Tough times

| November 17, 2008

Financial woes are being felt throughout the trucking industry.

Times are tough for the trucking industry and not getting easier in the near future, according to American Trucking Associations President and CEO Bill Graves.

Graves gave a keynote speech at the group’s annual conference in October, where he discussed the difficulties facing the industry. “Things are not going well for our industry,” he said, “and we face some awfully tough times in the near future.”

With stock market crisis, worldwide unrest and fuel prices close to all-time highs, Graves said, the near-term outlook seems bleak.

“The economic slowdown, highlighted by the housing and automotive industries, has had a devastating impact on our tonnage, and the recent financial meltdown on Wall Street severely impacts the credit markets you rely on for the capital to run your businesses,” he told conference attendees. “All of this has contributed to a collapse in consumer confidence, driving to the sidelines the principle partners we so desperately need for economic recovery.”

Graves’ speech also followed closely on the heels of a report released by ATA stating that driver turnover and company payrolls were down industry-wide for the second quarter of 2008. At 85 percent, driver turnover was down 18 points from the first quarter and was the lowest it had been since 1998′s first quarter. The report said the payroll reductions “were minor, but fairly broad based.”

ATA Chief Economist Bob Costello said the lower turnover rate actually points to a negative for the industry and is a result of the economic downturn.

“Turnover is the lowest in 10 years for large fleets because motor carriers are shrinking their fleet size,” he said. “There isn’t a big push to hire additional drivers, and as a result, drivers are not jumping company to company as much as they did. However, turnover is down because the economy is very weak and truck freight is lackluster, not because of a fundamental change in the driver market.”

Celadon Vice President of Operations Brett Terchila said the company was finding positives in the lower turnover rate. “It’s given us the opportunity to really partner more with drivers that are willing to help us drive our business well, the guys that are going to want to get good fuel economy and really promote safe driving.”

Still, the economy is having its impact on Celadon, and Terchila said the company had to “do some consolidation where it was necessary, and where it was possible to do more with less, we’ve been forced to do that in some cases.”

For Con-way Truckload, the internal impacts have not been as heavily felt, and President Herb Schmidt said the company actually had added 300 trucks since the beginning of 2008. But the overall effect on the industry is one that has not left the company untouched.

“It’s still a very challenging environment as far as transportation’s concerned, for us and everyone,” Schmidt said. “Regardless of the [market] bailout, I think the recovery process is going to be a long and tenuous one. I suspect that the transportation companies that are heavily in debt, that are over-capitalized, will still struggle for the next six to nine months. I would be surprised if a lot don’t go out of business.”

ATA’s Graves did point out that there are some actions industry leaders and drivers can take to offset the negative impacts of the economy. He encouraged planning, teamwork and greater knowledge of the nation’s infrastructure, as well as being involved with upcoming elections and legislative issues like the pending discussion on highway reauthorization.
- Misty Bell

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