US recovery could lead to rate increases

According to US consultancy FTR, North America is currently experiencing a phase of “extremely tight” freight capacity.

The company expects the tight environment for shippers to moderate slightly in the coming months – unless freight growth picks up as a result of a strengthening economy. 

“With any additional improvement in freight tonnage, capacity could hit a critical stage forcing shippers to incur added purchased transportation costs,” said Jonathan Starks, FTR’s Director of Transportation Analysis.

“Shippers learned that it doesn’t take much for a market that is operating with slim excess capacity to jump into the driver’s seat for rate increases,” he added. “The strong spot market rate increases seen during January, February, and March highlighted how quickly the environment can change on them.

“Just one year ago, several industry sources were showing that general rate increases were actually below year-ago levels; shippers were getting rate reductions. A fairly static economy allowed that to take place, but the introduction of new Hours-of-Service (HOS) rules for drivers back in July 2013 changed that.”

According to Starks, further economic acceleration in 2014 could mean shippers will not be able to get the rate reductions that they achieved last year. “FTR expects to see general rate increases of between 4-5 per cent for the year for truckload with national rate figures hitting 6% or higher versus last year during the middle of 2014.”

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