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ANALYSTS * USA - Bankruptcies, Independents, Owner-Operators and U.S. Trucking Capacity
* Resilience of trucking sector offers hope on the U.S. economy
USA -Trading Markets (London,UK) -March 25, 2008: -- The resilience of trucking stocks in the face of higher oil prices and slowing growth may mark the beginning of a rebound in a sector that is often viewed as a good barometer on the future prospects of the economy, analysts at Avondale Partners and JPMorgan said Tuesday... But broker BB&T Capital Markets remains downbeat about the prospects for the industry, lowering its earnings estimates in large part due to the negative impact of rising fuel prices... The Dow Jones Transportation Average was up 44 points at 4,905 in midday trading Tuesday. The index has gained 7.4% since the end of 2007, compared with a 7.9% decline in the S&P 500 Index over the same time... Avondale Partners said some of the higher quality truckload stocks it covers, such as J.B. Hunt Transport Services, Knight Transportation Inc and Werner Enterprises Inc, have been establishing a solid trading pattern of slightly higher lows and slightly higher highs for the last five months... The broker said the trucking industry has also suffered from a bout of unpredictable weather in the first three months of the year, which has seen an uptick in accidents and insurance claims and caused labor adjustment issues... "In addition, these carriers continue to be hindered by weak volumes due to the weaker U.S. economy," the broker said... (Photo by Zbigniew Bzdak/The Chicago Tribune -March 25, 2008Truck driver Tim Fischer from Carlisle, Ind., eats breakfast at the Flying J truck stop in Lake Station, Ind., on March 18, 2008. This is his only meal of the day since he can't afford more than one. Truckers are facing hard times as a result of dwindling freight shipments in the shrinking economy, lower rates due to competition from other truckers and the increasing cost of diesel fuel)* ...That is, if there are any survivors. At $4 a gallon diesel, that is not an unreasonable assumption...
Austin,TX,USA -GLG News (sm): Energy & Industrials, by John Schulz -March 25, 2008: -- ... The large trucking companies... Those are the guys who have it lucky. They can more or less pass on their fuel costs through a sliding scale of fuel surcharges, which helps them recoup nearly all their fuel costs... Not so lucky are the legion of independent drivers, who are at the mercy of tight-fisted customers as to whether they will get their fuel costs back in revenue. Independent drivers are a difficult lot to gauge. That's why they are called independents. There really isn't a hard number of them, although they generally are estimated to consist of perhaps 1.5 million to 2 million drivers... It's not an insignificant number. ATA chief economist Bob Costello predicts more trucking company failures, and independents leaving the market. "It's only going to get worse," Costello... While that's a tragedy for these independents and their families, there is a brighter side. In the macro sense, this does mean capacity is exiting the market place. This should be good for large TL carriers such as Swift, Schneider National, Werner Enterprises and J.B. Hunt, among others. Trucking rates have been stuck in neutral basically since this downturn started in August of 2006. There is some hope that the second half of this year will start to see a rebound in freight demand. If that happens -- and it's a big if, in my book -- the combination of less capacity and more freight should be better pricing for the survivors... (Photo by Zbigniew Bzdak/Chicago Tribune/March 25, 2008: Truck driver Tim Fischer from Carlisle, Ind., worries about the state of the industry in the economic downturn. "If things don't change, I'll be under in four to five months," he predicts) Labels: trucking industry analysis USA
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