Posted On: December 10, 2008 by Ken Shigley

Trucking industry capacity declining with recession

Bankruptcy (or mere shutdown) of 2,700 trucking companies in 2008 have put more than 127,000 trucks out of commission, cutting U.S. trucking capacity by 6.5 %, according to Donald Broughton, an analyst with the Avondale Partners research firm, as quoted by Mateusz Perkowski of Capital Press.

In previous economic downturns, trucks were simply mothballed and then returned to sevice when the economy improved. However, due to the weak dollar throughout much of 2008, there was a huge overseas demand for U.S. trucks. Many of the used trucks this year have been exported to Russia and Eastern Europe, resulting in more lost trucking capacity than in previous recessions.

The current contraction in trucking capacity may result in shipping demand quickly exceeding capacity when the economy recovers, so that trucking companies will be able to charge higher rates. Then, as they expand capacity to meet rising demand, they will be ordering new equipment with the next generation of fleet management and safety technology.

That should result in safer operations, fewer accidents and injuries in relation to the volume of traffic. But as we have been told so many times lately, it will get worse before it gets better.

Ken Shigley is a trial attorney in Atlanta, Georgia who has been listed as a "Super Lawyer" (Atlanta Magazine), among the "Legal Elite" (Georgia Trend Magazine), and in the Bar Register of Preeminent Lawyers (Martindale). He served as chair of the Southeastern Motor Carrier Litigation Institute, is on the National Advisory Board for the Association of Interstate Trucking Lawyers of America, and is a frequent national seminar speaker for the Interstate Trucking Litigation Group of the American Association for Justice. A Certified Civil Trial Advocate of the National Board of Trial Advocacy, he was a faculty member for ten years at the Emory University Law School Trial Techniques Program.

Comments

yes it is true. in macro economic sense, demand from offshore companies have declined.