Long-Term Outlook is Bright For the Trucking Industry

Although the global economy is coming to a screeching halt, the outlook is promising for the truckers over the long-term. Many signs exist throughout the market place that indicate that fleet operators will emerge from the current economic crisis with the potential for significant growth in their bottom lines.

As trucking operators fight to keep costs down to remain profitable, the fight will help them to become lean and be positioned for increased profitability when the economy starts to expand. In line with cutting controllable costs, the cost of financing is reduced as interest rates are lowered, which is currently the case.

Another major factor that will help propel the success of trucking companies over the coming years is the implementation of better technologies in fleet operations. New technologies are emerging in the transportation industry that help serve the overall efficiencies of trucking operations.

The last item I see helping truckers see success over the long-term is the falling price of oil and diesel fuel. Lower fuel prices takes some pressure off of truckers and allows for increased profitability. It has been said that the success of the trucking industry is inversely related to the price of fuel. This is an overly simplistic analysis of the transportation industry, and is flawed in its overall theory. However, it is hard to argue with the overall theory that when fuel prices are high, the trucking industry struggles. On the flip side, when fuel prices are low, the trucking industry flourishes.

With many signs pointing to the long-term success of America’s truckers, this is a time to get excited about the opportunities within the trucking industry.

U.S. Economic Crisis Impacting Publicly Traded Trucking Companies

With the nation’s trucking industry feeling the squeeze from the economic downturn here in the U.S., the large publicly traded less-than-truckload (LTL) carriers are no exception. Con-way Inc. (CNW: NYSE), one of the largest U.S. LTL carriers, recently adjusted their earnings per share forecast down for the year, citing weaker demand for cargo shipments and price pressure due to the economic slowdown. As a result, Con-way’s stock price has fallen nearly 20% in recent days in composite trading on the New York Stock Exchange.

Other publicly traded trucking companies have also fallen victim to the same market conditions as Con-way. Old Dominion Freight Line Inc. (ODFL: NASDAQ) and other trucking firms have also seen significant drops in stock prices as they struggle to manage the impact of lower freight volume and high fuel prices on business operations.

The trucking industry has long been a barometer of the vitality of the U.S. economy. Historically, there has been a strong correlation between the condition of the U.S. economy and the volume of freight shipments hauled by the nation’s trucking companies. Manufacturing output has seen a significant slowdown over the last two months, thus contributing to the gloomy outlook for the trucking industry as a whole. Many experts believe that cargo volume will stabilize in the near future, but that a major recovery for publicly traded LTL trucking companies may not happen anytime soon.