Walking Among Us

 Vampires may be all the rage in popular culture this year, but in the business world there’s nothing these days that beats zombies.

Those are the companies that in previous downturns might have been called survivors but now are seen as something more like the living dead — companies with balance sheets that show few signs of cash flowing through their operations but nevertheless walk through markets, lowering rates, devouring market share and threatening the true survivors.

They’re just about everywhere in the transportation world, except in the railroad industry, naturally, and some of the deserving survivors are raising more warnings that zombies are out there.

That’s what some large trucking companies are calling financially wounded competitors as more companies plow ahead under steep losses because banks are unwilling to foreclose, reasoning that owning fleets made up of a devalued equipment in a poor market is worse than carrying over a bad loan or two. That is a big reason trucking bankruptcies actually have declined in 2009 even as domestic shipping demand has remained weak and capacity plentiful.

But those sort of descriptions are overwrought in a business world where the real harm may come from the walking dead financial institutions, whether it is the European banks that are surviving on state largesse or the Wall Street firms pumped up by the unnatural infusion of federal bailouts.

Whatever you call them, many transportation companies are, in fact, limping toward the end of 2009 on life support, and whether they survive may say a lot about how transportation markets will develop for shippers and carriers alike in 2010.

Take Japan Airlines. Once a seeming unassailable brand in international aviation, JAL is still flying largely with the Japanese government’s forbearance despite an $11.2 billion debt burden and enormous pension costs.

Various groups of foreign carriers are looking to pump more than $1 billion into the airline if the government goes through with a potentially painful restructuring at the carrier.

Ocean carriers also are looking for lifelines, but despite billions of dollars in accumulated losses this year, it looks like some of that financial ballast may be working. Hapag-Lloyd part owner Klaus-Michael Kuehne said late last month the German carrier, once seemingly in deep need of state aid, now believes “the worst is behind us” and main owner TUI is working to right the ship.

“TUI can only get out once Hapag has a convincing business model. Otherwise, it will not find a buyer for its stake,” Kuehne told a German newspaper.

That’s really the heart of the matter for many companies operating in a middle world between business life and death. The sales of a handful of midsize trucking companies through bankruptcy proceedings in recent weeks may be a harbinger of larger deals that may occur in the coming months as the conditions that come along with cash infusions start to kick in and ownership begins to change hands.

The only other option would be to give up the ghost.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.

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