utive and now senior vice president of
consulting and engineering for
Transplace, a Frisco, Texas-based
third-party logistics service provider,
says many of Transplace’s shipper customers who rebid their contracts in
the fourth quarter netted savings of 3
to 4 percent over their previous deals.
Cubitt says while carriers are feeling less pressure to cut rates than
they were two years ago, they still lack
the leverage to pass along significant
increases to shippers. “Demand is not
strong enough now to dramatically
change pricing patterns,” he says.
But the calm may not last long. As
Save Space and Increase Throughput.
the industry exits its traditionally weak
winter months and heads into the seasonally strong spring period, truckers are
tweaking their spreadsheets. Looming cost
pressures, ranging from compliance with a
slew of unfunded government mandates
to rising diesel costs to the need to replace
aging rigs, have fueled their determination
to push through price hikes. And there are
few who are willing to bet the carriers
won’t eventually get their way.
What’s more, shippers that feasted off
bargain-basement rates during the downturn may soon find themselves scrambling for trucks. If carriers are forced to
choose among customers, the smart
money says they’ll give preference to shippers that didn’t squeeze them when times
were tough.
Derek J. Leathers, COO of truckload
giant Werner Enterprises, says carriers like
Werner will allocate a large portion of
their fleet capacity to those shippers who
refrained from playing rate hardball after
the freight recession began in late 2006.
Werner’s asset allocation moves will come
at the “expense of shippers who were
unsupportive of our needs,” Leathers says,
adding that there are many businesses
that fall into that category.
As a result, some shippers may face a
Hobson’s choice of sorts: Pay up—perhaps
in a big way—or risk not having wheels.
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FEELING THE PRESSURE
For shippers, how bad could it get?
According to Noel Perry, managing director of Nashville, Ind.-based consultancy
FTR Associates, the rate picture over the
next three years will mirror the 2004–2006
cycle, the last period of sharply rising
prices. Perry says rate increases in 2011
will be slightly lower than the 2004 average
of 11 percent. The real pain, he predicts,
will be felt in 2012, when rates rise above
2005’s nosebleed levels of 17 percent.
Rates in 2013 should be higher than the
2006 average of 8 percent, Perry predicts.
Next June should mark the peak of the
upcoming cycle, he adds.
By contrast, Leathers says that Werner
projects a “flattish” economy that would
likely forestall double-digit rate hikes.
However, stronger-than-expected freight
demand could easily change the equation,
