ALEXANDRIA, Va.—Trucking company failures are on the rise due to faltering freight demand, according to The Wall Street Journal.
An estimated 640 carriers have gone out of business in the first half of 2019, up from 175 for the same period last year. That’s more than double the total number of trucking company failures in 2018, according to transportation industry data firm Broughton Capital LLC.
This week, HVH Transportation Inc. of Denver abruptly shut down after a string of financial setbacks, which stranded about 150 drivers and loads out on the road. The closure adds to a 2019 tally that includes Ohio truckload company Falcon Transport Co. and regional less-than-truckload carriers New England Motor Freight Inc. and LME Inc.
The increasing number of closures come as trucking companies that boosted driver pay and plowed last year’s profits into record orders for new equipment now are dealing with a tougher pricing environment, lower demand for their services and higher insurance costs.
In 2018, “demand was so strong, rates were so strong, it was virtually impossible to fail,” said Donald Broughton, Broughton Capital’s managing partner.
But trucking rates stalled out in July, falling 0.1% from the prior year after a 27-month run of annual increases, according to the Cass Truckload Linehaul Index, which measures per-mile pricing for truckload carriers. Prices on trucking’s spot market, where shippers book last-minute transportation, were down nearly 19% last month compared with 2018, according to online freight marketplace DAT Solutions LLC.
As numerous trucking companies take a hit, trucking executives believe the recent spate of smaller carrier bankruptcies will give “larger carriers added control and pricing power in the marketplace,” said Jason Seidl, transportation analyst for Cowen & Co.