The U.S. freight transportation industry as a whole – and the trucking sector in particular – is undergoing a massive “re-set” of sorts in reaction to the global economic recession, unpredictable fuel costs, and shipment volumes below what are considered nominal levels for growth.
‘John Conkin, senior vice president of GE Capital’s transportation finance division, told FleetOwner that the firm’s recent CFO survey of 539 mid-market companies in seven distinct industries across the U.S. found that many transportation companies are completely re-evaluating how they do business.
“The transportation industry is much like the other industries where 48% of the CFOs surveyed saw the financial crisis as a fundamental reset in the economy. In other words, they don’t see the economy returning to pre-crisis conditions,” he said.
“The biggest difference is that the transportation industry has been feeling this downturn for nearly three-and-a-half years,” Conkin stressed. “The net result is a move back to basics, a reliance on their core competencies where they can add the most value to their customers. Transportation executives have had to make tough choices around cost management and expense control, and they have concentrated on deleveraging, paying down debt and maintaining a more conservative balance sheet.”
Other trends GE Capital sees include: fleets shrinking their size; overall length of hauls decreasing; and trade cycles being extended. “Regulation continues to influence change in the transportation environment and its forcing companies to reinvent the ways they serve their customers,” Conkin noted.
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Photo courtesy of Rennett Stowe under the Creative Commons License