According to trucking industry analysts, it is difficult to forecast exactly what impact the $700 billion financial-market bailout signed into law on Friday will have on credit availability and the trucking industry in general.
Passed by a 263 to 171 vote in the House of Representatives, the bill was signed into law by President Bush two hours later. There is hope that this measure will keep the financial crisis from getting worse, although there is disagreement on whether we’ve hit bottom yet.
“It’s not just the truckers and the fleets that will have trouble getting credit—it’s all businesses,” Eric Starks, president of FTR Associates, told FleetOwner. “Smaller guys will be hit the hardest because they will have so much trouble getting financing.”
Starks said he believes the trucking industry’s recovery might not arrive until into 2010 or possibly 2011, as the slowdown could continue through the third and fourth quarter of 2009, depending on credit availability.
Truck orders have started to drop, and will continue to drop as conditions worsen, Starks said. He added that it’s difficult at the moment to see any growth, as the best-case scenario would be if the economy remained flat for the next year and saw growth by the end of 2009.
The worst-case scenario, on the other hand, could decimate trucking. “A 10% decline in freight is not outside the realm of possibility,” Starks said. It could also include the economy plunging into a deep recession such as the one in 1982, he added, when the unemployment rate neared 11% and numerous banks went bankrupt.
Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), told FleetOwner that the benefit of the bailout would be in the short run, alleviating the credit crunch that has made lending increasingly difficult. “It’s not going to have a direct impact on the trucking industry, it’s more of an indirect impact,” he said.
According to Brady, because businesses and consumers can’t get credit, businesses are conservative on spending, so less freight is being moved. He said that it might take two to three months for freight to pick up again, but the fact that the bill was passed should improve businesses and household’s expectations of the economy.
However, Brady added that the current crisis has taught banks to be a little more selective about who they give money to. “We’re not going back to what we were like two years ago where anybody could get credit,” he said. “Banks were giving loans to people who weren’t justifying their income. They’re not going to do that again anytime soon.”
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