In 2019 alone, some 2,500 truckers across the United States have lost their jobs to layoffs and bankruptcy for large and small trucking companies. And while July was a particularly brutal month for the industry, the numbers show that the industry is likely to bounce back in the coming months.
The Chainalytics-Cowen Freight Indices are published as a monthly report that indicates the health of the trucking industry, and the latest indices show that freight rates were rising for three weeks straight through the month of August. Numbers are still down when compared to this time last year, but the upswing noted in August is the first time that numbers have been on the rise for the entire year. Another entity in the industry, Americas Commercial Transportation Research Co., noted the same upswing that the above report found, though they described it as “anomalous.”
The Health of Related Industries
Since the trucking industry relies so heavily upon the retail industry, it’s important to note, too, that retail giants like Walmart and Target are stronger than they were projected to be at this time. And as those retail giants get more service, trucks will be on the move, too.
The amount of tons moved by trucking companies is another way to measure the health of the trucking industry, and the American Trucking Associations’ Truck Tonnage Index spotted a 7.3% increase in tons moved in July 2019 from July 2018. And tonnage in the industry is much like a rollercoaster, up one month and down the next, as a reflection of other industries like retail and manufacturing.
Two types of freight affect the tonnage numbers: contract and spot. Contract freight is that which is determined by a set agreement between two companies, and spot freight is that which is purchased as needed by retailers and manufacturers. In 2018, spot freight became remarkably more expensive, which drove up prices and drove away customers who weren’t willing to pay those prices, driving demand into the ground. This is why many companies choose contract freight, leading it to take up about 85 percent of the trucking market.
Projecting for Peak Season
It’s no surprise that the end of the year is peak season for the trucking industry, as it’s peak season for the retail industry as well. While not projected to outdo the wild success of the 2018 holiday season, the 2019 holiday season should contribute greatly to the health of the trucking industry. Hub Group, the 12th largest trucking company in the US, has budgeted for a 2017-type peak during the holiday season.
Every industry ebbs and flows, and the wild success of 2018 has been theorized as foreshadowing for the dip we saw in 2019. For that, it’s been said that the trucking industry may have never been in recession at all. In a recent note to investors, Cowen analyst Jason Seidl wrote: “It’s not that 2019 has been so bad. 2018 was just really, really good.”
Ultimately, every industry sees higher years and lower years, but the overall health of the trucking industry is projected to flourish. 2019 is a year of adaptation to a steadier stream of work. To further invest in the health of your trucking business, give us a call.