By Michael Snyder | 18 June 2019
THE ECONOMIC COLLAPSE — The U.S. trucking industry has not experienced a downturn of this magnitude since the last financial crisis, and this is one of the clearest signs yet that the U.S. economy is steamrolling into a severe economic downturn. When economic activity is increasing, the trucking industry sees rising demand for their services and freight rates tend to go up. That is precisely what we witnessed in 2018, and truckers were hoping for more of the same in 2019. But when economic activity is on the decline, the trucking industry sees decreasing demand for their services and freight rates tend to go down. Unfortunately, the numbers that the U.S. trucking industry is reporting right now are absolutely abysmal. Freight rates have now fallen for six months in a row on a year-over-year basis, and according to Business Insider during the month of May loads on the spot market fell “by a chilling 62.6%” compared to last year…
This year has been rocky for the $800 billion trucking industry.
After a raucous 2018, 2019 has seen retailers and manufacturers moving less, according to the Cass Freight Index. Freight rates have dipped year-over-year for six months straight. Loads on the spot market, in which retailers and manufacturers buy trucking capacity as they need it rather than through a contract, have fallen by a chilling 62.6% in May year-over-year.
The spot market is where we see the marginal changes in demand most clearly, and what this is telling us is that we are already in a transportation recession.
Of course that is almost certainly putting it too nicely. According to one owner-operator, what we are witnessing right now is nothing short of a “bloodbath”…
The earnings of big and small players alike are getting hit as factory activity continues to decline. The Lexington, Kentucky-based owner-operator Chad Boblett said some truck drivers are seeing a “bloodbath.”
There has been a spate of trucking companies declaring bankruptcy this year, too. The largest was New England Motor Freight, which was No. 19 in its trucking segment. Falcon Transport also shut down this year, abruptly laying off some 550 employees in April.
If demand does not start rebounding really soon, we are going to see many more trucking companies go bankrupt. […]
My observation of truck company owners/mgmt in the 15 years I’ve been driving OTR, is that they are totally reactionary. Downturns and market corrections expose weaker companies which do not survive. Industry publications have been headlining ‘driver shortages’ my entire career, while driver pay has barely matched inflation. I have watched company after company throw drivers and equipment at accounts, rather than dialogue with their customers and solve problems. Only the banking industry gets to have someone else pay for their mismanagement. “It’s the business cycle, Mabel.” But I guess ‘bloodbath’ makes a better headline.
OTR driver jobs may also be a thing of the past, just like many factory worker jobs that are now being done with machines. The corporate globalist big wigs have big plans, all of them aimed at getting rid of the “human element”.