Top Trucking Executives Eye 2010 Rebound

Trucking companies that are surviving in today's treacherous economic environment will be well positioned to prosper when traffic begins to rebound next year, according to carrier and shipper executives meeting in Anaheim, Calif.

"It will take six to eight months before we get out of this mess," David L. Howland, vice president-rail at Schneider National, told the annual transportation conference sponsored by the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association.

The prosperous motor carriers of tomorrow will be those who paid attention to their margins during the economic recession and "didn't haul freight just to haul freight," said Michael J. Bruns, president of Comtrak Logistics.

Executives in the over-the-road and harbor drayage sectors believe that the industry has hit bottom. Traffic volume will remain soft and rates will be depressed until at least mid-year 2010.

By late summer, however, international and domestic freight volumes will pick up and rates will be on the rise. Banks, which have been lenient with struggling motor carriers because they did not want to be stuck with hundreds of devalued trucks, will demand pay-back, and many poorly-capitalized motor carriers will go bankrupt.

A driver shortage could develop as workers laid off during the recession leave the industry. The price of labor will be bid up when the rebound occurs.

Also, since orders for new trucks will be depressed for two straight years, a capacity crunch could materialize, said Kenneth C. Lund, vice president, support operations, at the Lund Company.

Harbor drayage companies will face the additional costs of purchasing new vehicles required under the clean-truck programs in Los Angeles, Long Beach and another half-dozen ports that are developing similar programs to phase out old, polluting trucks.

Under-capitalized drayage companies will find it difficult to survive under these conditions, but this could be good for the industry. "I love a good crisis," Bruns said. Motor carriers that remained relatively healthy during the recession will be able to afford clean tucks while under-capitalized companies will drop out, he said.

The combination of rising traffic volumes and an exodus of under-performing motor carriers that had been charging non-compensatory rates will create an environment where healthy trucking companies with compliant vehicles will gain pricing power, the industry executives agreed.

Contact Bill Mongelluzzo at bmongelluzzo@joc.com.