Rate increases likely in 2004

Oct. 31, 2003
In fact, its likely they will go up, given the drop in dry-van capacity and the combined effects of a driver wage increase and new hours-of-service rules

In fact, it’s likely they will go up, given the drop in dry-van capacity and the combined effects of a driver wage increase and new hours-of-service rules slated to go into effect January 4, 2004.

According to analyst firm Morgan Stanley, the balance of supply and demand has shifted in favor of demand. This alone could lead to firm prices, but other cost factors are lining up to drive carrier overhead higher.

Truckload carriers have struggled with driver recruitment over the last six months, and JB Hunt in particular may have signaled a trend in wage increases when it raised the per-mile rate of its lowest paid over-the-road drivers. Other carriers with low wage structures could be forced to follow suit.

Looking ahead to the implementation of the new hours-of-service rules, carriers are likely to lose some productivity that they would need to offset by adding drivers.

Fuel costs have been headed down, but won't offset increases in other areas. Shippers can expect more "rate discipline," especially when carriers announce their rate increases. www.morganstanley.com

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