The trucking business - slimming down

[Dreammaker]

Sounds like bad news/good news.

Consultant Batts, who formerly was president of the Truckload Carriers Association and a top official of the American Trucking Associations, says traditionally the winners in trucking are those with a history of operating ratios of 95 or better, a solid balance sheet, and a diversified customer base.

But a proper mindset is helpful too. "The best attitude to keep is 'This too shall pass,'" says Batts. "If you're in the 'woe-is-me' category, you're always looking backwards. You cannot look forward in that mindset."

Batts recently performed a survey of more than 100 TL carriers and found that 21 percent were considering liquidating their fleets within six months.

Additionally, 23 percent said they would consider a sale of their fleets within 18 months. This is on top of the additional double-digit capacity that has come out of the market due to closings, voluntary cutbacks, and repossessions in the market the past two years.

Considering that since 2000, some 22 percent of the Top 100 carriers already have closed, 8 percent have been bought out and 2 percent have fallen to below Top-100 status; meaning that nearly one-third of the Top 100 carriers are out of business in less than nine years.

"I think when all is said and done, we're going to witness some well-known companies fade away in one way or another," Batts predicts. And that's bad news for shippers who are currently enjoying bargain rates that may not survive an economic recovery. That's because of constraints on capacity.

"The survivors are saying that they can make more money raising rates than buying another truck," Batts says.

"That's why there's going to be prosperity for the survivors. The strong will be stronger and the big will be bigger."

For the whole article: Top 50 Trucking Companies: Only the Strong will survive - 4/1/2009 - Logistics Management

[ATeam]

Thank you, Dreammaker, for the link to this interesting, informative and thorough article. It is well worth the read.