The U.S. trucking business continued to weaken in January, according to an analyst's survey of the freight market released Thursday. The survey suggests trucking stocks may have even further to fall from their already depressed levels.

The number of truckers who said trucking demand was worse in January than a year ago increased to 84%, compared with 74% who said so in December, according to the survey conducted by Longbow Research.

"Truckload fundamentals are just not getting any better," Longbow analyst Lee Klaskow wrote in his report on the survey. "We continue to see available capacity increase relative to demand, which is putting additional downward pressure on truckload base rates."

Major trucking stocks have all declined more than 10% during the last 12 months. YRC Worldwide Inc. (YRCW) and Con-Way Inc. (CNW) have seen the sharpest declines, down more than 80% and 50%, respectively.

Longbow's survey comes at a time when the prices for trucking services have reached an irrational level. Klaskow and other analysts have said independent truckers and trucking companies are accepting rates at or below their costs as they compete with each other over a scarcity of shipments.

While the trucking industry has been in decline for three years, analysts said trucking demand decelerated sharply after last year's holiday shopping season turned out to be the weakest in more than a decade.

"The falloff in demand last fall has created a lot of excess capacity that's putting pressure on pricing and forcing trucking companies that are desperate for survival to aggressively bid for intermodal loads," Morgan Keegan & Co. analyst Arthur Hatfield told Dow Jones Newswires.

Hatfield said trucking companies that don't normally compete for intermodal freight - shipments that are hauled using some combination of ship, truck and rail - are getting into the business to make up for the falloff in their regular businesses.

That means a truck that would normally move goods from a ship to a railcar is now competing with the railcar for the fees to carry the load the entire journey. That also means truckers must accept lower shipping rates since rail has greater cost efficiencies than trucks.

Since a large majority of intermodal is tied to the automotive and retail industries, intermodal freight rates have been under extra pressure due to falling vehicle sales and production cuts by auto makers, plus weaker consumer spending on retail goods.

Longbow's Klaskow told Dow Jones that large trucking companies are competing for long-haul intermodal rail routes just to keep their people busy and their trucks in use. "They are just doing it for better asset utilization," Klaskow said. "There are only so many people that they can furlough and lay off, because eventually things are going to get better and you're going to need people."

Despite their efforts to keep their trucking fleets in use, trucking company asset utilization fell to roughly 82% in January, according to Longbow's survey, compared with 84% in December and 86% in November.

Large trucking companies, such as J.B. Hunt Transport Services Inc. (JBHT), Werner Enterprises Inc. (WERN), Heartland Express Inc. (HTLD), Knight Transportation Inc. (KNX), YRC Worldwide and Con-Way will survive the current imbalance in demand and supply, Klaskow said, due to their cost controls, healthy balance sheets and access to capital.

Independent truckers won't fare as well, Klaskow told Dow Jones, because the low freight rates are forcing them to run their businesses for cash flow instead of profitability.

"They need to manage their cash flow to pay for gas to haul their truck so they can pay for their truck," Klaskow said. "So you have many trucks chasing too little freight, and pricing becomes irrational," or below trucking costs, he said.

Despite running unprofitable businesses, many independent truckers refuse to leave the business, Klaskow said, which only exacerbates the overcapacity in the trucking industry.

"Unfortunately a lot have to go out of business, because you have to have the supply and demand equilibrium balance, and to do that a lot of supply has to come out," he said.

-By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com