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Trucking companies will fail once PPP loans run out, experts say

Aid from the federal government in the form of Paycheck Protection Program loans might be propping up trucking companies that are on the brink of failure.

Industry experts said the loans have allowed companies to “persevere” longer than they would have otherwise in a recession, cautioning this could lead to an uptick in company failures once the cash runs out.

“Yeah I think you will [see an increase] because if they were having trouble before this it doesn’t mean they fix the problems after it,” experts said during a webinar hosted by FreightWaves on Tuesday.

Experts are alluding to underlying challenges the industry is still dealing with, which have not gone away. For example, trucking companies are still struggling with rising insurance rates, a weak spot market, difficulty finding qualified drivers, trade uncertainty and increased costs related to new regulations.

Shipping rates have also been so low that it has been more profitable for some companies to keep their trucks parked rather than to accept a job.

TRUCK DRIVERS WORRY ABOUT DELIVERING TO AREAS WITH DEFUNDED POLICE DEPARTMENTS

More failures would come on the heels of a brutal 2019, which saw at least 795 companies fail as spot pricing dropped and trade uncertainty pervaded in the market.

Prior to the pandemic, the industry had been expecting 2020 would be a recovery year for truckers.

The good news, however, is that the impact of potential pending failures in 2020 likely wouldn't be as strong as they were in 2019.

That’s because the market won’t be as “soft” as it was last year, FreighWaves’ experts said, though volumes and capacity will be erratic.

Overall, however, drivers should be reabsorbed back into the labor force as demand picks up while the broader U.S. economy recovers.

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