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Irving, TX, United States, 2011/04/26 - Rising diesel prices, a driver shortage, complying with government regulations and maintaining aging fleets are significant concerns (NYSE: GE). NYSE: GE
Nearly three-quarters (71%) of trucking company executives surveyed by GE Capital, Transportation Finance expect business conditions to improve in 2011 but they are concerned about the impact of external and internal factors on their profit margins. The rising price of diesel, a nationwide shortage of drivers and the twin costs of complying with government regulations and maintaining their own aging fleets are all significant concerns.
When asked to identify their company’s top three business opportunities this year, a full 75% of respondents said they expect existing customers to ship increasing volumes of goods. The same number said they foresee an increasing rate environment. Sixty-eight percent of respondents expect to acquire new customers in 2011.
"As the economic expansion gains strength − although it’s clouded by recent global challenges − trucking companies are working hard to communicate with their shippers exactly what’s involved in moving their freight," said Dan Clark, president and general manager of GE Capital’s Transportation Finance business. "At the same time, shippers in the U.S. should try to understand the challenges that are impacting trucking executives’ business decisions."
Executives said their biggest challenge will be recruiting and hiring quality drivers, cited by 74% of survey respondents. Two other widespread concerns are the rising costs of diesel fuel (67%) and equipment parts and maintenance (41%). Additionally, they are concerned about the operational costs of complying with recent government regulations related to the hours that drivers may work and the reporting of safety, compliance, vehicle, driver and regulatory violations to the Federal Motor Carrier Safety Administration, which regulates the U.S. trucking industry.
While shipping capacity is tight, nearly half (48%) of survey respondents expect the number of competitors in their market to decrease while an additional 39% expect the competitive landscape to remain unchanged.
"In previous business cycles, the positive volume and rate conditions that we’re seeing now would’ve primed the market for new entrants," said Serena Tse, GE Capital, Americas senior vice president and transportation industry research manager. "Even though carriers have a tremendously positive outlook on business conditions and revenues, they’re sobered by concerns about profit margins."
Additional findings from the survey include the following:
• A significant portion of carriers intend to maintain their fleet size in 2011; however, 68% anticipate adding to their sleeper cab fleets and 70% adding to their trailer fleets in 2012.
• Forty-nine percent of carriers expect the average age of their fleets to decline in 2011, likely a result of replacing older equipment; 25% are planning to continue using their existing equipment. The aging is concentrated in the long-haul segment of the industry.
• Carriers are positive about having adequate access to capital this year, with 43% expecting it to increase and 46% expecting it to stay the same.
• Executives representing fleets with 1,000 or more trucks are generally more optimistic about business conditions than those with smaller fleets, likely due to the latter’s regional exposure.
• Those in the Southeast are the most positive about trucking conditions, while those in the Southwest are least optimistic.
GE Capital surveyed owners, general managers, chief financial offers and other industry executives in March 2011.
About GE Capital, Transportation Finance
With over 35 years of experience, GE Capital, Transportation Finance is the industry leader when it comes to the commercial trucking industry. We provide secured loans as well as operating and finance leases for heavy- and medium-duty commercial trucks and trailers through a variety of customer channels, including dealers, as well as direct to for-hire fleets and other end-users.
GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit gecapital.com or follow company news via Twitter (@GECapital).
GE (ge.com) is an advanced technology, services and finance company taking on the world’s toughest challenges. Dedicated to innovation in energy, health, transportation and infrastructure, GE operates in more than 100 countries and employs about 300,000 people worldwide.