Despite growing signs that the trucking industry is finally recovering from a four-year recession, access to credit remains stubbornly tight and truckers seem reluctant to borrow, according
to a quarterly survey by M&A firm Transport Capital Partners.
A second-quarter survey of about 160 truckers, most of
whom have annual revenues of more than $25 million, found
that 60 percent expected credit availability to remain
unchanged during the next six months, with 15 percent
expecting credit conditions to tighten. Just 25 percent forecast
credit conditions to improve by year’s end.
The speculation over credit availability comes amid a brightening picture for the trucking industry. Nearly 90 percent
expect volumes to increase over the next 12 months compared with the prior 12 months. That was up from 70 percent
in the first-quarter survey. About 84 percent of respondents
expected rates to rise over the next 12 months, up 53 percent
from the first quarter and 12 percent from a year ago.
One reflection of truckers’ optimism is their reduced
reliance on freight brokers for business. About 80 percent of
the carriers surveyed reported they were making less use of
brokers, compared with 30 percent in May 2009. The figures
indicate that business is strong enough for truckers to procure
more traffic directly from shippers without having to pay an
intermediary to generate loads.
Richard J. Mikes, a managing partner with Transport Capital
Partners, said he was surprised by the feedback on credit conditions given historically low interest rates and ample liquidity in the marketplace. Yet an absence of credit isn’t as much
of a negative as it might seem, he added. Larger truckers are
already sitting on large cash piles and may not need credit to
finance capital investments. Smaller truckers are generally
conservative and will be loath to buy anything if they can’t pay
cash for it, Mikes said.
While the lack of credit may hamper purchases of new
equipment, Mikes said that isn’t much of a concern, either.
There is an enormous amount of used capacity already
parked, and truckers can effectively add space simply by
boosting the utilization of their existing fleet. Should truckers
want to add rigs or trailers, they are likely to head to the aftermarket, where a five-year-old rig can be bought for maybe
one-third the cost of a new one, according to Mikes.
Rising costs across the board are likely to curtail truckers’
appetite for credit, anyway. Truckers are already paying more
to recruit and retain drivers. In addition, new government
safety regulations set to take effect in the fall will increase the
industry’s compliance costs, while at the same time further
thinning the available driver pool.
The improving market outlook has sparked interest in acquisitions, the survey found. In the second-quarter survey, 45 percent
of respondents said they would be interested in buying another
trucking company in the next 18 months. Of those who expressed interest, 53 percent were classified as larger truckers.
truckers see credit crunch continuing
The Raymond Corp. has unveiled what it calls the material handling industry’s first order-picker powered by a
hydrogen fuel cell.
Raymond also announced that specialty food supplier
United Natural Foods Inc. will be the order-picker’s
launch customer. United Natural Foods will install the
order-picker in its Sarasota, Fla., distribution center as
part of a program to convert the fleet of lift trucks working in the 352,000-square-foot DC to fuel cell power.
The order-picker comes equipped with a redesigned 21-
inch battery box that can accommodate a fuel cell,
Raymond said. Because of size compatibility issues
between a fuel cell and a traditional lift-truck battery, the
Greene, N.Y.-based company needed to reconfigure the
battery compartment of its Model 5500 order-picker to
ensure that it could properly hold a fuel cell.
United Natural Foods said the switch to fuel cells will
boost the operation’s efficiency by eliminating the need to
charge and change traditional batteries, and will cut carbon emissions in the DC by 132 metric tons a year, equal
to the emissions of 35 cars.
Raymond unveils first fuel
cell-powered order-picker
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