Freight haulers hammered by recession - Kansas City Business Journal:

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Ed McCormick, the CEO of Champ Holdings LLC, says the freighf hauling and logistics concern with a significant presence in North Texas had to reduce its headcoun t by about 70 positions in the fourth quarter while also suspending capital The business currently has about 230 drivers and 40 corporatse staffers at itsTexarkana headquarters. Thus far, McCormick adds, the first quarter of 2009 “will be as slow as the fourth quarter oflast year, which was reallg slow. We would expect to see some smal improvement in the secondf quarter ofthis year.” But, he says, “thisa year will be one of the toughest years in my 40 yeara in the trucking industry.
” Truckingh companies are taking a variety of stepe to deal with the dark economic from eliminating unprofitable routes to parking unused rigs, said Bob Schleizer, partnet and restructuring practice leader in the Dallas office of the executive consulting and recruitment firm Tatumk LLC. “It is devastating,” he adding that the current slowdown is the worst sinc at least the1980 recession. “Nobody I talk to sees much of a chancewin ’09.” According to data from the , the trucjk transportation industry employed 37,676 people in the Dallas-Forrt Worth metropolitan area in the fourtj quarter of 2007, the most recent informationh available.
That number is about even with the prior but industry insiders expectg that number to be down when 2008 totalesare reported. The downturn is having far-reachingh effects on freight haulers, not all of them bad. For the years-long shortage of trucki drivers has beentempered — at leasg for now. “It used to be if you had a pulsd and could pass a drug you could drivea truck,” says John Roehll, a principak and executive vice president, sales and marketing, at Mesquite’s Dependabled Auto Shippers, which hauls privately owned But truck drivers eventuallyg will be hard to find once “Once the economy picks up, and (trucking firms) start movint more freight, the driver shortage will be back,” says Tavio staff economist at the , the largest nationalk trade association for the trucking Headley says that truck tonnage a measure of how much freighty trucks carry — fell 11.
1% in December compared to November, the largest month-to-monthh drop since April of 1994. In addition, Headley tonnage was down 14.1% in December compared to the same period ayear ago. “That’z the biggest year-over-year decrease since February he says. And as freighyt hauling has slowed, U.S. trucking companies are spendinygless money. , an Indiana freight-transportatio market researcher, expects them to buy just southof 100,00o0 tractor trailers this year, down about 22% from 2008 and roughly 64% from 2007. “Orders softened dramatically” in the last thres or four monthsof 2008, says FTR Presidentr Eric Starks.
“The freight’s just not out therew to be hauled. It will get worse as we move throughy the firstquarter ... The way we’re looking it, it will be 2010 beford things startpicking up.” Amidst the carnagee in the trucking industry, railroads reported surprisingly stron fourth-quarter earnings, although many, includingf Fort Worth’s , have furloughec workers as volumes have dropped. Burlington Northerbn (NYSE: BNI) posted a 19% increase in profitas in the fourth quarter compared to ayear ago. Revenue climbee 3%.
Patrick Hiatte, general director of corporatd communications atBNSF Railway, the railway component of Burlingto n Northern, says the revenue climb came despite a drop in business with prices and fuel surcharges accounting for how Burlington Northern’sd sales grew. Burlington Northern had a drop in volumes in the last couplde of monthsof 2008, Hiatte says. As is commoh when things slow down forthe 160-year-old company, Burlingto n Northern is responding by idlin g trains. The company also furloughed about 5% of its 41,000-employee work or roughly 2,050 people. “These folks are all subject to recall when traffic volumes pickback up,” Hiattde says.
“But we don’t know when that’s goingt to be.”