The 2009 credit crisis has affected all types of industries across the nation, including the trucking industry. Its devastating effects have reached thousands of suppliers, forcing many business owners to freeze production and shut down, thereby eliminating the need to ship goods or products on trucks.
The actual tonnage hauled by large fleets of trucks is falling, meaning that there are fewer truck shipments. In March 2009, the Truck Tonnage Index fell 4.5%, and then again another 2.2% in April 2009. This is the lowest it’s been since 2001. Not only is the trucking industry getting hit hard by the recession, but it’s getting hit with the massive inventory correction that suppliers are undergoing.
ATA Chief Economist Bob Costello recently said, “While most key economic indictors are decreasing at a slower rate, the year-over-year contractions in truck tonnage accelerated because businesses are right-sizing their inventories, which means fewer truck shipments.” Sales have dramatically decreased, ultimately causing truck shipments to suffer.
The Jim Palmer Trucking Industry narrowly escaped bankruptcy in May 2009. The company had to file for Chapter 11 Bankruptcy in July 2008 due to average fuel costs skyrocketing up to 12% over the last year. Fuel costs forced the trucking company to become delinquent on $1.5 to $2 million dollars in equipment loans and other debt. Fortunately, the bankruptcy judge approved a reorganization plan and allowed the company to escape bankruptcy.
Thankfully, fuel costs have gone down since July 2008. Back then, diesel prices skyrocketed to around $5 a gallon. Now, they are around $2.19 a gallon.
Some say that if you’re looking for signs of economic recovery then just look at how many trucks are on the road. From lumber to food, furniture to detergent, large trucks are the backbone of America. Trucks carry almost all the manufactured goods and retail products in the nation. After the economy picks up and supply is aligned with demand again, then the trucking industry will finally be able to grow again and increase their prices.
An economist with the American Trucking Associations, Mr. Tavio Headley, believes that the economy will soon show signs of improvement and that the trucking industry will pick up as early as next quarter.
Trucking companies who have not been affected by such hard, trying circumstances have either restructured their current trucking insurance or have acquired new, more affordable trucking insurance from Hub Transportation. Hub Transportation continues to see positive growth in the insurance industry as truck owners turn to them for the most affordable trucking insurance rates around.
More and more truck fleets are tightening their control on every single possible risk factor in order to prevent cost losses. Managing safety is the most important factor a trucking company faces. For those who have managed to survive this terrible recession, boasting responsibility and safety can be your claim to fame. When various trucking companies are fiercely competing for business, those who do not boast trucking safety will fall by the wayside. The trucking company who comes out on top is the one who adamantly reports safety progress to all.
Trucking companies who take safety seriously and pay higher deductibles show that they have confidence in themselves and their employees. Suppliers are now being very picky on who they’ll allow to transport their cargo. If a company has a poor record of accidents or other unfavorable attributes, suppliers are likely to turn to another truck company that has a more stable record and is more dependable.
Hub Transportation believes in offering the best trucking insurance coverage to companies who need a competitive edge to survive in this struggling economy.