Highly leveraged because of expansion or renovation programs, some truckstop owners are experiencing severe cash flow problems triggered by sky-high fuel prices at the wholesale level. When they pay their fuel bill, there's little cash left for anything else.
"The building programs have simply exhausted their sources of available cash in the form of short-term loans," says TTP Publisher Tom Stanford. "They have nowhere to turn, no financial means for riding out the storm."
Indeed, says Stanford, some independent truckstops may be forced into bankruptcy if fuel prices stay in the stratosphere much longer.
"It's the worst situation I've ever seen," says Stanford, who has closely followed the truckstop industry for more than 35 years. "In previous crises, margins remained high enough to cushion the effect on cash flow. But in today's economy, fuel margins have shrunk to pennies."
Some of the larger financial institutions that cater to the truckstop/travel plaza industry have put a temporary hold on large loans earmarked for expansion, Stanford says.
While not in immediate danger of bankruptcy, even the larger truckstop chains are cutting back on non-essential spending programs. In some instances, they have put a hold on all new construction and remodeling. One major chain is said to be considering some layoffs to reduce labor costs.