There have been so many companies trying to get into the expedite business over the past several years we're now starting to reach the saturation point. When business starts to flatten out, the first ones to start having trouble are the small companies with 30-some trucks, one guy working in dispatch and maybe one salesman that takes care of a handfull of accounts. Their drivers have a lot of built-in deadhead miles, and if they don't have plenty of runs they can't make any profit at all especially at today's fuel costs. These companies live hand to mouth anyway, and the first thing that starts to drag them down is their receivables. When their customers start dragging out their payments to 50-60 days instead of 15-30 days their cash flow dries up, they can't pay their bills on time and the drivers begin to notice their checks might be a day or two late or a trip not paid that should have been. Then they lose a key account or two to a competitor that offers cheap rates and their drivers start to see fewer runs. Next thing you know, their drivers leave and they don't have the trucks to service their accounts properly so they lose them to the more financially sound competition that is ever-more agressive in these conditions. Once this downward spiral starts they have few assets to begin with and very little to liquidate, so they declare bankruptcy and go out of business leaving their employees, drivers and creditors holding the bag. We will probably see some of these smaller companies go under this year, and it's just as well that this economic Darwinism takes its course. The smart drivers will recognize these warning signs and hopefully not get left high and dry.
The larger, more stable companies like the big four that everybody knows will survive and continue to do well. They have a more diversified national account base and don't depend so much on American auto manufacturers. Their fleet numbers may be reduced, and cargo vans will be the first to feel the pinch since there's a glut of them in today's market. The business-savvy drivers like the well managed companies will be able to tighten their belts and survive the slower months now just as they have done in the past.
Things might seem slow right now, and it's mainly due to the troubles of the Big 3 and the consequences their suppliers are having. A lot of these suppliers are also moving production to Mexico, but that's another discussion for another thread. This is not like a full-blown recession, so if we all hang tough and work smart this too shall pass.
