Saturday, November 7, 2009

US Freight Trucking Companies Circle Seeking An Opportunity

Depressed Volumes and Overcapacity May Cost Some Drayage Carriers Dear
Shipping News Feature

US – In common with haulage operators the world over the US truck operators are suffering in a reduced market after a prolonged period of growth and expansion. One mans problem is another’s opportunity however and several of the larger LTL fleets are casting avaricious eyes over the competition.

The way trucking is set up in the States means there are several, by European standards, massive players. With the economy of scale there is always however a down side, and in the case of freight haulage, especially in the less than trailer load sector, this is simply that overheads are notoriously difficult to reduce when times get tough.

This is not to say that major movers have not made valiant and timely efforts to reduce fleet and staff sizes and even cut depots where possible. The very basis of a transcontinental service for somewhere as vast as North America means that numerous intermittent terminals are essential to the continuous traffic flow required for transit times fast enough to suit customers’ needs.

In recent months we have seen YRC Worldwide turn in depressing figures, shares taking a 60% plus nosedive this time last week as they struggle to reschedule debt. The company recorded a 45% dip in revenue for Q3 year on year against 2008 figures, this despite commendable attempts to cut their costs and the support of the Teamsters union as reported here previously.

The latest Con-Way Freight report is similarly depressing. Two months ago they were withering regarding the assistance being given to YRC and intimated the market would be healthier without their Kansas based competitor.

Now the buzzards are circling the Californian giant with comments this week from North Carolina based carrier, Old Dominion Freight Line Incorporated CEO, David Congdon telling reporters the reason they had not sold off old equipment was because they were anticipating a “major consolidation event” i.e. either the collapse of one of the big boys or a merger between one or more competitors.

Sceptics would say, as with the competition, Old Dominion might well need to hang on to older equipment rather than borrow to invest in new, at a time when nobody in an undoubtedly overcrowded market could be said to be thriving.