Chicago is one of the nation’s trucking hubs. Chicagoans are used to seeing tractor trailers on area highways and roads at any time of the day. But these trucks are becoming a less common sight as lags in the economy are forcing more Chicago and Illinois trucking companies to close. And while this might decrease the number of Illinois trucking accidents, it does not bode well for the state of the current economy.
Over the last year, more than 3,000 trucking companies went out of business, which translates to about 7 out of every 100 trucks that were taken off of the road. And while economic analysts assure us that the economy is slowly recovering this trend is not apparent when we look at the frequent closing of trucking companies in Illinois, Chicago, and nationwide.
In just the first quarter of 2009 about 480 trucking companies closed nationwide. While this only impacts less than 1% of our nation’s total freight capacity it still leaves too many trucks competing for too few shipments.
If the economy continues to be weak, more trucking companies could go out of business. Experts predict that the pace of closures will continue to increase until supply is more aligned with demand. However, when trucking business begins to increase again this trend should be mimicked in the rise of other economic factors, such as employment rates and gross domestic product.
Economist Tavio Headley, of the American Trucking Association, predicts that the trucking industry business will pick up as early as next quarter, but believes that the economy will probably stay weak for a while. “We do expect the economy to continue to contract, but at a slower pace over the next few quarters,” Headley said.
Trucking companies usually see shipments increase three months to a year before a broader economic pick up. This increase is an indicator of retailers restocking their shelves and manufacturers picking up the pace of production. For example, in the recession of 2001, freight shipments improved a full year before the broader economy recovered.
Lower fuel prices are not necessarily helping the trucking industry at this time. In July 2008, the price of diesel fuel was about $5.00 a gallon. Now it’s about half that rate, but trucking volume on U.S. highways has not caught up. Diesel fuel is now at about $2.19 a gallon according to the Energy Information Administration.
Another reason that trucking companies are financially in a downturn is because they were unable to raise their shipping rates because of the rapid increase in fuel prices in 2008. The fees that truckers charge shippers is based on fuel costs. Those fuel surcharges help offset millions spent on filling tanks. But now that the surcharges are gone, trucking companies are forced to keep the rates low and as a result are losing money.
Chicago’s Kreisman Law Offices has been handling Illinois trucking accident cases for over 30 years, serving areas in and around Cook County including Oak Lawn, Downers Grove, Des Plaines, and Evanston.