Fuel prices help save trucking companies on the brink

| Thursday, February 19, 2009

The substantial drop in fuel prices through the final three months of 2008 are credited, by at least one analyst, with saving trucking companies that were “running on fumes.”

A quarterly report on the trucking company failures by industry analyst Donald Broughton reflected that the number of companies going out of business in the fourth quarter of 2008 dropped significantly.

Broughton reported that 375 companies went out of business in the final months of 2008. That is down from 785 companies that closed up shop in the third quarter. The fourth-quarter failures bring the total number of companies that went out of business in 2008 to 3,065 with more than 137,650 trucks shut down.

He reports that lower fuel prices allowed “critically ill” companies to “run on fumes.”

Because fuel prices were so much lower than this past summer, Broughton said that meant companies weren’t spending as much on fuel, giving them more cash on hand and helping them stay in business.

And even though fuel prices still hover at their lowest levels in recent history, Broughton reported that most carriers should still be collecting right around 20 cents per mile on a fuel surcharge.

Broughton predicts that when fuel prices inevitably begin to go back up, so will the number of trucking companies that fail.

If there were any bright spot in his prediction, it would be that as more companies fail there will be fewer trucks to haul the available freight. That will put surviving companies in the position to be able to negotiate better rates.

– By Jami Jones, senior editor
jami_jones@landlinemag.com

 

Comments