Trucking Freight Rates Rising With Economy

As the U.S. economy recovers and the demand for trucks increases, I have had to formulate the following language to share with my customers:

I’m putting my thoughts to paper to explain how truck availability (capacity) is changing and how that will affect freight rates.

As you know, the United States and most of the world along with it, experienced a deep economic recession over the last several years.  During that period, hundreds of trucking companies downsized or ceased to do business and removed hundreds of thousands of trucks from the freight transportation system.  Many of these trucks were scrapped or exported to other countries and are not readily available to be put back in service.  As freight was limited, freight rates also fell in keeping with the laws of supply and demand.

Now, as economic conditions are improving, the demand for freight transportation is beginning to see a lot of pressure.  This is true in Laredo and all around the United States and Mexico.  As manufacturing increases globally, oil demand, and thus fuel prices are also rising.

The trucking industry has always had difficulty getting enough qualified drivers, and that problem is expected to get worse as the baby boomer generation reaches retirement.  One more factor that is expected to compound the driver shortage problem is the U.S. government’s new CSA safety rating program set to launch in fall 2010.  CSA will rate drivers’ and carriers’ safety performance much like a credit rating that follows an individual or business.  Carriers will become more selective about which drivers they hire and many drivers will be purged from the qualified driver pool.  The industry will be battling the capacity problem on several fronts, for several years.

Following are a few links to Internet articles on this subject: 

As a Landstar agent, I do not raise our rates in order to arbitrarily increase our profit line.  We only raise our rates when we have difficulty getting capacity for our customers.  During the recent recession, you noticed that our rates decreased because capacity was in surplus.  Now, the economic conditions have swung in the other direction.  In order to continue to supply you with quality capacity and service, the time has come for us to adjust our rates.

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