Moving back to our special focus on transporation this week, Analyst Jason Seidl spoke to us about how the rough times in the economy are taking their toll in the transportation space. He talked to us a little bit about what companies in this space are doing to adjust to these rough times in the market:
Mr. Seidl: You’ve seen many larger truckload carriers pulling trucks out of their fleets. J.B. Hunt (JBHT), Knight (KNX) and Werner (WERN) have all done it. Actually, since the beginning of 2007, Werner has pulled 30% of its medium to long haul or regular fleet out of the marketplace…However, we must remember that the preponderance of truckload carriers out there aren’t big carriers and tend to operate much smaller fleets, the majority of which have fewer than 10 trucks. Thus far we have not seen a large spike in bankruptcies among the smaller carriers. A couple of years ago, freight rate increases were at unprecedented levels for truckload carriers. I believe that carriers took advantage during these times and made hay while the sun was shining. While any proverbial war chests that were built up during this period have helped carriers hang on, I don’t think the little guy can last that much longer.
For the full interview with Mr. Seidl, including an outlook for 2008 and stock picks, click here.
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