Dive Brief:
- This month, multiple organizations that track the trucking industry reported the sector is heading toward, or is already in, a recession.
- ACT research showed two quarters of negative sector growth, DAT reported a 50% decline in year-over-year freight spot market loads and the Cass Freight Index for May 2019 saw declining freight shipment levels. All three organizations point to a possible "economic contraction" in the trucking industry in the coming year based on these factors.
- In a recent DAT blog post, financial analyst Donald Broughton said the economic outlook shifted. "First, it was 'We don’t expect growth to be as strong as 2018, but see no reason to predict a recession," he wrote. "Now, it’s 'in almost every sector, in every mode of transportation, in every part of the globe, freight flows are signaling economic contraction.'"
Dive Insight:
Earlier this year, economists forecast a potential slowdown in the trucking industry in 2019. DAT data predicted a negative impact of tariffs on the freight market. Part of the problem stemmed from shippers rushing inventory into the U.S. to avoid tariffs, which pushed freight rates upward as trucking capacity strained to keep up.
Now however, this trend has begun to slow down and DAT has reported dramatic decreases in load volumes across the spot market as well as in its van, flatbed and reefer load-to-truck categories.
DAT Trendlines
| Category | Year over Year |
|---|---|
| Spot Market Loads | -50.3% |
| Spot Market Capacity | +29.9% |
| Van Load-to-Truck | -50.3% |
| Van Rates (Spot) | -18.5% |
| Flatbed Load-to-Truck | -74.5% |
| Flatbed Rates (Spot) | -18.45 |
| Reefer Load-to-Truck | -55.5% |
| Reefer Rates (Spot) | -16.8 |
SOURCE: DAT Trendlines
The trucking industry often experiences seasonal fluctuations, though not all of them lead to predictions of a recession, ACT President Kenny Vieth told FreightWaves.
According to the Cass Freight Index for May 2019, which ACT cited in its own recession predictions, "The weakness in spot market pricing for many transportation services, especially trucking ... along with airfreight and railroad volume data, strengthens our concerns about the economy." In addition, the Cass report cited concerns about the trade environment and the potential for future disputes, which have made its predictions more concerning than the average seasonal decline.
