What do carrier closures mean for trucking in 2020?
With a handful of closures dating back to the final weeks of December, this year is likely to see an uptick in trucking companies shutting their doors for good, according to experts.
When GDS Express shutdown and put 75 drivers out of work at the tail end of 2019, it set a dangerous precedent for where 2020 could be headed.
In an interview with WKSU, director of editorial and research for Freight Waves Kevin Hill said, “We just have this amount of overcapacity that needs to be corrected, and part of that is trucking companies contracting, selling away nonproductive assets, or for those unlucky few, basically declaring bankruptcy or closing up shop.”
Hill also added that anticipated more closures moving forward, with a market balance finally coming around mid-2020.
From December 2019 to the end of January 2020, the industry saw companies close in Akron, New York, Colorado, Texas, and Georgia, with amounted to approximately 486 truck drivers losing their jobs.
To add insult to injury, some big-hitters in the industry also ceased operations throughout 2019, including Falcon Transport, New England Motor Freight, and Celadon. Among only those three massive companies, just under 5000 truck driving jobs were lost.
Additionally, while large companies may take slight hits throughout the year, the economy may not be as gracious to smaller companies. This ultimately may lead to continued closures, according to John Kearney, president and CEO of Advanced Training Systems.
"The economy for the small companies is not good," Kearney said. "Large companies are going to hurt, but they'll be able to pull through.”
Adding to Hill’s aforementioned analysis, company failures were seemingly due to the “stellar year the industry had in 2018,” per Fox Business.
In complete contrast to 2018, last year saw prices drive down as demand began to wane, in turn making it difficult for smaller companies to operate. This ultimately played a big part in as many as 640 trucking carriers filing for bankruptcy in the first half of 2019, according to Broughton Capital LLC.
Nonetheless, there’s been a plethora of disagreement on how companies as a whole will react to the market throughout 2020.
While many believe that carriers will continue to struggle this year, others believe that a boom in the industry is on the cusp as we’re in the midst of a “healthy economy, freight demand, and new trade agreement,” according to the president of Jetco Delivery Brian Fielkow.
“There’s a scenario where it could be as robust, or more, than 2018,” Fielkow said. “Even if freight volumes don’t improve from 2019, it’s going to be less trucks chasing the freight.”
However, only being a month into the year, the industry won’t know what to expect for at least a couple of more months.
So, where do you think the industry is headed in 2020? Let us know in the comments or on social media!
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