Whenever costs go up in the Transportation Industry, whether they be insurance, labor or fuel historically that signals more bankruptcies for Independents and more industry consolidation. So with Diesel Prices up over $.30 per gallon, as oil prices rush thru $70.00 per barrel will we see more of the same now in 2006? Perhaps and let's flash back real quick to 2000 during the downturn in the economy and higher than normal fuel prices.
In 2000 Trucking Company Consolidators and Merger and Acquisition specialists were making their move to buy up companies and capture customers that as the lead pack is moving ahead. Fed Ex, UPS, Swift, J.B.Hunt, Yellow, were consolidating with cash on hand, great credit lines, an abundance of sellers and a specific strategy. We watched as New Truck Manufacturers had laid off one half of their employees.
Banks reluctant to repo independents for fear they will be upside down in the loans if they tried to sell when every used truck dealer in America was over stocked by 300 percent and sales were down by 45 percent. Fuel costs and over regulation, such as the OSHA rules, DOT rules, over taxation by states on fuel, too much road construction because of surpluses of state income taxes slowing traffic, hours rules, etc.were the cause.
The Industry felt the affects.Now most independent trucking companies are competing against companies with thin margins as they are on major razor thin margins themselves. Needless to say trucking sure is not what it once was. Is the industry going to find more consolidation with the higher fuel prices as the War in Iran heats up or the Hurricane Season gets going? Are we going to see the commodity analysts $85.
00 per barrel predictions and almost $4.00 per gallon diesel prices? Some are worried and others see this as a buying opportunity in the making. Consider all this in 2006.."Lance Winslow" - Online Think Tank forum board.
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By: Lance Winslow