Trucking failures remain very low
May 9, 2012
After an uptick at the end of 2011, trucker bankruptcies dropped slightly in 2012Q1. The pace of fleet failures remains extremely low. The number of fleets that failed fell from 180 to 160. The number of trucks removed also remained extremely low during the quarter. Not every quarter will be at these low levels, but it will stay at traditionally low levels through 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 first quarter of 2012, 160 fleets failed. This is a decrease of 20 fleets compared to the previous quarter but is nearly double the level that we had in 2011Q3 (the record low). It is down 135 versus Q1 of 2011. This is the fifth-lowest recorded figure since Avondale Partners started tracking the data back in the 1990s.
The average fleet size ticked higher to 13 trucks but this is a normal level for this stage of the recovery cycle and is well down from the high of 50 trucks/fleet that occurred during the 2008-2009 timeframe when we were in the midst of the recession.
The number of trucks removed also remained extremely low at just 2,110. 1,965. This number has stabilized over the last 3 quarters after falling sharply for the prior year and a half. The number peaked at over 46,000 trucks in the second quarter of 2008. It had a later mini-peak at the start of 2010 at just under 35,000 trucks.
Avondale reported that failures are impacting smaller firms with long length-of-hauls, although shorter length-of-haul fleets are starting to be impacted. Despite a strong increase in the price of fuel during the latter half of the quarter, there seemed to be no ill effects on the ability of fleets to stay ahead of the cash curve. We will see if that is able to stay true into Q2. Unless we see diesel prices spike further, we wouldn’t expect to see a noticeable impact. High used equipment values are helpful for fleets and the modestly tight capacity environment is keeping everyone busy enough – despite the somewhat weaker freight environment that we experienced during Q1.
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 modestly tight in 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.
NOTE: Historical data is sourced from Avondale Partners.
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