The most important change is the economy, and whether the new administration and Congress can build consumer confidence and get the credit markets moving again. In 2009, the trucking industry will suffer unless two things improve: liquidity and the availability of credit. Many carriers are in distress over the lack of both, and we’ve already seen many fall prey to bankruptcy. Distressed companies need cash and financing to reorganize, and it has become increasingly difficult for companies in distress, including those in Chapter 11 situations, to get financing. Unless the government’s measures to get the banks lending again are successful, credit markets will remain tight in 2009.
The liquidity of trucking companies will be a great challenge until at least early 2010, as carriers will see downward rate pressure in a buyer’s market. And liquidity challenges will continue regardless of any federal stimulus packages for consumers, who buy the goods that keep our transportation companies in business, because it will likely take several months for the impact of an economic stimulus package to trickle down. However, freight volumes should begin to rally once that happens, perhaps before the end of the year.
A steady decline in the cost of diesel will likely continue, to the mid-$2-per-gallon range by mid-2009, which will help ease operating costs and trucking companies’ ability to turn a profit. In addition, after several years of continuous growth, the domestic truck fleet decreased by about 5 percent in 2008. Several thousands of over-the-highway power units are being exported every month because a weak dollar throughout most of the year created a market overseas for these units.
The trucking industry needs an improved economy, lower fuel costs and tighter capacity. Once these factors kick in, the industry should boom and, with luck, we will have a much better outlook for next year.