New reports from the trucking industry show the transportation recession continues to gain momentum through the end of summer, likely to continue through 2019 into 1H20.
The US trucking industry had a blockbuster year in 2018, as high demand for freight allowed transportation companies to expand fleets. But since freight demand was artificial, sparked by importers pulling forward to get ahead of tariffs, the good times were destined to end and end rather sharply.
The Institute for Supply Management’s purchasing managers index plunged to 49.1 in August, the first time a contraction has been seen since 2016. Prints below 50 suggest the manufacturing economy is shrinking. Data also showed new orders dropped to a seven-year low, while the production index hit 2015 lows.
A transportation/manufacturing recession is developing, but it didn’t start overnight. The first signs of a slowdown began last summer when freight rates peaked last June, and have since collapsed 20% through this year, reported The Wall Street Journal.
“There are more trucks than there are loads now,” said Kyle Kottke, general manager for Kottke Trucking Inc. in Buffalo Lake, Minn.
Production for new trucks is still elevated, as manufacturers fulfill orders placed last year, but new purchases and production volumes are starting to weaken.
According to ACT Research, heavy-duty truck orders from the four largest truck makers in North America (Daimler Trucks North America, Paccar, Volvo Trucks USA, and Navistar International) collapsed 80% in July YoY. Orders in June plunged 69% from a year earlier.
XL Specialized Trailers, a manufacturer of specialized trailers for hauling heavy things, has warned that in the last three months, orders have plummeted.
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