes were improving, compared to 19% in 3Q11. Only 14% said southbound US volumes had decreased compared to three months ago, down 17 percentage points from last quarter. And, 65% said volumes were about the same compared to 50% in the previous quarter.
In the northbound US market, which has been relatively strong in recent years 58% of respondents said volumes were about the same, up from 37%, while the percentage reporting an improvement in volumes declined to 35 from 51%.
Rates also appear to be holding up – the majority of respondents reported that rates were “about the same” in each of the geographic markets – although some softening was reported in terms of those who felt the rate environment was improving. An exception to this was the southbound US rate environment where a growing proportion (21% vs 14% in 3Q11) said things were improving.
All Costs Increasing for Carriers
Carriers are facing across the board increases in all major operating costs compared to last year: 64% reported fuel cost increases of more than 10% over the past year. The costs of maintenance and tires are both on the rise with 86% and 80% of respondents, respectively, reporting increases. Labour costs — the largest component of operating cost — are also on the upswing, with 88% of carriers reporting increases in driver wages, most of which (33%) being in the 2% range. Employee benefits costs are under upward pressure with 53% of respondents reporting increases of between 2% and 5%. Similarly, 31% report increases in owner-operator compensation between 2% and 5%. In terms of the purchase price of equipment, 52% said that increases in tractor purchase prices have increased between 2% and 10% higher compared to a year ago and 26% report trailer increases are have increased by 26%
Loaded Miles/Length of Haul
The majority of respondents (55%) report that loaded miles are staying the same, up from 47% in 3Q11. A smaller proportion report loaded miles increasing (27% in 4Q11 vs 45% in 3Q11) and somewhat more carriers (18% vs 8%) say loaded miles are decreasing. Seventy-two per cent reported that the average length of haul is staying the same, while 18 per cent reported it is increasing — up 3 percentage points since last quarter’s survey. Similar findings were reported for the average length of haul.
Carriers appear to want to keep a lid on capacity. Fifty per cent of respondents expect capacity to stay about the same over the next six months, up from 33% in 3Q11, while 29% expect capacity to decrease (same as last quarter). Twenty-one per cent expect capacity to increase, down from 37% in 3Q11.
Carriers continue to be split on whether they should add to their driver pool or not. Forty-nine per cent of respondents said they plan to add more company drivers while 44% said they have no planned changes to the net number of drivers. Similarly, 51% said they plan to add more owner-operators, while 47% said they plan no net change.
Further indication of the carriers’ desire to manage capacity is evident in the responses regarding equipment — 73% said they plan no new additions to their fleet of tractors. With regard to trailers, 56% plan no net change in the number of trailers in their fleet and 38% say they plan to add more trailers (net) over the next three months.
Most shippers appear willing to accept fuel surcharges, as 91% of respondents reported that customers are paying a reasonable fuel surcharge, up 6 percentage points from last quarter. A lot more carriers said they are charging all of the customers accessorial changes (46% vs 31%) compared to the last quarterly survey. And, only 2% — the lowest level since the survey was started in 2008 – said they are not using accessorial charges. In addition, a higher proportion 33% vs 27%) said they are collecting accessorial charges from all of their customers. The vast majority 75% said shippers are taking about the same length of time to pay their freight bills compared to the previous quarter, but the percentage reporting that it is taking their shippers longer to pay dropped from 33% in 3Q11 to 23% in the current quarter.
55 carriers participated in the survey which was conducted electronically in October 2011.