Journal — Truck Gauge

How much does size matter?

Small and large carriers perceive business conditions in similar ways

 

It’s reasonable to assume that small and large trucking companies experience the market in substantially different ways given the gap in their resources. But based on what is admittedly a single snapshot – a survey of business conditions for December – those differences might not be so great after all.

In the Randall-Reilly MarketPulse survey for December, about 50 percent of senior executives at for-hire carriers said that business conditions were basically the same as the month before, while 22 percent said things were better. Also, nearly 75 percent said business would be better or much better in six months, adjusting for seasonality.

Bigger carriers worry more about drivers.

Surely, these numbers would vary significantly by carrier size, right? Not at all. The 151 participants in the latest survey split almost precisely between those with 10 to 99 power units and those with 100 and more. So what proportion of each group said November and December were basically the same? Under 100, it was 50.6 percent. Exactly 50 percent of the 100-plus group said the two months were the same. And 22.1 percent of smaller carriers and 21.7 percent of larger carriers said conditions were better or much better in December.

There was more variation in the question about expectations for six months from now, but not much. The most notable difference was that nearly 8 percent of smaller carriers expect conditions to be worse in six months, while fewer than 3 percent of larger carriers expect worsening business. On the other hand, about 75 percent of smaller carriers expect business to be better or much better compared to about 74 percent of larger carriers. Smaller and larger carriers also were in lockstep on whether to add or reduce employees and contractors.

Go beyond perceptions of general business conditions, however, and clear differences emerge. For example, while about half of both smaller and larger carriers plan to increase the size of their fleets during the next six months, nearly 38 percent of larger carriers plan to replace aging equipment, while fewer than 24 percent of smaller carriers plan to do so. Among smaller carriers, 22 percent plan no change in their fleets over the next six months, while fewer than 7 percent of larger carriers plan no changes.

Differences in the challenges smaller and larger carriers face are more striking. While driver availability is the No. 1 concern for both groups, there’s a 25-point gap, with 54 percent of larger carriers ranking it as their top worry, but only 29 percent of smaller carriers doing so. On the other hand, smaller carriers are far more worried about freight pricing, with 22 ranking it as No. 1 compared to only 7 percent of larger carriers. Smaller carriers also are more concerned about cash flow and fuel costs.

Perhaps these findings aren’t all that surprising, but it’s always reassuring when the data confirms what you already have presumed to be true.

Avery Untitled 1AVERY VISE is executive director, trucking research and analysis for Randall-Reilly and senior editor, industry analysis for Commercial Carrier Journal. E-mail avise@truckgauge.com

 

 

 

 

Some comments from the latest MarketPulse report

Check Untitled 1“Economic conditions continue to improve. Customer sales expectations continue to grow. Growth in all sectors of our current customer base has us reforecasting revenue expectations.”

“Look for a year very much like last, only with a bunch of new regulations to contend with. This will cause most to reexamine their price structure and make adjustments.”

“Rates are holding and improving, and business is staying strong. I look to a much improved 2012.”

“The driver shortage will drive rates up.”

To purchase the Randall-Reilly MarketPulse report, go to www.etrucker.com/store/research