Trucking’s Great Purge
During the pandemic, consumers turned their attention to e-Commerce, causing a massive influx of freight into the United States and the freight market to surge with almost double the amount of new players entering the industry.
However, now that the market is facing the crack of the supply chain bullwhip, coupled with an impending recession, there’s been a significant decline in those imports, as quoted by senior Freightwaves global trade analyst Henry Byers. Consumer confidence is down, causing a downturn in discretionary spending.
This downturn could spur recession-like conditions in the trucking sector. With all of the new fleets and drivers who entered the market, suddenly there are more drivers than there is cargo. Some industry professionals believe that they are headed for what is being called a Great Purge because conditions may push small truckers out of business.
Truckstop.com reports that, in the current climate, it costs around 50% more to operate a trucking business than in 2021. Smaller operations will feel that pain much more acutely than the larger carriers. Industry leaders say the main culprit is the unprecedented hike in diesel fuel prices coupled with the cost of equipment.
Avery Vice, Vice President of Trucking at FTR Transportation Intelligence says, “The truck freight market has entered the inevitable period where conditions for carriers are transitioning from uniformly strong to those that will be more variable from month to month and from segment to segment. Uncertainty is high on both the demand and supply sides. Consumers are generally remaining strong financially, but prices are increasing due to inflation, cutting into buying power.” However, he also says: “supply chain woes persist and durability of that demand is not a given.” Analysts told Logistics Management that the smaller carriers are suffering because they “provide their capacity to brokers and not to shippers directly.”
“Bestway Freight Solutions people and processes are set up to steer you around these concerns,” says Managing Partner Riley Wiles. “Beyond relationship management, the Bestway system constantly monitors the carrier environment, tracking trends that can impact your shipments.”
If you have questions about movement in the road freight arena or any other current events that affect your cargo strategy, reach out to your Bestway representative today.