After over two years of downturn in the domestic shipping industry, many believe the trucking recession has ended. In early 2022, freight rates began plummeting rapidly to record levels. From March 2022 to March 2023, truck spot load postings dropped nearly 70%. By quarter 1 of 2024, spending by shippers fell almost 28% from quarter 1 of 2023. The sudden decrease in shipping, lowering freight rates, and overcapacity have led to what the industry calls a “recession.” A freight recession is a significant decline in the volume of goods that carriers transport. One of the leading causes of the freight recession was the coronavirus pandemic.
As brick-and-mortar stores began closing, there was a rise in customers buying goods online and international shipping. Along with movement by air and sea, the need for trucking rose and reached record volumes during the pandemic. As a result, the surge in demand led to an abundance of new carriers entering the market to compensate. Once the pandemic began, the demand started to decrease while there was an oversupply of trucks, prompting a recession. Now, in the fourth quarter of 2024, many in the industry believe that the industry believe that the recession will soon or already have ended.
Why Do Many Believe That The Trucking Recession Has Ended?
The idea that the freight recession had ended comes from the recent recovery signs in the last few months. Spot rates in 2024 have been higher than in 2023 and 2022 and up $1.78 from $1.54 a year ago. This can indicate that available capacity is decreasing, and demand is increasing. Capacity has slowly balanced over the last few years from carriers leaving the market due to strains from the recession. The FMSCA’s Clearinghouse-II regulations, starting on November 18th, could further decrease capacity, with nearly 170,000 drivers potentially losing their CDLs. Tender rejections, or the rate at which trucking companies refuses bids for transportation, have also risen. The rate of tender rejections is up 6% from 3.4% post-Labor Day of last year.
The Presidential Election’s Impact On Trucking
With the trump administration coming into office, there is a belief that policy changes could further affect trucking. These changes include corporate tax cuts, higher import tariffs, investment in domestic manufacturing, etc. As a result, there may be an increase in the demand to ship goods domestically. In particular, the administration’s proposed tax cuts as low as 15% for U.S.-made products could increase U.S. production. As manufacturers begin making more goods locally, there will be a greater need for trucks to transport the products. Domestic shipping could also grow from the administration’s proposed 60% tariff on all U.S. imports from China.
Despite the belief that the recession is over, it may take until 2025 before the industry fully recovers. Meanwhile, shippers still have to move cargo by land, and they can achieve this by speaking to a freight broker. Brokers act as middlemen between carriers and shippers and coordinate the movement of goods to the final destination. They offer various solutions like negotiating rates, preparing shipping documents, ensuring compliance, finding carriers, and more. Reach A1 Freight Solutions at 305-677-8323 or info@a1wwl.com to speak to a broker regarding moving your cargo domestically.