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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.
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.
More on Celadon
Dec. 5: Two Former Celadon Executives Charged in Fraud Scheme
Aug. 15: Celadon Gets $165 Million Infusion From Luminus Management
April 29: Celadon Group Sells Intermodal Operations to Bison Transport
April 25: Celadon to Pay $42.2 Million After Admitting to Accounting Fraud
April 22: Celadon Sells Logistics Group, Hopes for Financial Reporting in Fall
Oct. 3, 2017: Celadon Acknowledges Active SEC Investigation
July 13, 2017: Celadon Chairman, CEO Paul Will Steps Down
July 3, 2017: Celadon to Record Impairment Charge in Review of Company’s Value
May 2, 2017: Celadon's Financial Statements Called Into Question
April 25, 2016: Celadon Founder Russell Passes Away
June 23, 2014: Celadon’s Russell Used Hard Work, Luck To Build Large Cross-Border TL Carrier
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.
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.
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.
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