Freight is often looked at as a bellwether for the rest of the economy. If industries ranging from retail to housing to lumber are estimating that they’ll need fewer truckers, many economists see that as an omen of an economic downturn. If people aren’t buying or building as much stuff, there’s less of a need for truckers. Trucks move 72% of all freight.
One 2019 study from Convoy, a trucking brokerage firm, found that six out of 12 trucking recessions led to macroeconomic downturns. For example, the trucking industry dipped in April 2006 — more than a year before the Great Recession slammed the larger economy.
Trucking experiences recessionary periods twice as much as the rest of the economy. But for the 2 million American truck drivers who power much of this industry, the effects can be brutal.
Trucking demand is “near freight recession levels,” according to Bank of America. Shippers’ outlook on rates, capacity and inventory levels are matching attitudes not seen since May and June 2020, when pandemic lockdowns sent freight volumes into a historic decline.
As FreightWaves reports, in a Friday note to investors, Ken Hoexter (available to Zero Hedge professional subscribers), the managing director of Bank of America’s trucking research, wrote that shippers’ view of demand is down 23% year-over-year. The proprietary Truckload Demand Indicator hit 58 — the lowest since June 2020.