- The slowing US economy is hitting truck drivers, and the sector could be heading for worse conditions than 2008.
- Per-mile rates are less than half of levels from 2021, according to FreightWaves data cited by Bloomberg.
- Inflation, a glut of goods supplies, and higher operating costs all weigh on trucking.
The sluggish US economy is weighing on trucking, and the sector faces a slowdown that could get worse than it did in 2008.
Freight demand has deteriorated over the last year, and per-mile rates for drivers have plunged since the pandemic boom in 2021.
Trucking offers a gauge of the broader economy, as it represents nearly two-thirds of tonnage carried by all domestic freight transportation, the American Trucking Association said. And a so-called freight recession could signal a downturn.
Inflation, higher operating and maintenance costs, and the declining demand of goods all combine to paint a bleak picture, according to an Odd Lots interview featuring FreightWaves CEO Craig Fuller and editorial director Rachel Premack.
For example, drivers are commanding per-mile rates as low as $1.49 per mile, per FreightWaves. Those rates hovered at $3.01 two years ago, and are worse than the levels seen in a brutal 2019 slowdown.
After adjusting for inflation hovering near 5%, Bloomberg noted that the current National Truckload Index rate of $1.49 a mile is actually closer to $1.19.
And as capital becomes more expensive, trucking companies have been forced to pay more than usual to finance their vehicles.
What's more, the tender rejection rate for truckers — how frequently drivers can reject a job, a number that typically soars in a hotter market — has fallen to 2.53%, from the nearly 30% seen in 2021.
The grim data come as Shelly Simpson, the president of trucking giant JB Hunt, said in an earnings call recently that the current market is "reminding us of 2009."
Meanwhile, the American Trucking Associations' advanced seasonally adjusted for-hire truck tonnage index dropped 5.4% in March, marking the largest monthly drop since April 2020.
Other recession signals continue to blare across the US. The New York Fed's Recession Probabilities model places the odds of a downturn before April 2024 at about 68%.