2009 trucking industry expected to be as tough as 2008

With problems in the national housing sector and manufacturing dominating much of national and local news, the trucking and transportation sector is an often overlooked but important element of the Fort Smith regional economy.

According to figures from the Arkansas Department of Workforce Services, 25,400 are employed in the trucking and transportation sector in the Crawford, Franklin, Logan, Polk, Scott and Sebastian counties.

As of November 2008, there were 37,710 truck drivers employed in Arkansas, collecting an average wage of $37,090. In the Fort Smith area (counties listed above), there were 5,360 truck drivers in November 2008 with an average wage of $38,534.

Unfortunately, the trucking sector faces a tough time in 2009.

ATA Chief Economist Bob Costello, the chief economist for the American Trucking Associations, said he expects freight to further weaken as the economy contracts through the first half of 2009. Specifically, he predicts the trucking sector will see more capacity reduction from operator failures in 2009. There were almost as many trucking company failures in the first half of 2008 (1,905) than in all of 2007 (1,985).

Two major area employers in the sector are Fort Smith-based Arkansas Best Corp., one of the largest national less-than-truckload carriers, and Van Buren-based USA Truck, a mid-sized truckload carrier.

Arkansas Best and USA Truck are both publicly held companies and have seen their stock prices fluctuate wildly through the year. Shares of Arkansas Best (Nasdaq: ABFS) opened the year at $20.56, soared to $42.25 on July 17 and then slid down to close out 2008 at $30.11.

The company, which was able to maintain revenue and net income figures through the year, has laid off workers at its corporate headquarters but won’t release a tally of the layoffs.

USA Truck shares opened the year at $13.79, dipped to $9.96 on July 16, jumped to $18.75 on Sept. 15 and inched back to close out the year at $14.79.

The good news is that both companies are expected to survive the more than two-year downturn in the trucking sector. Costello has said that companies surviving the downturn are likely to gain marketshare and be stronger companies when the economy rebounds.

The ATA recently released a 2008-2009 trends report that offers more insight into the trucking industry. Highlights of the report include:

• “While California and Texas may have the most people working in the trucking industry, Arkansas and Nebraska, in terms of percentage of total state employment, were on top.  In Arkansas, 3.6% of all people employed in the private sector worked for a trucking company, while the same was true for 3.5% of all private sector employees in Nebraska.”

• According to the U.S. Department of Transportation, there were more than 600,000 U.S. interstate motor carriers in the United States in June 2008.

• There are a handful of billion-dollar carriers operating in the U.S.; however, the industry is primarily comprised of small carriers. Federal figures show that 87% of carriers operate six or fewer trucks. Furthermore, nearly 96% of carriers operate fleets of 20 or fewer trucks.

• According to the U.S. Department of Labor, the number of active truck drivers in the U.S. decreased to 3.46 million in 2007. This was a decline of 15,000, or 0.4%, from 2006. From 2001 to 2007, for-hire and private fleets added a total of 304,000 drivers.

• Despite the overall decrease in the number of drivers in 2007, the government reported that the number of female drivers increased by 2,680 during the year. In 2004, the female driver force had declined to a recent low of 147,420. Since 2004, for-hire and private fleets hired nearly 36,000 female drivers (net gain).

• Trucking failures by year
1998: 1,439
1999: 1,200
2000: 3,670  
2001: 3,990
2002: 2,374
2003: 1,850  
2004: 1,195
2005: 2,250
2006: 1,305
2007: 1,985

• Trucking failures by fiscal quarter beginning January 2007:
2007 (Q1): 385
2007 (Q2): 445
2007 (Q3): 530
2007 (Q4): 625
2008 (Q1): 935
2008 (Q2): 970

• $2,806: The total annual state highway user fees for a typical 5-axle tractor-trailer combination in Arkansas as of January 2008. Arkansas ranked 33rd among the 50 states for its user fees.

• $4,176: The national average state highway user fees for a typical 5-axle tractor-trailer combination as of January 2008.

• The number of miles traveled by large trucks jumped 16.5% from 1997 to 2006, while the number of large truck fatal accidents dropped 6.4% during the same period. Consequently, the large truck fatal crash rate, which is the number of fatal crashes per 100 million vehicle miles traveled, plunged 19.5% during the 10-year period.