NEW ORLEANS (June 5, 2002)—Adversity produces strength.
It was a message that resonated in executives' speeches, in a Cajun comedian's antics and in a video of America set to Lee Greenwood's country/western anthem, “Proud to be an American.” Bridgestone/Firestone emphasized to commercial tire dealers attending its Bizcon 6 meeting that despite negative circumstances—such as a depressed trucking industry, fears of domestic terrorism and a sputtering economy—business opportunities are still available.
“Our industry is arguably going through one of the most difficult times in its history,” Singh Ahluwalia, BFS vice president of commercial sales, told attendees at the conference. Bizcon 6, originally scheduled for last September until the 9/11 terrorist attacks canceled all travel, was held April 24-26 in New Orleans.
He noted that even though many trucking fleets have gone out of business or consolidated, a new spirit has emerged in that industry since 9/11—a spirit shared by tire dealers.
“You kept America's trucks rolling, and those trucks kept America rolling,” Mr. Ahluwalia said, referring to the fact that trucks continued to deliver freight after Sept. 11 even when air transportation was shut down.
Mr. Ahluwalia, along with representatives from the American Trucking Associations (ATA), highlighted the myriad factors that have depressed the trucking industry and how crucial it is for dealers to cut fleets' downtime and tire costs. Trucking revenues are linked with manufacturing revenues, and the recession of 2001 caused corporate spending to fall and inventory to build up, according to Bob Costello, the ATA's chief economist. He said everyone is hoping for corporate profits to increase in the next few quarters so that investment can increase. That, in turn, would then raise freight levels and thus add business to commercial dealers.
Noting the higher diesel fuel costs last year, Mr. Costello told attendees that a direct correlation existed between the price of that fuel and trucking firm bankruptcies. He said a 10 cents-per-gallon rise in fuel can cause about 1,000 motor carriers to go out of business. Industrywide, fleets consume 30 billion gallons of fuel and log 451 billion miles annually, he said.
Since the government moved to deregulate the trucking industry in 1980, only 37 of the top 100 fleets from that time are still in business while 11 merged with other companies, said ATA Chairman Duane Acklie. Seventy-five percent of all U.S. communities depend on trucks, yet freight rates have risen above inflation, he said.
“If it were easy, everybody would be in the trucking industry,” Mr. Acklie remarked.
Mr. Costello cited a recent survey of 1,000 motor carriers that found that most fleets' primary truck insurance premiums escalated in 2001, particularly after 9/11. He advised dealers to carefully watch their receivables in light of that trend.
“I can tell you that some carriers saw their insurance rates increase 300 to 500 percent,” Mr. Costello said.
On a more positive note, he said trucking's share of total freight revenue soared to 88 percent in 2000 from 68 percent in 1960. With more than 550,000 carriers on file with the Office of Motor Carriers, he said that trucking will continue to be the dominant transportation mode for freight delivery.
Mr. Ahluwalia said an economic recovery is expected soon as much inventory has been purged and manufacturing seems to be climbing out of a deep hole. But he predicted that a 4- to 5-percent growth in manufacturing wouldn't occur until 2003 or 2004.
“It will be a while before (the manufacturing sector) can sing 'Happy Days Are Here Again,'” he said.