Friday, November 20, 2009

Small Hauliers Fade Away In Crisis As Larger Truck Operators Struggle

“Adapt or Die” Doesn’t Work in the Haulage Industry
Shipping News Feature

UK – US – A survey by the Handy Shipping Guide over the past month has revealed an alarming trend for individual owner operators to simply move out of the industry, as it faces one of the toughest times ever. Whilst other trades can at least change strategy, farmers cultivate alternative produce or look to tourism, manufacturers simply lay off staff and reduce production, hauliers and drayage contractors usually have to sit and suffer.

For many “one man band” truckers the pressure is simply proving too much. Many of the smaller operators who featured in the guide index are retiring from the industry and confirm the fact that there is still oversupply of equipment and manpower in a drastically reduced field. The situation appears the same both in the UK and USA where the struggle for the less than truckload (LTL) market is at its peak. We have reported here earlier on the problems faced by the giant US corporations like Con-Way, YRC and Werner Enterprises.

The haulage industry in both countries can be roughly divided into three groups, all of whom have different needs and strategies to survive the recession. With many major companies restructuring debt they are waiting each other out to see if any of them folds first to decrease competition for less and less work.

Medium sized companies have the problem of persuading creditors that foreclosure will produce no winners. Where loans are outstanding for equipment there is a good case for debtors to simply sit and wait, second hand trucks are not worth reclaiming in a depressed market where their value to a lessor cannot be realised.

The smallest of operators tend to simply leave the industry if work is not forthcoming. Either that or they lay up their trucks, working when something is available or taking another part time job if possible.

All the while these three groups agree to rates simply too low to be sustainable in the long term. We are witnessing a painful struggle which is likely to produce a slimmed down industry in the short, and possibly, long term. With debt in the entire global shipping industry estimated at $350 billion by some analysts there will be a long hard road ahead for the small trucker and his bigger brothers.

Image courtesy of Werner Enterprises.