SAN FRANCISCO (Thomson Financial) - Truckload carriers are increasingly
turning to factoring companies to help ease cash flow difficulties brought on by
higher fuel prices, and some firms could be headed for bankruptcy, an analyst
said.
"One trucking service provider noted that roughly 30 to 40 carriers
currently do business with factoring companies, which is a significant
increase," Wachovia Capital Markets analyst Justin Yagerman wrote in a note to
clients Friday.
Diesel rose 12 cents per gallon to $3.40 as of a week ago, up 91 cents from
a year ago, according to the Department of Energy.
"We currently expect high diesel prices coupled with tractor licensing and
prepayments (for items such as insurance policies and tolls) to be a catalyst
for truck capacity to exit the market" in the first half of the year, Yagerman
said.
Morgan Stanley freight transportation analyst William Greene echoed
Yagerman's sentiment and said Friday that while truckload demand was
reaccelerating after a trough, the sector will struggle to recover without
additional efforts to shrink fleet size.
"If carriers don't reduce supply on their own accord, we may need to wait
for external forces, such as a strong rebound in freight demand or additional
carrier bankruptcies, to force the truckload market back into balance," Greene
wrote in a research note.
Stock of J.B. Hunt Transport Services Inc. was up 6 cents at $28.61. Werner
Enterprises Inc. shares were up 14 cents at $18.16. Landstar Systems Inc. stock
was up 56 cents at $46.71. Covenant Transportation Group Inc. stock fell 31
cents to $7.80.
Brigid Gaffikin
bg/pc
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