In the freight business, it feels like a recession
In the freight business, it feels like a recession
The trucking company Yellow — which employs 30,000 people — shut down operations this week and is headed for bankruptcy. The company has been struggling for years, but its downfall is a sign of tough times, not just in trucking but pretty much anything involving freight shipping.
Somewhere on the road between Garden City, Kansas, and Edgerton, Kansas, we caught up with Trucker G. “That’s what everybody knows me as, everybody knows me as Trucker G,” he said.
Trucker G is an independent trucker and a bit of a trucking influencer on social media. And he said that trucking is having a rough time.
“I’ve been doing this for 32 years. This is probably the worst I’ve ever seen it,” Trucker G said. “This is worse than it was back in 2008.”
Rates truckers are paid have plummeted by more than half since 2021, accounting for inflation. Meanwhile, costs have only risen.
“Inflation is so high, cost of fuel is high, there’s some guys out there hauling these loads and they’re actually paying money out of their pockets to haul the load,” Trucker G explained.
There’s trouble in freight by ship too. And air. And rail. Shipping container volume at the Port of Los Angeles is down 23% year over year, and profits are down at railroads.
“Every mode of transportation is experiencing declines in volume and, in a lot of cases, a decline in revenue as well,” said Cathy Morrow Roberson, president of Logistics Trends & Insights.
Many corners of the freight industry scaled up when prices and demand were blazing hot during the pandemic.
“When you had that surge in prices, people responded to it and thought, ‘How can we supply more?'” said Phil Levy, chief economist at logistics company Flexport. “People moved in to trucking, people took planes out of the desert and started flying them again.”
They commissioned more ships and leased more plane space, but demand is now far below those pandemic peaks.
“And that wrong-footed a lot of people in the business, cause they had prepared for a continuing boom,” Levy said.
The cost of moving a container cross country has fallen 90% from its pandemic high, Levy added. So while the economy as a whole is doing OK, freight seems to be in a recession.
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