Trucking Growth Will Continue, Analyst Says
Mar 1, 2001 12:00 PM
Despite the overall economic downturn in recent months, Deutsche Banc Alex Brown (DBAB) analyst John Barnes is predicting that the trucking industry will continue to grow — although not as fast.
Barnes, who officially launched DBAB coverage of the truckload and less-than-truckload sectors, believes several key trends are fueling growth in the trucking industry, which is projected to grow 3% per year from 2000 to 2008. These include the growth of outsourcing and the increasing importance of time-specific deliveries, he said.
“As shippers realize that there are more appropriate uses of their free cash flow, we believe outsourcing of the trucking function will accelerate and may provide upside to the projected growth rate,” said Barnes.
For the truckload carriers, Barnes predicts the failures of smaller trucking companies will create a stronger pricing environment and more attractive acquisition opportunities for the largest carriers.
On the other hand, Barnes believes the LTL carriers are now in a position to outperform their truckload counterparts due to union agreements that are favorable in a down economy and the even stronger pricing environment created from several years of capacity rationalization.
Despite the sizeable growth prospects facing TL and LTL carriers, Barnes remains cautious, stemming from concerns he has about the impact of the slowing United States economy and rising operating costs.
