Trucking Company Failures Surged in 2020, Small Carriers Hit Hardest
Washington D.C. – A new report reveals trucking company failures surged in 2020… up nearly 185% from the year before and small carriers were the hardest hit.
According to analysis from Broughton Capital LLC, a respected transportation data firm, 3,140 trucking companies called it quits last year.
Nearly half of those failures (1,580) came during Q2 after widespread lockdowns to contain the spread of the coronavirus hit the United States economy with unprecedented ferocity.
A March explosion of freight demand in essential goods, especially in the grocery sector, quickly waned by mid-April.
Spot market rates plummeted most impacting small carriers and especially single truck operations.
In fact, according to a report in the Wall Street Journal, in 2020 the average size of failed fleets was 40% smaller than in 2019.
The American Trucking Associations (ATA) reports that 97.4% of trucking companies operate 20 or fewer trucks, while 91.3% of fleets operate six or fewer trucks.
Distraught and outraged by the meager rates being offered by freight brokers, independent contractors staged the longest trucker protest in history.
In May, hundreds of truckers traveled to Washington D.C. for “MayDay,” in attempts to bring public awareness to the crisis facing small trucking businesses.
The historic three-week protest garnered the attention of President Donald Trump and eventually led to a Department of Justice investigation into alleged anti-trust violations among freight brokers.
However, by mid-June, national averages for van and reefer rates climbed above where they were before the coronavirus crisis in February, excluding fuel surcharges, according to DAT.
Still, rises in insurance and maintenance costs, as well as the downturn in the oil and gas sector especially impacting carriers in Texas and Oklahoma, and inadequate cash reserves were commonly cited reasons to Transportation Nation Network for the growing list of carrier failures.
Then as states began reopening across much of the country by late summer and into early fall trucking failures began to dip.
Broughton Capital reported 580 failures in Q3 and 280 in Q4.
Despite the challenges created by the pandemic, tonnage was down only 3.3% for all of 2020, compared with the same 12-month period in 2019, ATA reported in January of this year.
“Tonnage ended last year on a high note,” Bob Costello, ATA chief economist assessed last month. “With the stimulus checks recently issued and with a strong possibility of more in the near future, I would expect truck freight to continue rising.”