Summary
More evidence that shippers are re-evaluating the cost and vale of operating a private fleet. As common carrier rates continue to decline, private fleet becomes harder to cost justify.
Analysis
Danial Bearth, in this weeks Transport Topics, correctly points out that shippers are often looking at transportation when squeezing out costs. This is evident as shippers continue to press for rate reductions with their for hire carriers, and now private fleets have come under the microscope.
In the face of a declining rate market, it has become very difficult to justify the cost of operating and maintaining a private fleet. Those same companies that grew their private fleet back in 2003 through 2007, are now looking to reverse course and draw down their fleets.
This effects the market is a couple of ways. First it increases the glut of late model used equipment that is for sale. Secondly it is helping remove some excess capacity form the market. The size and growth of the nation's private fleets may prove to be a lagging indicator of the economy's general health. Shipper's will not be motivated to increase the use of private fleet until demand increases to the point that capacity becomes an issue and/or carrier rates escalate.
The question remains as to when will demand start to increase?
