Summary
The current slump in ground freight demand is taking its toll on some independent truckers, pinched between high fuel costs and slack demand. One truck repossession company reports it more than doubled the number of trucks it repossessed in 2007 compared with 2006. But at least one transportation consultant believes this is a good thing because "the invisible hand of Adam Smith" means that eventually this lessening of capacity will mean higher trucking rates for the survivors.
Analysis
In virtually every other trucking recession there has been one mega-bankruptcy. The most notable recently was the sudden closing of Consolidated Freightways, a $3 billion LTL carrier, that shuttered on Labor Day of 2002.
The current ground freight slump, which dates to about August of 2006, has been exceptional in that there has not been any large closing of a major carrier in the $300 million-plus range. Numerous small, "Mom-and-Pop" carriers have closed but nothing along the likes of a CF or an A-P-A Transport as in past downturns.
That does not mean, however, that some capacity is not leaving the industry--in the wake of near $4 diesel, high fixed costs and slackening demand.
This story, which pulls heavily from an Associated Press story on independent truckers, notes that capacity is leaving the industry--mostly in the manner of one-truck independent owner-operators who are parking their vehicles either for good or until times improve.
The current conditions have been good for at least one trucking-related concern. Nassau Asset Management, a repossession firm, noted that it has more than doubled the number of truck repossessions in 2007 from 2006.
Independent truckers make up about 9 percent of the nation's 3.4 million long-haul drivers, according to the Labor Department.
As usual, the CB radios (and now the Internet chat rooms devoted to independent truckers) are full of chatter of a "nationwide truck strike" to protest their current conditions.
I feel for these drivers, to be sure. But the chances of an effective national truck strike are about the same as Phyllis Diller being named Miss America. By nature, independent truckers are disorganized and are a difficult lot to manage. Besides, any freight that they would stop hauling would be quickly snatched up by rival carriers.
One transportation consultant, Gary Girotti, is quoted as saying the shrinkage of independent truckers eventually should mean higher trucking rates for the surviving entities.
If, as common wisdom holds, the trucking market does not pick up until late this year or early 2009, those survivors will be in dire need of healthy truck rate increases by that time.
