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Trucking Recession: Heavy-Duty Truck Orders Collapse, Production Slashed, Cancellation Orders Soar
Trucking Recession: Heavy-Duty Truck Orders Collapse, Production Slashed, Cancellation Orders Soar
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.
As heavy-duty truck orders collapse, suppliers, such as ones who produce transmissions have predicted that the outlook for sales this year will be horrible.
XL Specialized Trailers, a manufacturer of specialized trailers for hauling heavy things, has warned that in the last three months, orders have plummeted.
…click on the above link to read the rest of the article…
They Are Calling This A “Bloodbath” For The $800 Billion Trucking Industry As U.S. Economic Activity Dramatically Declines
They Are Calling This A “Bloodbath” For The $800 Billion Trucking Industry As U.S. Economic Activity Dramatically Declines
The U.S. trucking industry has not experienced a downturn of this magnitude since the last financial crisis, and this is one of the clearest signs yet that the U.S. economy is steamrolling into a severe economic downturn. When economic activity is increasing, the trucking industry sees rising demand for their services and freight rates tend to go up. That is precisely what we witnessed in 2018, and truckers were hoping for more of the same in 2019. But when economic activity is on the decline, the trucking industry sees decreasing demand for their services and freight rates tend to go down. Unfortunately, the numbers that the U.S. trucking industry is reporting right now are absolutely abysmal. Freight rates have now fallen for six months in a row on a year-over-year basis, and according to Business Insider during the month of May loads on the spot market fell “by a chilling 62.6%” compared to last year…
This year has been rocky for the $800 billion trucking industry.
After a raucous 2018, 2019 has seen retailers and manufacturers moving less, according to the Cass Freight Index. Freight rates have dipped year-over-year for six months straight. Loads on the spot market, in which retailers and manufacturers buy trucking capacity as they need it rather than through a contract, have fallen by a chilling 62.6% in May year-over-year.
The spot market is where we see the marginal changes in demand most clearly, and what this is telling us is that we are already in a transportation recession.
Of course that is almost certainly putting it too nicely. According to one owner-operator, what we are witnessing right now is nothing short of a “bloodbath”…
If demand does not start rebounding really soon, we are going to see many more trucking companies go bankrupt.
