Kearny, N.J. ? The trucking business is showing signs of better health after a painful two-year slump that put hundreds of thousands of drivers out of work.

But it is consolidation not a surge in demand that is behind the emerging rebound of an industry regarded by many as a leading economic indicator. As a result, analysts and executives are hesitant to draw overly optimistic conclusions about a broader economic recovery.

Al Badri, an independent owner-operator from Salt Lake City, says he hasn't seen an increase in business for the trucking industry, contrary to what others in the industry are reporting. Badri said he believes there are still too many truckers for too little freight.

Still, carriers are hauling more freight, getting better rates and reporting higher profits and that trickles down to small business owners like Nat Jones, who has been replacing truckers’ worn-out tires for more than 30 years.

“My business has picked up a lot in the last two or three months,” Jones said. Sure, there are fewer 18-wheelers on the road these days, the 67-year-old Jones said, but those drivers that didn’t go out of business are picking up the slack and seem to be in need of fresh treads more regularly.

The industry got its reputation as a leading economic indicator because higher profits for trucking companies have been linked with increased consumer spending and expansion in the manufacturing sector.

Freight tonnage grew 3.5 percent during the second quarter, but large trucking companies are primarily benefiting in 2002 because thousands of smaller rivals went out of business during the latest economic downturn, said Bob Costello, chief economist at the American Trucking Assn., the organization Kansas Gov. Bill Graves will become president and CEO of after his term ends in 2003.

Roughly 7,000 carriers with fleets of five trucks or more shut down in the past two years and if you add carriers with fleets of four trucks or less, the number of closures amounts to tens of thousands, Costello said.

For survivors, “that’s just a favorable dynamic,” said Thomas Albrecht, a senior vice president of transportation research at BB&T Capital Markets in Richmond, Va.

Albrecht, who estimated there are 330,000, or 13 percent, fewer trucks today than there were two years ago, said large companies have been able to gain market share and even raise rates despite sluggish growth. Within the industry, Albrecht said, truckers that rely more on the retail sector have fared better than those dependent on the manufacturing sector.

Whatever the case may be, truckers fueling up at the Tullo Truck Stop in Kearny said the slight increase in freight volumes hasn’t translated into a windfall for them.

“The last couple of years have not been great,” said 37-year-old Al Badri, an independent owner-operator from Salt Lake City who has not taken a vacation in three years.

Badri said he believes there are still too many truckers for too little freight. To turn a profit, he spends entire days negotiating favorable rates with freight brokers. He also has had to delay capital improvements as long as possible.

For their part, trucking executives say they have been able to squeeze profits out of less revenue by using better technology to keep costs down.

Bill Zollars, chairman of Overland Park.-based Yellow Corp., another big trucker, said better logistics software has enabled companies to more efficiently coordinate the movement of trucks around the country.

Zollars added that while he was encouraged by the slight increase in demand during the second quarter, business appears to have leveled off so far in the third quarter.

“The economy seems to be getting better,” Zollars said. “But I still think there is fragility in the numbers we’re seeing.”