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Home Carrier Outlook

Asset operators: Revenues recover, but what about costs?

by Tony Mulvey
Thursday, August 27, 2020
in Carrier Outlook, Special Topic, Trucking
Reading Time: 1min read
0

(Photo: FreightWaves / Jim Allen)

The business environment for asset-based trucking carriers continues to improve: Empty mile percentages are lower and revenue per driver per week is up. There are headwinds blowing against asset operators, though: The rack-to-retail diesel fuel spread is no longer doing much work on the carriers’ income statements, and operating expenses are stubbornly high.

 

We think the outlook for asset-based carriers materially improves in the fourth quarter of the year when significant portions of their contract freight portfolio will be renegotiated and repriced higher, given historically tight spot capacity, a lack of a viable intermodal safety valve, and the number of 3PLs giving back contracted freight.

 

One test for carriers will be how well they were able to manage through an exceptionally volatile year, keep their drivers happy and motivated, and resist excessive wage increases as they rebuild operating margins. Mounting evidence for a strengthening industrial recovery suggests that flatbed demand will continue to improve (flatbed tender rejections are above 7% after spending most of April, May and June below 5%) and that carriers with industrial exposure should be able to further balance their networks.

 

We’re watching ocean import volumes and intermodal rates for further clues to the underlying strength of trucking demand.

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Tags: asset-based carrierslogistic researchrevenue per driver per weektransportation research
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Tony Mulvey

Research Associate, FreightWaves

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