IBJNews

Celadon sees trouble ahead for trucking fleets

Back to TopCommentsE-mailPrintBookmark and Share
On The Beat Industry News In Brief

Just how bad are things in the trucking industry during this road kill of an economy?

It’s so bad for some fleets that they won’t be able to afford license plates, Steve Russell, chairman and CEO of Indianapolis-based Celadon Group, told analysts during a conference call last month. The first quarter is when many trucking lines renew plates and insurance.

Russell

“Banks aren’t lending to weak fleets, and a license plate is roughly $2,000 and the collateral value of a license plate is no more than the value of the metal” plate, Russell said. “So it’s likely that there will be an increase in fleet failures during this period.”

Celadon is not among the weaklings and, if anything, will benefit from additional fleet failures to the extent it diminishes industry capacity. A substantial drop in capacity could allow survivors like Celadon to raise prices.

“Adam Smith was right; supply and demand determine rates,” Russell said. “This industry has been cyclical, as I’ve often said, since the Phoenicians invented the cart.”

Transport Topics Online reported that freight tonnage fell nearly 11 percent in January. There were 375 trucking-firm bankruptcies during the fourth quarter. Analysts predict the first quarter will be fraught with trucking fleets unable to obtain credit. At year-end, Celadon had no bank borrowings outstanding on a $40 million bank line and just $300,000 outstanding on a line of credit.

Recently, Celadon resumed business with Chrysler for the first time since 2006. Chrysler plans to increase production in Mexico, which Celadon serves and where the automaker plans to build Fiat cars to be sold in North America.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT