Last Year Proves Brutal to Trucking Firms, but Better Times Predicted

by Jan Cottingham  on Monday, May. 17, 2010 12:00 am  

The "real good numbers" aren't, however, to be seen in this year's list, except for those companies that rose through the ranks to higher spots.

YRC maintained its perch at No. 1, followed by FedEx Freight and J.B. Hunt Transport. Con-Way Freight fell to fifth place; however, that primarily was because, in an effort to compare apples to apples, Arkansas Business measured only its freight business - $2.6 billion last year - rather than all of Con-Way Inc., as had been done in previous years ($5 billion for Con-Way Inc. in 2008).

For the second straight year, UPS Freight held the No. 6 position, though income dropped 12 percent. The other companies showed little dramatic change in ranking.

In addition to revenue declines, the recession made its presence felt in big drops in the number of workers employed by the carriers. For example, YRC - which reported in 2009 having 49,000 employees in 400 other U.S. locations and more than 70 countries - reported only 36,000 now. ABF Freight, which had 11,167 workers in 2008, employs only 9,814 now.

Other cost-cutting measures included a decline in the number of trucks owned by the companies. AAA Cooper Transportation, for example, reported having 2,663 trucks in 2008 and 2,500 in 2009.

"In almost every case, with few exceptions, revenues are down and management has attempted with varying degrees of success to hold or even reduce expenses proportionate to those revenues going down," Kidd said. "And in some cases, they've been able to do it by laying off more people, sending drivers home.

"In most cases, the companies have not been able to sell their equipment to match that because the market for used trucks is simply gone," he said. "Up until about 2008 or maybe 2007, a lot of trucking companies were shipping their used trucks overseas to Vietnam, Brazil, India and some of the developing countries where there was a great demand for these trucks. Now that demand has dried up, so most of the trucks are simply sitting in the yards. And that's been a continual drain on capital for the trucking companies because in most cases they were still being financed."


First Indicators

Trucking in particular and transportation in general provide the first indicators of both economic downturns and rebounds.

Trucking, "by a period of three to five quarters" has "predicted every single recession," Broughton said. And "there has not been a recovery without it first being predicted by an increase, a surge in truck tonnage," he said.

"It's very encouraging," Broughton said of the recent uptick. "What's also encouraging is it's not just truck. ... This has been a recovery in which all freight modes are improving. In fact, domestic air freight, international air freight are back to pre-recession levels."



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