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SLOWDOWN & SHUT DOORS * USA - Downturn flattens transportation companies
High cost of diesel fuel opens floodgates for trucking firms to reduce size of fleets
Kansas,MO,USA -The Kansas City Business Journal, by Suzanna Stagemeyer -October 21, 2008: -- Inside a chain-link fence, the former headquarters of Copp Transportation Inc. is dark... Weeks ago, Copp, beaten down by surging fuel costs on top of a lengthening slowdown, shut its doors and surrendered equipment to creditors, lawyer Donald Bucher said. In September, a trio of creditors filed involuntary Chapter 7 bankruptcy against Copp in search of whatever value might be left... Copp is not alone. Near record-high numbers of trucking companies have been crushed in a downturn that’s stretched to nearly two years, and many expect more failures. The situation became more desperate, despite a respite in fuel prices, when the financial markets crashed in recent weeks and credit grew scarcer... According to an August report by Avondale Partners LLC, more than 1,900 trucking companies failed in the first half of the year — the highest failure level per quarter since the record highs in late 2000 and early 2001. But the current downturn has taken more trucks off the road; companies that fail average 45 trucks instead of the 20 to 35 from earlier in the decade. More than 88,000 trucks, or 4.5 percent of the nation’s capacity, were idled during the first half of this year. That compares with 117,000 trucks leaving the market in all of 2000, and 110,000 trucks leaving the market in all of 2001. The numbers don’t count the many shed from surviving companies’ fleets or companies with fewer than five trucks... Because of the weak value of the U.S. dollar, many idled trucks have been exported instead of just parked, eliminating capacity. And new carriers aren’t entering the market to offset the capacity losses. So any lift in demand would promptly place trucking companies in the pricing driver’s seat... But no one yet knows when that day might be...
Labels: transports shut doors
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