Avondale: Fleet failures up slightly
February 2, 2012
The pace of fleet failures remained extremely low at the end of 2011. Only 180 fleets closed their doors. While low this is an increase of 95 fleets versus the prior quarter. Not every quarter will continue to be at these record low levels, but it will stay at traditionally low levels until after 2013.
Donald Broughton, senior research analyst with Avondale Partners, tracks how many fleets went out of business and the number of trucks that those businesses accounted for. In the last quarter of 2011, 180 fleets failed. This is an increase of 95 fleets compared to the previous quarter (the record low) but is down 200 versus Q4 in 2010. The average fleet size moved lower to 11 trucks after being nearly unchanged for the prior 4 quarters. It is well down from the highs recorded during the 2008-2009 timeframe when it averaged a fleet size of nearly 50 trucks.
The number of trucks removed also remained extremely low at just 1,965. This number had fallen for 5 straight quarters prior to the end of 2011. The number peaked at over 46,000 trucks in the second quarter of 2008. It had a later mini-peak in early 2010 at just under 35,000 trucks.
Fuel is neither a strong head nor tailwind currently. High used equipment values are helpful for fleets and the tight capacity environment is keeping everyone busy – despite the relatively weaker freight environment that we experienced during much of 2011. The fuel spike of 2008 and the following Great Recession did a pretty good job of weeding out the bad fruit. We don’t expect every quarter to be this low, but it will stay at traditionally low levels. As capacity continues to stay tight going into 2012, we expect the number of trucks removed to remain near its historical floor of around 300 fleets per quarter and 3,000 units per quarter. We have modestly lowered our truck units assumption (previously 5,000) on the continued tight capacity environment and the finalized HOS rules that won’t go into effect until mid-2013.
NOTE: Historical data is sourced from Avondale Partners.
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