America is heading for a downturn, and recent freight recession shows that clearly as trucking is often regarded as a leading indicator of the rest of the US economy with 71% of America‘s freight being moved by trucks. From trade wars to manufacturers producing less, many factors came in to create a turbulent recession that struck the giant US Trucking Industry, with some calling it a bloodbath. On the other hand, these bad signs in the trucking industry don’t necessarily mean that the rest of the country‘s economy is on a crash course as the freight industry is known for going into recession as twice as often as the rest of the economy. Yet, the impact is undeniable, and here you will see how an $800 billion industry is impacted by the recent recession, and who is paying the price the most.
Trucking Companies Going Bankrupt
US Trucking industry has been hit by a meteor shower of challenges and obstacles in 2019, making an already difficult situation even more unfortunate, especially for those who own trucking companies.
According to data from Broughton Capital LLC not only trucking rates have stalled out in the month of July, falling 0.1% from the prior year after a 27-month run of annual increases, but approximately 640 trucking companies went bankrupt in the first half of 2019. And that’s more than triple of bankruptcies compared to the first half of 2018!
The recession is forcing even the veterans in the business such as Ready Trucking Company operating since 1968, and many other businesses, including large ones like HVH Transportation alongside their 324 truck drivers.
Thousands of Jobs Swept Away
Alongside bankrupting companies comes a devastating follow up of unemployment, leaving thousands of truck drivers without a job. Adding an already decisive punch to the US Trucking Industry‘s shortage of drivers.
Following various federal reports and news, it is confirmed now that truckers are losing their jobs by the thousands due to recession. Around 5,100 trucking jobs were lost in the month of August alone this year making it the biggest drop since April of 2018.
It is the first reported slash in trucking payrolls since March.
Sinking Incomes of Existing Trucking Companies
While last year trucking was incredibly profitable boasting exceptional high rates and record-low bankruptcies, this year, however, is a complete opposite.
If not bankruptcy, then a significant sinking of income strikes some companies such as USA Truck Inc. The company says one of the main culprits is declining spot rates by as much as 18% which resulted in USA Truck Inc.’s net income to sink from $2.5 million in the second quarter of 2018 all the way to a shocking $1,000 in profit by the second quarter of 2019.
And that‘s only one example out of many who are struggling at the moment.