Painful transition ahead, trucking CEO tells House fuel panel

Maverick CEO Steve Williams warned legislators of 'rising tide' of failing carriers

By KEVIN JONES
The Trucker Staff

6/25/2008

WASHINGTON — Called to Washington to testify about the impact of market speculation on the price of fuel, a trucking industry leader didn’t give congressmen a lot of global finance ‘why’, but did give plenty of ‘what-for’ when it comes to struggling truckers.

Maverick USA Chairman and CEO Steve Williams told a House Energy and Commerce subcommittee Monday that his company didn’t make a profit in 2007 — the first red ink in its 27 years. And the culprit is the soaring cost of diesel.

Maverick’s fuel bill increased by $12 million from 2006 to 2007, and between the sagging economy and tough freight pricing, the company had to absorb the cost increases. If the current diesel price remains constant for the rest of 2008, the fuel bill for his 1,500 vehicle flatbed fleet will increase from $67 million last year to $115 million, up 72 percent, he reported.

Williams characterized the rising tide of carrier business failures as “uncharted waters” even for an industry accustomed to perilous cycles — “but it’s going to get much worse before it gets better,” he said.

Asked about the struggles of the many small carriers, and the possibility of less competition, Williams compared the current fuel cost shake-out to industry changes in the early 1980s following deregulation — resulting in a “significant change in the makeup” of trucking.

“The gentleman that may be losing his job driving a truck that he owned might migrate to a company such as mine and drive a truck for me, but that doesn’t limit the pain and anguish of the loss of equity or the nest egg that he, or he and his father, had generated over an entire lifetime,” he said. “There’s going to be a lot pain in the transition.”

Williams added that the truckers who are hanging on are regaining some rate traction because of capacity leaving the market — not because of improving freight demand. “We’re almost back to break even, which I never thought would look good,” Williams said of Maverick’s bottom line.

Asked to look toward the trucking horizon, Williams suggested that those carriers with capital backing would survive.

“But I think it’s important to note that when they’re wounded as they are, they’re unable to invest in a lot of the new technologies that will allow us to continue to meet our fundamental challenge, and that is to move much more freight in a much more congested environment while we improve highway safety,” he said. “We’re wasting some time as we need to get on about doing better things in a better way.”

The coming problem, he concluded, is that when the industry and economy do improve, there likely won’t be enough surviving trucks to carry the freight load — “whether it’s strawberries or coiled steel.”

To see Williams’ opening testimony, as well the proposed “sustainability initiative” that he submitted to Congress, click here.