Fuel Prices, Recession Make Grim Year for Trucking Industry
By Daniel P. Bearth, Senior Features Writer
This story appears in the Dec. 22 & 29 print edition of Transport Topics.
The world of trucking was turned upside down and shaken like a snow globe during 2008.
As a record-setting run-up in crude oil prices was occurring in the first half of the year, the nation’s economy was slowing down. Later in the year, a global financial crisis halted economic growth and sent prices for gas and diesel fuel tumbling to their lowest levels in five years. The net result for trucking was grim.
During the year, representatives of less-than-truckload carriers signed off on a multiyear labor agreement with the Teamsters union, only to see the nation’s largest LTL carrier seek to return to the bargaining table a few months later to ask for wage cuts as freight shipments petered out.
A group of auto haulers also inked a national contract with the Teamsters but lost one of their own in June with the shutdown of Performance Transportation Services, the nation’s second-largest car hauler. And as the year ended, top executives from all three of the nation’s major carmakers went hat in hand to ask Congress for emergency loans to keep them in business after a dramatic drop in auto sales.
A year that began with a first-term senator from Illinois deciding to challenge the clear front-runner, Sen. Hillary Clinton, for the Democratic party’s nomination for president ended in the historic election of Barack Obama, strengthened the party’s majorities in both houses of Congress and set the stage for new federal policies on energy, labor and the environment.
In the last months of the year, the Federal Motor Carrier Safety Administration issued a flurry of new regulations, including rules covering hours-of-service and the medical certification of truck drivers.
American Trucking Associations unveiled a sustainability package aimed at promoting a greener image and gaining political clout ahead of the 2009 highway reauthorization bill.
To address the financial crisis on Wall Street, Congress passed legislation authorizing the federal government to spend $700 billion to buy up troubled assets of commercial banks and insurance companies. The Federal Reserve also extended financial help to banks in an effort to restore the normal flow of credit.
Credit woes curtailed spending by businesses and consumers, contributing to a sharp drop in truck tonnage as consumer spending plummeted.
“Most economists agree that a severe recession has broken out in the United States, one that will linger for four to six quarters,” Egil Juliussen, a research fellow for automotive research firm iSuppli Corp., said in late November.
Fleets generally held off on buying new trucks because of declining demand for freight hauling. Sales of heavy-duty Class 8 trucks were down 13.1% through November, compared with a weak 2007.
More than 900 carriers closed their doors in each of the first two quarters of the year, including Jevic Transportation, which ranked No. 71 on the Transport Topics 100 list of largest for-hire carriers in the United States and Canada.
Several other large carriers, including commercial vehicle hauler JHT Holdings (No. 66), truckload carrier group Gainey Corp. (No. 64) and dedicated hauler Greatwide Logistics Services (No. 23), filed for protection from creditors during the year under Chapter 11 of the U.S. Bankruptcy Act.
The pace of failures slowed in the third quarter as fuel prices reversed course in the global economic slowdown.
U.S. lawmakers took up consideration of an economic stimulus package that would provide additional funds for improving the nation’s highway and telecommunications infrastructure, as President-elect Obama said he intended to use such projects to get the economy moving again.
At the ports of Los Angeles and Long Beach, Calif., officials proposed a plan to reduce air pollution by requiring trucks that access the port to be newer than 1989 and meet 2007 emission standards by 2012.
ATA sued, claiming that a provision barring access by independent owner-operators constituted illegal restraint of trade.
Despite continuing legal challenges, a judge allowed the ports to go ahead with implementation of the plan on Oct. 1, although the ports delayed the owner-operator ban after the Federal Maritime Administration sued to halt it.
Among other noteworthy developments during 2008:
· Caterpillar Inc. said it would pull out of the North American Class 8 diesel engine market by 2010 and work with Navistar to sell trucks and truck engines around the world.
· Freightliner stopped production of Sterling trucks and shifted production of Western Star and other trucks to Mexico.
· Cummins Inc., the sole remaining independent engine supplier, reversed its decision to use exhaust-gas recirculation to meet 2010 emission standards and instead said it would offer engines that use selective catalytic reduction technology.
· DHL Express, which is a unit of Germany’s Deutsche Post WorldNet, ended its five-year effort to compete with UPS and FedEx Corp. in the domestic package delivery market in North America. The company said it would continue to offer international package delivery and contract logistics services.
