Shipping Rates Could Rise 6 Percent In 2012

Shipping Rates

The trucking industry may be in for a shock in 2012. It’s partially due to regulatory measures, upgraded technology tools and toll roads springing up all over interstate highways. While the new HOS rules don’t go into effect until 2013, economic concerns due to fuel prices and freight insurance will also play a part.

Federal Regulations Now a Factor in Trucking Costs

New federal regulations are likely to have a cumulative impact on trucking productivity, reducing the number of available drivers and placing constraints on capacity, said John Larkin, managing director and analyst at Stifel Nicolaus. John Larkin said prices could increase as much as 8% in coming years

Truckload rates are likely to rise anywhere from 2% to 6%t in 2012 and even as high as 8% in coming years, depending on the strength of the recovery and the effect of new truck safety regulations, according to a transportation analyst.

Less-than-truckload rates will rise more quickly in 2012 and beyond as well, Larkin said, because excess LTL capacity has been wrung out of the marketplace. He said LTL rates could rise in a range from as low as 3% to 10% annually.

There is quite a broad range of potential price increases that we think are possible going forward, Larkin told shippers at a Jan. 31 National Industrial Transportation League event. On a compound basis, we are talking about major moves in pricing.

Larkin focused on the potential cumulative impact of new truck driver work hours rules, onboard recorders, CSA, truck speed limiters and more stringent drug testing and medical exams that are slated or expected to be introduced in coming years.

Most of those requirements have the potential to reduce the number of drivers and truck productivity anywhere from 2% to 5%, Larkin said. More stringent drug tests and medical exams could cut the driver pool by 5 to 12 percent, he said.

If the regulations take more capacity away, or if the economy accelerates and generates more freight, we are basically going to have too much freight and not enough trucks to handle it, meaning price increases will accelerate, he said.

Some shippers are very nervous about running out of capacity and are beginning to exchange rate increases for capacity commitment going forward, Larkin said. In my opinion, we are just seeing the tip of the iceberg of this problem.