Industry analysts say that struggling carriers may not survive once the government’s Paycheck Protection Program funds end.
On Tuesday, Freightwaves released its June Market Update Webinar. Hosts FreightWaves’ Director of Freight Market Intelligence, Zach Strickland, and Economist, Anthony Smith discussed the state of the industry.
During the Q&A session, Strickland was asked, “When PPP loans run out, do you expect an uptick in trucking company failures?”
Strickland said that PPP loans essentially sustained struggling companies. He said that if the trucking companies were struggling before PPP, they likely didn’t fix the issues and once the money runs out, they’ll be facing the same issues.
Even before Covid-19, many trucking companies were struggling to survive. Over the last two years, hundreds of trucking companies have shut their doors, citing increased insurance costs, a soft freight market, and regulations.
There doesn’t appear to be an end in sight for struggling carriers, as the House just passed a bill that would increase required insurance coverage from $750,000 to $2,000,000.
Strickland did say that he doesn’t expect the failures to be as great as 2019 but that 2020 will still be a spotty year for freight.