The worsening truck driver shortage combined with an increase in carrier and owner-operator bankruptcies threatens to sap freight capacity from an already tight truckload shipping market as freight demand rises, reports the Journal Of Commerce.
As operating costs such as driver pay rise and tighter US federal hours of service regulations cut into productivity, an increased number of companies are shutting their doors each quarter, reports the magazine. Although most of these companies are small, collectively they are as large as a multi-billion-dollar U.S. motor carrier.
In the first quarter of 2014, for instance, 390 carriers with 10,650 tractors shut down in the US, according to Avondale Partners. In the 2013 fourth quarter, 335 carriers with 7,775 trucks exited the industry.
“Their combined fleet was bigger than that of Werner Enterprises, the third-largest U.S. truckload carrier, which operates 7,035 tractors,” explains JOC.
And although last year’s bankruptcies were still far below the 3,065 trucking failures Avondale Partners reported for 2008, it’s still nearly double the 500 bankruptcies in 2012, representing 21,000 trucks.
Additionally, smaller carriers have difficulty competing with larger competitors with greater scale and capability to absorb rising costs. (On average, the 390 carriers that Avondale says went bankrupt in the first quarter had only about 27 trucks each).
As a result, smaller carriers have to compete on specialization, such as making pickups at customer docks as late as midnight, said Rick Lockwood, Jr., president of DTI. “Our persona has to be a little bit different than our larger competitors. In some cases, we’re really delivering same-day service within our small geographic footprint.”
Lenders, as well, are getting more stringent with ‘marginal’ trucking companies, leading to more companies on the brink that have to shut their doors.
Avondale insists the number of bankruptcy under-represents the total loss of truck capacity to shippers each quarter, as many owner-operators frustrated by rising costs simply park their trucks without filing for bankruptcy protection.