Contct us Tracking

Sparx Logistics

08/25/2014

Bankruptcies Depleting Already Tight U.S. Trucking Market

According to multiple media sources, increased operating costs caused by driver pay raises and federal regulations are forcing hundreds of U.S. trucking companies out of the business each quarter. As reported by Avondale Partners, which has tracked trucking bankruptcies since 1990, an estmated 335 carriers with 7,775 trucks went bust during Q3 2013, while 390 carriers with 10,650 tractors closed their doors in Q1 2014. Though the total for 2014 is far below that of 2008 (970 bankruptcies vs. 3.065), the overall number has increased steadily since 2012.

 

Donald Broughton, Chief Market Analyst at Avondale Partners, attributes the rise to tougher truck safety regulations, noting that many bankrupt truckers were ordered by federal authorities to install electronic logging devices to better enforce hours of service rules. Those companies saw truck utilization drop, as drivers with fewer miles made less money and quit, and the carriers were forced to hire new drivers — at higher wages — to replace them, Broughton said.


The biggest challenge facing truckload carriers remains recruiting and retaining drivers, which is also the leading strain on over-the-road truck capacity. According to GE Capital Transportation Finance, though more and more trucking companies hope to expand, higher vehicle costs and the lack of available drivers pose major roadblocks. Also, when large trucking companies like U.S. Xpress Enterprises are raising driver pay by as much as 13%, how can smaller competitors keep pace?

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