SPECIAL REPORT: Trucking failures continue at record pace

| 10/28/2008

Tuesday, Oct. 28, 2008 – The economic downward spiral has taken a deeper toll on the trucking industry than ever before with a record number of companies failing in the first three quarters of 2008.

Donald Broughton, a longtime trucking analyst and managing director of Avondale Partners LLC, reported that 785 companies with approximately 39,000 trucks, or 2.0 percent of the nation’s over-the-road heavy-duty trucks, closed their doors in the third quarter.

That brings the total number of trucks pulled off the road in 2008 to more than 127,000 trucks or 6.5 percent of the trucks in the industry.

“The first three quarters of 2008 have already established a new record for the amount of capacity pulled from production within a single year,” Broughton wrote in his third-quarter report on the industry.

“Never have more trucks been pulled off the road in a shorter period of time than in the first three quarters of this year.”

If the pace continues through the fourth quarter, Broughton says 2008 will be “the worst year to be a marginal trucker.”

But, he acknowledges, it could be the “best year to have survived.”

A total of 2,690 companies with five or more trucks went out of business between January and September. Broughton notes that more companies failed in the 2000-2001 trucking downturn, but they were smaller companies than are failing in 2008.

In 2000-2001, the average size of companies that failed was companies with between 20 and 35 trucks. This year, it’s companies with more than 45 trucks.

One saving grace in the third quarter, Broughton notes, was the steady decline in fuel prices. He speculates this may have saved many trucking companies that were on the brink of shutting down.

However, he reports an increase in the usage of “quick pay systems” and factoring.

“This suggests to us that the drop-off in the third quarter will prove to be only a lull in the storm and is not a sign that the worse is over,” he wrote in the report.

– By Jami Jones, senior editor