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OPINION Consultant * USA - Overcapacity hurts trucking
The declining overall economy and freight demand both are starting to find a bottom, but overcapacity remains a major concern
Birmingham,Ala.,USA -eTrucker, by Dean Smallwood -1 July 2009: - ... Freight may be the backbone of the trucking industry, but with industrial production at its worst since the first quarter of 1975 and other significant continuing issues – including demand and overcapacity – trucking is experiencing its worst environment since the 1980s, Eric Starks, president of FTR Associates said. Many economic indicators – including the ISM Manufacturing Index, the Chicago Fed National Activity Index, employment figures, the Consumer Price Index, durable goods orders, retail sales, inventory levels and housing starts – reveal mixed signals and are near historic lows, but some of these indicate stability and the possibility of improvement in the next few business quarters, he said... Credit is available, but banks are reluctant to lend to trucking, Starks said. Another phenomenon contributing to overcapacity is what Starks called “zombie truckers” – fleets kept alive by banks that would rather keep them afloat instead of repossessing their equipment. Regarding the used market, many companies are upside down on their trucks, and replacement cycles have been extended because of better equipment and fewer miles being put on it, which Starks said will lead to no measureable prebuy of less-expensive equipment prior to Jan. 1, 2010, when tighter emissions regulations mandated by the U.S. Environmental Protection Agency go into effect... Labels: trucking industry opinions
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