Braces for Freight
As inflation continues to rise and the economy slows, experts believe the trucking industry is
finally winding down from its pandemic boom. Recently, many trucking companies have been
forced to raise prices and cut back on services as freight demand has begun to soften.
The American Trucking Association has also confirmed that the 2021 driver shortage has capped
at 80,000 drivers and experts say the industry needs at least 160,000 drivers by 2030 to keep
up with freight demand.
Add in the effects of the pandemic and the supply chain crisis, and many trucking companies
are facing an uncertain future. The industry is already feeling the effects of the slowdown, with
truck orders falling sharply in recent months and new truck sales expected to drop by double
digits in 2021.
For many, these are all signs that the trucking industry is heading for a freight recession, which
could have major implications for the US economy. Some experts believe that the trucking
industry is already in a recession.
A recession is defined as two consecutive quarters of negative economic growth. When it comes
to the trucking industry, a recession is typically characterised by a sharp drop in freight demand
and trucking activity.
This has been the case in recent months, with prices of big rigs (used) slumping 20% cheaper
than in previous years. Global disruptions also caused the supply chains to disarray, with port
congestion, logistics challenges, and product shortages hampering business operations
everywhere. The Bank of America has been sounding the alarm on a freight recession as early
as April 2022.
In a Freight Recession, fewer freight moves because companies have too much inventory, are
cutting back on production, or both. This lack of activity subsequently weakens demand for
trucking services, leading carriers to reduce capacity (by idling trucks and/or laying off drivers)
and further reducing freight activity. The trucking