Thursday, February 18, 2010

Trucking failures to accelerate this year

Bankruptcies in the U.S. trucking industry are expected to escalate this year as higher fuel prices and excess capacity squeeze margins further and lenders start to tighten their noose on the sector.

The highly fragmented freight market in the United States has been in recession for about three years now. Excess capacity has put pressure on pricing and dented margins at truckers as well as freight brokers.

But the sector has not seen as many insolvencies as expected in the last two years, as lenders wait for the market to improve for the used trucks they hold as collateral.

Last year, lenders helped YRC Worldwide, the No.1 U.S. trucker, narrowly avoid bankruptcy.

Industry analysts say a spike in bankruptcies might not be a bad thing after all for the sector -- it will take away hundreds of underperforming companies, suck out the excess capacity and finally narrow the gap between supply and demand. Complete story....

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