| TranSystems--When truckload carrier contracts come up for renewal this year, one report has them seeking 5-10% rate increases. The mode of transportation (the largest in the United States, generating approximately $300 billion in revenues annually) likely reached equilibrium between supply and demand in January, and rates will continue to rise as capacity tightens. The danger for the truckload segment is the price of oil—if it continues to spike, even 10% rate increases won’t keep carriers from getting hurt. Unlike the LTL segment, which can spread its fuel surcharges to multiple customers, TL has just one customer per truck, and it seems unlikely that customers will allow for a 20% price hike to cover fuel costs. Although, in 2008 when oil did hit $147 a barrel, many shippers experienced a fuel surcharge bill that was in the %20 range (20% increase in the fuel surcharge – not the total cost of transportation). Read more! |
