Truckers’ are fearing the worst as many don’t see themselves being able to remain in business for the long term. Their confidence has plummeted to recession levels and their fears of a downturn are skyrocketing.
According to a report by Business Insider, capacity, meaning the number of trucks available to move loads, was up by 29.9% in June year-over-year. Last year was particularly profitable for truckers, and it encouraged lots of companies to buy more trucks and hire more drivers. Companies ordered so many new trucks last year that by January there was still an eight-month backlog of new truck orders. Industry insiders told Morgan Stanley in a survey that they expected some of this capacity to go away too. That means more companies going bankrupt or scaling back business. There are some positive indicators, though; the trucking industry has generated 11,700 jobs in 2019, including 7,300 in the second quarter. But for some reason, this job growth is not translating into confidence or optimism in the trucking industry.
Freight rates have dipped year-over-year for six months straight while loads on the spot market, in which retailers and manufacturers buy trucking capacity as they need it, rather than through a contract, fell by 50.3% in June year-over-year. Truckers have also continued to warn of a “bloodbath” as they slash their profit expectations and companies file for bankruptcy.
Because trucking is a cyclical industry, many say this is just par for the course and it’s not really anything to be concerned about.
“One of the problems that we’ve had in the past when things are hot, people will expect a year from now that it’s going to be just as good,” Don Ake, a vice president at the freight-equipment research group FTR, previously told Business Insider.
“We will build too many trucks, and then any pullback that you have in the economy causes this large down-cycle, and it’s bad for everyone in the industry,” Ake said. “The cycles are bad for the industry, but you can’t control them. You can’t tell people not to buy trucks and not to build trucks.”
While some indicators and the mainstream media suggest the overall economy is healthy and no one should worry, truckers like Christopher Powell have seen their pay drop dramatically. Powell says his gross earnings have tanked to $3,500 to $5,000 a week from a range of $6,000 to $7,000 a week — and that’s before he has to pay out for repairs, maintenance, and other business expenses.
“I don’t know how long I can stay in business if things don’t pick up,” Powell told Business Insider.