Since GDP growth has contracted for the past two consecutive quarters, the U.S. is by definition in the early stages of a recession. Yet with the national unemployment rate still historically low and employers in numerous industries actively seeking to hire more — trucking included — recession deniers point to this kind of data to corroborate why they believe the economy is sound.
However, given that trucking serves as a bellwether for how the economy as a whole is performing, an increasing number of indicators suggest the recession is here — and it's settling in.
One such sign is the growth in transportation capacity. In October, the Logistics Managers' Index, which assesses what resources carriers have available each month for hauling needs on a scale of 1 to 100, reached 73.1, FreightWaves reported. That's 1.3 percentage points higher than the previous month and the largest rate of increase in the past six years.
As it pertains to capacity, any figure higher than 50 is an indication that motor carriers have more of what they need to move product, meaning demand for traditional trucking services has declined. A figure lower than 50 means just the opposite (less capacity/more demand).
Between back-to-school shopping and the holidays, the last few months of the years are among the busiest for motor carriers. Whether they're hauling goods from producers to brick-and-mortar stores or from shipping ports to manufacturers, the merchandise that consumers buy in stores are available to buy thanks to truckers.
Import activity is down
But in addition to the growth in transportation capacity, imports are down as well, the same imports business need to manufacture their end-user products. Ben Hackett, founder of Hackett Associates, attributed some of this to retailers having bought the materials they need ahead of schedule.
"The growth in U.S. import volume has run out of steam, especially for cargo from Asia," Hackett said, per the National Retail Federation. "Recent cuts in carriers' shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend."
Similarly, the Truck Tonnage Index, which measures the weight of freight motor carriers are hauling, is growing at a slower rate. After rising 2.8% in August, the American Trucking Associations' advanced seasonally adjusted For-Hire Truck Tonnage Index budged higher in September, but barely, up just 0.5%.
Another indication of the recession taking its toll on trucking is occurring with regard to job growth. Motor carriers — and employers who partner with logistics entities — continue to accept applications, with the driver shortage forecast to be in the vicinity of 160,000 by 2031, according to estimates. But hiring activity is down, with transportation jobs dropping by 11,400 in September to 1.58 million, American Shipper reported from government data. This follows a decline of 3,300 in August and 2,300 in July, both of which were revised downward after initial reporting suggested the numbers were more optimistic.
The midterm elections, actions by the Federal Reserve and the direction of gas prices will largely decide how the recession plays out in 2023 and what impacts it will have on the trucking industry.
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