Due to various market conditions, Jevic Transportation Inc., a
regional less-than-truckload (LTL) carrier providing services in the Northeast
announced today it is discontinuing operations.
In a letter to customers, Jevic President and CEO David H. Gorman
said “the current high fuel costs, economic downturn, increasing insurance
costs, and tightening credit markets have made this decision necessary.” The
letter also noted that Jevic will cease providing pickup service, effective
today, but it will continue to deliver all freight within its system prior to
closing.
With market conditions in the LTL sector remaining unsteady and
capacity continuing to outstrip demand, this news did not catch anyone
off-guard. In fact, one LTL executive who asked not to be named told LM this
could be the beginning of a trend which sees more LTL operators put the brakes
on business.
Fennimore based Koschkee Truck Lines closed their doors last week. With fuel going the way it is I look for a lot more fall-out in the industry. I predict that one or two more local LTLs are on the ropes and that Jevic won't be the biggest carrier to close their doors this Summer.
Demand is mushy and there's way too much capacity to carry into a slowing economy. Given a hard shake-out it'll be a buyer's market for any carrier with strong cash reserves this Fall. If YRC let's one of its carriers go down to break the Union and consolidate terminals we could be looking at a blood-letting like we haven't seen since deregulation.
“With the way market capacity has been greater than demand, companies of
this kind will struggle because of the difficulties of customers to understand
what the true value proposition is,” said Jindel. “Other companies with revenues
in the $50-to$100 million revenue range are likely to experience these types of
challenges in the next four-to-six quarters.”
Six quarters is an ugly-long time. You might want to fasten your seat belts.
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