Truckers’ are fearing the worst as many don’t see themselves being able to remain in business for the long term. Their confidence has plummeted to recession levels and their fears of a downturn are skyrocketing.
According to a report by Business Insider, capacity, meaning the number of trucks available to move loads, was up by 29.9% in June year-over-year. Last year was particularly profitable for truckers, and it encouraged lots of companies to buy more trucks and hire more drivers. Companies ordered so many new trucks last year that by January there was still an eight-month backlog of new truck orders. Industry insiders told Morgan Stanley in a survey that they expected some of this capacity to go away too. That means more companies going bankrupt or scaling back business. There are some positive indicators, though; the trucking industry has generated 11,700 jobs in 2019, including 7,300 in the second quarter. But for some reason, this job growth is not translating into confidence or optimism in the trucking industry.
Freight rates have dipped year-over-year for six months straight while loads on the spot market, in which retailers and manufacturers buy trucking capacity as they need it, rather than through a contract, fell by 50.3% in June year-over-year. Truckers have also continued to warn of a “bloodbath” as they slash their profit expectations and companies file for bankruptcy.
Because trucking is a cyclical industry, many say this is just par for the course and it’s not really anything to be concerned about. “One of the problems that we’ve had in the past when things are hot, people will expect a year from now that it’s going to be just as good,” Don Ake, a vice president at the freight-equipment research group FTR, previously told Business Insider. “We will build too many trucks, and then any pullback that you have in the economy causes this large down-cycle, and it’s bad for everyone in the industry,” Ake said. “The cycles are bad for the industry, but you can’t control them. You can’t tell people not to buy trucks and not to build trucks.”
While some indicators and the mainstream media suggest the overall economy is healthy and no one should worry, truckers like Christopher Powell have seen their pay drop dramatically. Powell says his gross earnings have tanked to $3,500 to $5,000 a week from a range of $6,000 to $7,000 a week — and that’s before he has to pay out for repairs, maintenance, and other business expenses. “I don’t know how long I can stay in business if things don’t pick up,” Powell told Business Insider.
H/T [Business Insider]
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In my experience, they were conceited, red unionists, who felt magical about themselves. You owner / operators can find work on the freight boards. Welcome to the gig economy / free market.
While there are many signs of the economy reaching the end of the normal business cycle in America, internationally, disaster looms in Europe with the collapse of Dooche Bank and the dominoes that will fall in Europe from that collapse.
The drop in Semi Truck sales mentioned in this article may well herald a pause while trucking companies transition to electric semi’s like Tesla’s to obtain a strategic edge on the competition. There are several manufacturers of electric semi’s ready to market their product. But business sentiment and consumer sentiment, in general, is still surprisingly strong; as it always is before a Crash.
The BIG problem as I have mentioned here many times in the past is the ENORMOUS DEBT BALLOON that threatens China. And it is bursting with the major bankruptcies which I told you would happen….. years ago. Yeah, its in the archives.
From Zero Hedge: https://www.zerohedge.com/news/2019-07-09/chinas-losing-control-its-crushing-debt-load-defaults-and-missed-payments-skyrocket
If TRUMP ever really unleashes TARIFFS, China will crumple like a paper tiger. Paper from wayyyyy to much fiat and not enough dollars. 🙂
Certainly folks understand that the people pay the cost of tariffs, not countries. The trade deficit with China is $372B. For every 1% rise costs from tariffs Americans are bled out $3.72 Billion. MCGA!
Yes consumers pay the cost of TARIFFS, which is why they (consumers) will seek substitute goods from substitute countries as they subconsciously apply the Economic Principle of Substitution to their purchases.
TARIFFS are designed to make the purchase of Chinese products economically unattractive by artificially manipulating price elasticity in the marketplace through the imposition of this TAX !!! 🙂
Sounds like you may be a Broker?
I was an OTR driver for 23 years and have personally experienced the ups/downs of this industry.
Unless you are an O/O,or have been one,you have absolutely no idea what it’s like,or how tough it can be,you can only speculate..
That’s okay. Elon says the robot trucks are on their way.
I drove truck for 40 years. owned several a different times. It was a living. When Obummer got the fuel up above $4 a gallon the trucking industry lost freight to the railroads. Owner operator Long haul trucking suffered and never rebounded.
I’m calling complete and utter BULLSHIT on this. In my line of work, we rely on common carriers (trucking companies) to deliver our products to customers. We have a helluva time finding trucks to deliver our goods, and even when we do, a lot of the time they will drop our load in favor for another, more profitable one. There are NOT enough drivers out there to keep up with the demand, ESPECIALLY in the oilfield business. The main problem is the older truckers retiring and not having enough young guys wanting to drive a truck and replace the older ones. If a driver “cant find work” its because they are either lazy and aren’t looking or they’d rather sit on their ass at home drinking beer and watching NASCAR. I know guys that are making $150k just hauling water and sand in the oil patch. There is NO recession in the trucking industry. PERIOD.
This is another BS article in a growing percentage of BS articles on this website. There is, in point of fact, an extreme shortage in long-haul trucking availability. A two month wait is the norm at present.
What these articles never address is the underlying rules and regulations that are killing trucking. Get one ticket and you could have your insurance dropped. Drive 5 minutes over allowed time and you’re looking at fines. Have one accident and your insurance rates skyrocket. Have a major breakdown and your out thousands and thousands of dollars. I’ve been in trucking all my life and I’m glad I got out.