WINDSOR, CO — Carriers are saying that since rates and accessorial charges are yet to improve, they need to look at increasing productivity to raise their bottom lines. Problem is, HOS rules are still working against them, according to the fourth-quarter survey by Transport Capital Partners (TCP).
TCP advises on transportation mergers, acquisitions and capital sourcing, operations, and long-term strategy.
Seventy-eight percent of carriers reported those new rules having some impact on productivity. Forty-one percent expect the impact will be less than five percent. But an almost equal number (37 percent) say the new regulations will have more than a-five-percent impact.
But almost six months after the changes were made, 16 percent of carriers still have not determined the impact.
Carriers Expect Wages to Climb
With a loss in productivity under the new HOS regulations, it would seem to follow that driver wages would also fall. However, capacity increases and the need to find more drivers will inevitably push carriers to raise wages.
The survey found that seventy-two percent of carriers expect to raise wages, but modestly (from one to five percent). And expectations are not even across the board: 81 percent of larger carriers think wages will increase by one to five percent, but only 50 percent of smaller carriers agree. Thirty-five percent of smaller carriers think wages will increase between six to 10 percent, but only 14 percent of larger carriers agree.
“We surmise the pressure of unseated trucks and higher turnover levels may be driving some carriers to higher pay increases,” said Steven Dutro, TCP Partner.
What’s more, carriers are also taking a second look at their labor policies. Right now, less than 30 percent of carriers hire inexperienced entry-level drivers. But whereas only 15 percent of smaller carriers are likely to spend the time, money and effort to develop entry-level drivers, twice as many larger carriers (33 percent) are more likely to do so.
Only a third of carriers presently use entry-level drivers, but the survey found that slightly over half of all carriers expect to soon be training and using inexperienced, entry-level drivers.
While a slight majority of carriers are interested in using entry-level drivers, many carriers (84 percent) are willing to support allowing younger, properly trained drivers to enter the driving pool.
“We believe this means they support other carriers hiring and training younger drivers so that they can then poach them later,” comments Richard Mikes, TCP Partner.
Buyers Remain Conservative
Carriers who want to leave the industry in the next six months remained at 11 percent, the same as last quarter but down slightly from 13 percent a year ago. However, 15 percent of smaller carriers are thinking about leaving the industry in the next six months, if revenues do not improve. This number contrasts with 10 percent of larger carriers.
Those carriers wishing to sell their company in the next 18 months dropped to 11 percent – the lowest it has ever been. And the overall number of carriers wishing to buy a company in the next 12 months has dropped slighted from 47 percent to 42 percent, with buyers concentrated among the larger carriers at 50 percent vs. 27 percent.
“TCP experience shows pricing continues to be a focal point, with buyers remaining conservative and hesitant to pay ‘blue sky’ except for carriers with excellent operations or significant strategic benefits,” Mikes said.