Show BABSON'S THE TRUCKING INDUSTRY By Babson's Reports Incorporated Incorporated Wellesley Hills Mass Since the end of World War II the truckers have made tremendous progress outpacing outpacing ing the traffic gains in overall overall over over- all transportation by a substantial substantial substantial sub sub- margin This has been accomplished by diversion of traffic primarily from the rails Today the trucking industry Isone is isone isone one of the nations nation's largest with revenues exceeding 50 billion annually It provides employment for some persons and is a major consumer consumer consumer con con- sumer of goods and services Joining Forces This Is not a centralized in in- It is highly fractionalized fractional fractional- l. l involving more than companies with only about 50 being publicly own own- ed Many privately held firms are still controlled by the founding families or original owners But in recent years there has been an increasing trend toward consolidation or merger There seems little littie doubt that this trend will continue continue con con- as the participants strive to extend their operating authorities authorities au au- and acquire established establish establish- ed and professional management management manage manage- ment teams Mergers and consolidations are not the only factors responsible responsible re reo for the industry's growth Our population has moved to suburbia away from the traditional rail centers Decentralization Decentralization De De- centralization of industrial production has also led to plants being built away from rail centers and simultaneously simultaneous simultaneous- ly Iy our federal highway system which is well along toward completion has enabled other truckers to serve reaching far-reaching markets Overhead Pressures Pressure At the same time that revenues revenues revenues re re- venues have grown expenses have also aiso increased thereby resulting in a steady pressure pressure on profit margins The truckers truckers truckers' truckers truckers' truck truck- ers' ers biggest expense expense is labor wages and fringe benefits amount to o some two two thirds thirds of operating costs in comparison with 50 per cent for railroads and 40 per cent for airlines Since 1963 the trucking industry industry indus indus- try has been absorbing increases es in labor expense of about five per cent a year Through technological advances it has been able to absorb these by byuse byuse byuse use of larger equipment and tandem trailers Turnaround The trucking industry has shown good profit improvement improvement improve improve- ment and barring any unforeseen unforeseen seen developments the year as a whole should be very favorable Aiding this years year's results has been the rate relief relief re reo lief granted by the ICe which will witt more than offset the wage boosts This plus a generally general general- ly stronger economy labor accord accord ac ac- cord and increased freight movement argall are all t vf f log factors to years year's earnings earn eara- ings improvement for fort I the truckers The success success of the truckers is dependent on a healthy economy Should there be a slackening the trucking industry's industry's indus indus- try's growth rate would level off But should such a slowdown slowdown slow slow- down occur the Babson staff feels it would be e only a temporary temporary tem tern situation not permanently permanently per per- damaging to this in in- dus y Bright Future On the whole we feel the trucking industry is in a a favorable favorable position and we are its near near- and long tern long term out out- look As more and more companies companies com com- merge the surviving stronger positions are better able to o cope with the narrow profit margins of this cyclical al alb b business sil Also I o. o un unlike ike the tile situation situation sit sit- In hi the rails the Inter Interstate Interstate Inter Inter- state Commerce Commission is not likely to become a roadblock roadblock road road- block to future combinations Advice Adyce Presently Babson's abson's Reports is maintaining hold advices on the better quality issues in inthe inthe inthe the group which have shown good earnings growth over the years and whose management is highly regarded in the in In- These in include lude McLean McLean MeLean Mc Me Lean Trucking Pacific Intermountain Intermountain Intermountain Inter Inter- mountain Express National City Lines Cooper Jarrett and Ryder System Inc Several of these hese have been recommended recommend recommend- ed by us during recent years Currently we favor for purchase pur pur- phase chase hase the common sto stock k of Consolidated near 33 3 |