Trucking news: Transport Capital Partners survey points to carriers considering buying or selling

A survey of trucking executives conducted by Transport Capital Partners (TCP) found that in the future more than half of the survey respondents have some level in interest in buying a trucking company or selling their own.

The survey found that larger carriers—those with more than $25 million in revenue—are twice more likely to be interested in buying a company compared to smaller carriers (with less than $25 million in revenue).

And with tonnage levels relatively flat on an annual basis, the survey found that should truck tonnage not increase within the next six months (survey data was culled in late May/early June) 11 percent of surveyed carriers would exit the industry, compared to more than 20 percent that indicated they would in February 2009. Of the 11 percent that said they would leave, 18 percent were smaller carriers and 8 percent were large carriers.

“We are in a huge state of flux,” said TCP Partner Lana Batts in an interview. “In the trucking industry, there is a paradigm shift taking place. When we first started doing this survey, people were saying ‘get me out of this business.’ But more small carriers than large carriers still feel that way, and it is no surprise that more large carriers are looking to buy.”

Federal issues like CSA 2010 and the proposed Hours-of-Service revisions, which both would limit total industry capacity and limit the number of available drivers, are also impacting the situation and adding to overhead, explained Batts.

The sentiment from carriers expressing an interest in closing up shop does not come as a surprise at all, due to financial and regulatory challenges they are facing.

“The reason many carriers want to get out is that they are not getting an adequate rate of return on their investments into their business,” said Batts.

This was highlighted in the survey, with 53 percent of carriers saying they are getting an adequate rate of return, with 47 percent saying they are not. What’s more, 45 percent of smaller carriers maintain they are getting an adequate rate of return, and 57 percent of larger carriers feel the same way.

Batts said this spilt was surprising, because carriers of all sizes typically get the same rates from shippers and have similar expenses for equipment.

“If you are debt-free, it is a different story, but as far as I know there are only a handful of companies that are debt-free,” she said. “The glass is half empty here. Carriers are not adding capacity; they are replacing equipment. Shippers are getting more nervous all the time, when it comes to the rate environment, as carriers are paying 2011 prices for equipment, and getting 2006 rates.”

And with national debt issues squarely in the national spotlight, Batts said it stands to reason that credit availability is likely to get even tighter than it already is, which could stall industry deal making activity.