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ANALYSIS * USA - How Much More Capacity Needs to Exit the Trucking Industry?
* Analysis of: "Race to Bottom, As Huge Drops in Shipper Demand Parallel Equal or Greater Losses in Carrier Capacity", by John Schulz
New York,NY,USA -Intelligently Connected -May 13, 2009: -- The slump in U.S. freight demand has reached 34 months, according to my charts. It's the longest slump since trucking was deregulated in 1980, and really shows no signs of a turnaround yet... Begun in August of 2006, the slump continues as many carriers are reporting first-quarter losses as they continue to "feel for the bottom, " as one carrier executive said... Analyst, John G. Larkin, of Stifel Nicolaus, Baltimore, estimates that 18 percent of short-term capacity has left the market, with about 15 percent long-term reduction necessary. On LTL, the short-term figure is 8 percent, with 6 percent long-term needed. In rail and barge, 15 percent short-term capacity has left, but no long-term drop is needed, according to Larkin... Express has lost 12 percent short-term capacity, with 8 percent long-term needed. Ocean has lost 11 percent, but needs no long-term reduction in capacity, Larkin says... The wonder actually is that losses have not been worse in transportation. Except for troubled U.S. trucking giant YRC Worldwide, where losses are approaching $1.9 billion over the last two-plus years, other carriers' losses have been rather mild... Of course, most of the rest of the trucking industry is quietly hoping YRC's lenders get tough and perhaps cause a bankruptcy proceeding. At $9.4 billion, YRC has nearly a 27 percent market share in the LTL sector. Ironically, that may just be about the correct amount of overcapacity in that sector... (Photo: truckwallpapers)* Truckers slide on weak retail sales
New York,NY,USA -Associated Press/FORBES -13 May 2009: -- The trucking sector steered lower Wednesday with the broader market as the government revealed that retail sales - a key driver for the trucking industry - were weaker than expected last month... Investors are worried that the report means economic recovery could be further off than previously thought. The Commerce Department said earlier that retail sales fell by 0.4 percent in April, when economists expected them to be flat. Trucks haul about 70 percent of all retail and manufactured goods in the country, so when stores aren't selling or manufacturing plants aren't humming, trucks aren't moving... Overland Park, Kansas-based YRC said in a filing with the Securities and Exchange Commission that it needs to cut more costs and get more shipments in order to counteract the steep decline in revenue from the slumping economy. It warned it might be at risk of default if discussions with creditors aren't able to produce some sort of compromise...* As trucking goes, so goes the economy
NewYork,NY,USA -AP, by SAMANTHA BOMKAMP -13 May 2009: -- Looking for signs of economic recovery? Try counting the number of trucks on the road... Trucks carry almost all the manufactured and retail goods in the country — from refrigerators to lumber, detergents to toys... Many economists gauge how fast assembly lines are running, and how much consumers are buying, by the volume of goods hauled by trucks. But the most recent earnings reports show trucks are not carrying enough yet to indicate recovery is near... Slow consumer spending and stalled manufacturing activity took its toll on truckers in the first three months of the year. Nearly all major trucking companies reported lower first-quarter revenue and falling profits as the recession continued and shipping demand slid... Many cut back their fleets because of soft demand. Werner Enterprises Inc., for example, said it trimmed an additional 4 percent of its fleet of over 8,000 trucks in the first quarter. Many companies said more cuts will come... In the first quarter of 2009, about 480 trucking companies went under. That's less than 1 percent of the nation's total freight capacity, which still leaves too many trucks competing for fewer shipments, according to analyst Donald Broughton of investment bank Avondale Partners. More than 3,000 trucking companies went out of business last year — taking seven of every 100 trucks off the road...
Labels: trucking industry analysis USA
posted by Unknown @ 6:28 AM
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