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Keep On Truckin’

May 26, 2023 | Posted in: Wealth Strategies

What Does Trucking Tell Us About The Economy?

Pundits are prone to making confident predictions regarding the economy, but the reality is that the outlook is generally uncertain and there are always crosscurrents. A great example is the trucking industry which is in the middle of a painful downturn. Truck drivers are being paid an average of $1.49 per mile which compares with the peak in 2021 of $3.01. Trucking companies frequently overbook so they are often forced to reject loads offered by shippers. At the peak, they rejected about 30% of outbound loads whereas that figure today is 2.5%. On top of weaker demand, the industry is smarting from higher interest rates and maintenance costs.

One explanation for the industry’s problems is overcapacity in that the number of trucks increased 17% between 2019 and today. Remember all of the headlines regarding shortages of truck drivers? Well, the invisible hand worked its magic, and a large number of new drivers entered the industry. The other possible explanation is weak demand; trucking freight volume has declined by about 8% since last summer. So, is this just an industry that needs to right size? Or, are we seeing early signs of declining consumer demand and the possibility of the much-discussed recession?