Despite a lingering recession, weak freight volumes and fuel prices that were rising once again, the number of trucking companies with five or more power units that failed in the second quarter of this year was the lowest in more than two years, according to a leading industry analyst.
The latest failures report from Donald Broughton, senior research analyst for Avondale Partners, estimates that 370 carriers failed in the second quarter, down sharply from both the first quarter of this year and the second quarter of 2008. The average size of failed companies was 18 trucks. Both the number of failures and the average size were at their lowest level since the first quarter of 2007, Broughton reports.
The number of trucks being pulled from the road is less than 15 percent of last year’s second-quarter rate, Broughton says. He contended that the principal reason that carriers are remaining in business despite unfavorable market conditions is that creditors are allowing otherwise insolvent companies to stay in business so that they don’t have to take back used equipment that is experiencing what might be its worst pricing in history. And without a surge in failures, freight pricing will not improve as it must to return the industry to health, Broughton says.
