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December 12, 2019 4:15 PM, EST

Industry Leaders: Celadon Drivers, Others Recently Laid Off Likely to Find Work

layoffsIn the first nine months of 2019, according to Broughton Capital, 795 trucking firms shut down, more than in all of 2018 when 310 companies shut their doors. (Chalirmpoj Pimpisarn/Getty Images)

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Recent headlines concerning the trucking industry’s economy have been somewhat foreboding.

On Dec. 9, Indianapolis-based carrier Celadon Group announced it was declaring Chapter 11 federal bankruptcy and shutting down. More than 2,500 drivers and 1,400 other workers are losing their jobs. Also in Indiana, engine manufacturer Cummins Inc. plans to cut 2,000 positions and restructure its operations in 2020.

Some analysts say there is reason for optimism as most, if not all, of the displaced employees are marketable and should find comparable work.

ATA's Bob Costello

Costello

Bob Costello, chief economist at American Trucking Associations, told Transport Topics that fleets are facing rising costs with higher salaries for drivers and increases in liability insurance, but at the same time, rates are not as high as they were in 2018 when the freight economy was strong.

“Contract volumes are OK, but you’re having some other pressures on rates. So, in the near term, it’s a tougher market. But if you get through the next quarter or two, I think things will be a little different,” Costello said.

That does not suggest there is a broader economic recession around the corner, he added. “I would think by spring you’ll see a different marketplace than it is today.”

In the first nine months, according to Broughton Capital, 795 trucking firms shut down, more than in all of 2018 when 310 companies shut their doors — the lowest number on record. Broughton Capital tracks trucking closures and said each of the companies that went out of business had about 30 drivers.

RELATED: 2019 Trucking Company Closures So Far Have Doubled All of 2018 

The closings and layoffs come at a time when the nation’s unemployment rate of 3.5% in November is its lowest level in 50 years. The federal government’s Bureau of Labor Statistics projects trucking and transportation will continue to grow. By 2028, the agency estimated 5.74 million people would be working in the transportation and warehousing industry, up 322,000 or 5.9% from the 5.41 million workers in 2018.

For truck drivers specifically, the U.S. Department of Labor said 1,958,800 drivers were employed in 2018, and that figure is expected to expand 5% through 2028, adding some 100,000 new jobs.

Rajeev Dhawan, director of the Economic Forecasting Center at the J. Mack Robinson College of Business at Georgia State University

Dhawan

Economist Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, said the number of trucking companies closing their doors in 2019 doesn’t concern him yet.

“Even in a great economy, you are going to have companies go belly up; that’s normal churning,” Dhawan said. “If every company in the transportation industry were laying off people, then you’d have a problem. But that’s not the case.”

Past trucking companies that have closed include New England Motor Freight of Elizabeth, N.J., Falcon Transport of Youngstown, Ohio, LME Inc. of New Brighton, Minn., Starlite Trucking of Ceres, Calif., and Hendrickson Truck Lines Inc. of Sacramento, Calif.

RELATED: Economist Noel Perry Warns of More Shutdowns After LME Padlocks Doors

Other closures came within larger companies, including Highland Transport, closed by TFI International, and Schneider Direct, a final-mile delivery service closed by Schneider.

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