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TRUCKING MARKET ANALYSIS * USA
Analyst: "...remains optimistic for the future (of the trucking industry) ..."
New York,NY,USA -Forbes, by SAMANTHA BOMKAMP -9 June 2008: -- As unprecedented fuel prices and still-weak demand drive capacity reductions and bankruptcies across the trucking industry, analysts suggest the market needs to shrink even more to improve the outlook for remaining players... The most recent trucker to fall victim was privately held Delanco, N.J.-based Jevic Transportation Inc., which shut down in late May after 27 years. The less-than-truckload carrier had about 1,500 employees and a fleet of 1,000 trucks... Stephens Inc. analyst Thom Albrecht predicts an additional four to six less-than-truckload carriers are currently at risk of going out of business. But Albrecht said in a recent note to clients that truckload carriers are even more exposed to soaring fuel costs and shaky credit markets, which will likely lead to more closures. Overcapacity is also a more significant issue for the truckload segment, he said... Industry reports suggest that twice the number of carriers went bankrupt in the first quarter of 2008 as compared with the same quarter a year earlier, and Wachovia Capital Markets analyst Justin B. Yagerman said that number will likely accelerate in the second quarter as fuel costs continue to rise. So far this year, bankruptcies have increased 143 percent over last year... This consolidation will help supply and demand come back into balance across the sector by handing off more freight to surviving companies, Yagerman said. As more carriers shut their doors, the outlook will brighten for the market as truckers are able to raise prices and regain a more competitive edge, he predicts... But Yagerman remains optimistic for the future, noting that a rising number of capacity cutbacks and bankruptcies will produce a stronger, better capitalized market...
Labels: trucking industry analysis USA
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