Soaring fuel prices have driven trucking bankruptcies up 143% over the same time last year, and industry analysts said the market may need to consolidate more before it improves for those companies that survive, the Associated Press reported.
Analyst Thom Albrecht, with Stephens Inc., predicted an additional four to six less-than-truckload carriers were at risk of going out of business, but he said in a recent note to clients that truckload carriers are more exposed to high fuel costs and shaky credit markets, which could likely lead to more closures in that sector. Overcapacity is a more significant issue for the truckload segment, he said, AP reported.
As unprecedented fuel prices and still-weak demand drive capacity reductions and bankruptcies across the trucking industry, analysts suggest the market needs to shrink even more to improve the outlook for remaining players.
Wachovia Capital Markets analyst Justin Yagerman said that number of insolvencies likely will grow in the second quarter as fuel costs continue to rise, AP said.
Industry Consolidation will help supply and demand come back into balance across the sector by handing off more freight to the surviving companies, he said, as truckers will be able to raise prices and regain a more competitive edge, AP reported.
As more carriers shut their doors, the outlook will brighten for the market as truckers are able to raise prices and regain a more competitive edge, he predicts.
Yagerman said that so far this year, the average per-share stock in the truckload segment has gained about 13%, while the average price among LTLs has shot up about 27% in the same period, AP reported.
