Trucking companies across the country have experienced a rough first half of 2019. Coming off a profitable and robust 2018, the transportation industry has taken a one step forward, two steps back, which is causing many trucking companies to shutter their doors and leave thousands of drivers unemployed. There are many factors that have led to a shaky 2019 for trucking. Let’s take a look at a few.
As reported by Business Insider, the trucking industry is an $800-billion-dollar industry and moves hand and hand with the economy. One of the more basic economic principles, supply and demand, connects the capacity of trucks to loads being up 29.9% in June year-over-year in the spot market. Coming off a profitable 2018 many trucking companies were adding to their fleets by purchasing new trucks to keep up with the freight volumes. Reality, however, has kicked in this year and the market has been flooded with available equipment when there simply weren’t enough loads to move. Trucking companies (some faster than others) have had to let drivers go while some have been forced to shut down completely.
In addition to the overcapacity, Business Insider states spot market truck load rates have fallen by 18.5% year over year in June. Lower rates, less freight, and an overcrowded supply of trucks certainly paints a clear picture as to why trucking has taken a hit. And then there are the factors that are out of everyone’s control….Mother Nature. A 2017 FreightWaves report states “bad weather is thought to cause some 23% of truck delays and costs the industry as much as $3.5 billion a year.” 2019 saw record low temperatures across the Midwest which stalled and even cancelled many loads.
Analyst Jason Seidl of Cowen believes that the struggles plaguing the industry have been “greatly exaggerated.” He stated “the tremendous strength in the freight market in the first half of 2018 just makes 2019 look really bad.” 2019’s rates are on par with what we saw in 2017 and are still above the 2016 rates where the industry had recession qualities. Overall there is a brighter outlook for the second half of 2019 after a recent spike in retail spending but it is always wise to stay on top of new trends.