According to Avondale Partners analyst Donald Broughton, the number of trucking companies who had no choice but to file bankruptcy last quarter has significantly decreased when compared to previous years, showing that the trucking industry is recovering.
Trucking took a hit from 2007 through 2010 due to the following: Demand, fuel and price being extraordinarily volatile, as well as “credit becoming impossible to find for some fleets and difficult to afford when it was available to others” (http://insurancenewsnet.com/article.aspx?id=297906).
For these reasons, over 8,500 carriers went out of business, taking over 325,000 trucks off the road, a decrease of 12% availability according to the report. This 12% decrease was in large part due to 12 specific carriers, who decreased their fleets by a combined total of 10,454 trucks.
Last year’s 3rd quarter led to 330 truck companies and 10,685 trucks filing bankruptcy while this year, only 85 companies and about 1,470 trucks were shut down, a near 90% decrease, Avondale Partners notes.
Looking further, the 3rd quarter proved significantly more successful than this year’s 2nd quarter, when 240 carriers and 3,955 trucks exited the industry.
So why the improvement in statistics all of a sudden? Rising rates due to tighter capacity restraints play a large hand, proving to be of notable profit to carriers.
Since the start of 2010 through today, “truckload rates have increased about 11%, excluding fuel surcharges,” the report notes, with an estimated 3-5% truckload and up to 10% LTL rate increase per year.
Broughton explains that “shippers are willing to pay higher prices because they have recognized the increasing labor, fuel, depreciation, maintenance and insurance costs that fleets face” and offered hope in saying “If [fleets] made it this far through the tough times, then they can make it through the better times” (http://insurancenewsnet.com/article.aspx?id=297906).
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