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Analysis * USA - Consolidation expected as truckload rates continue down
Freight buyers need to balance price with supply to keep carriers in business
Newton,MA,USA -Logistics Management,David Hannon -18 Feb 2009: -- With demand and rates heading down, truckload carriers are struggling with their bottom lines and freight buyers and shippers need to continue to maintain their communication with carriers to ensure timely shipments. In fact, according to a recent survey, 21% of truckload carriers suggested that they were likely to consider liquidating in the coming six months... In its most recent financial filing, truckload carrier Knight Transportation, for example, said "a substantial number of small and mid-sized carriers have been forced into bankruptcy due to tight credit, high and volatile fuel prices and challenging industry pricing. We believe that this dynamic could eventually set the stage for tighter industry capacity"... In addition to lower rates, numerous truckload shippers are extending payment terms from 30 days to as many as 60 days, making it more difficult for carriers to fund their operations in a down market.... And for carriers, an increasing percentage of lines of credit are being dedicated to letters of credit for to insurance and other costs. Several carriers said that letters of credit have jumped by 50-100% the past couple of quarters vs. a year ago...
Labels: trucking industry analysis USA
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