The rest of the world is starting to sit up and notice how the trucking industry is struggling.
Two major papers, the St. Louis Post-Dispatch and the Boston Herald, are among those that have taken a look at trucking's hard times
and its relation to the rest of the economy in recent weeks.
The Dec. 3 Herald pointed out financial obstacles faced by owner-operators and how such impediments likely portend an economic downturn in the near future.
A trucking analyst for A.G. Edwards and Sons in St. Louis told the paper a record number of haulers are failing to make it.
"What is rather ominous is that with all of these failures [1,300 U.S. companies with 10 or more vehicles between July and September]," the analyst said, "the remaining truckers should be seeing more business. They're not, though, because the economy is going soft."
Another 30,000 to 40,000 owner-operators with less than 10 trucks have gone out of business this year, as well, according to the analyst.
Frank Salvoni, who has a fuel-hauling business in Natick, Mass., says in the article that he's been able to raise his rates 7% but that doesn't completely cover higher diesel prices, which have risen 64% since last January, according to the Herald.
"The guys I supply are in the fuel business," Salvoni told the paper, "so they understand what's happening. I've also saved a lot of money by getting a contract price for fuel because I have a tank to store it in. Smaller truckers who have to buy it at the pump can't get that break, though."
The A.G. Edwards analyst predicted at least six more months of tough sledding for the trucking industry, but told the Herald "the eventual survivors and those that invest in them will clean up later on."
The St. Louis Post-Dispatch cited the same A.G. Edwards figures, starting out its article with the lead, "If you're looking for another indication of where the economy is headed, take a peek at the trucking industry."
Donald Broughton, a transportation analyst with A.G. Edwards, told the paper that he was surprised by the number. Although he had expected that the failure rate of companies with more than five trucks to easily surpass last quarter's record of 745, his prediction of 1,000 bankrupties was exceeded by the actual figures.
Anyone in the trucking industry can point to high fuel costs, rising insurance rates and higher driver wages as reasons, and the paper talks about them, as well. But Broughton told the paper that there has also been a drop in freight shipments, with the trucking industry moving 6.8 percent less tonnage from July through September than it moved during the same period last year.
Bob Costello, chief economist for the American Trucking Association, told the Post-Dispatch that he expects bankruptcies to keep rising through the second quarter of 2001.
"It's like spending on a credit card," he told the paper. "You spend and spend and it will take a while before you realize you've overspent and file for bankruptcy."
The Post Dispatch told its readers, "The outlook is reason to pause, given that trucking companies are on the front line of the economy."
While the increase in the number of trucking company failures supports a predicted economic slowdown, experts told the paper it doesn't necessarily mean we're headed for a recession. The economy is still growing, just at a slower rate, said Mario DeRose, a fixed income analyst with Edward Jones in St. Louis. Meanwhile, inflation, absent oil prices, is up just 2.5 percent for the year, he added.