The Great Freight Recession Has Now Lasted Longer Than The COVID Bull Market

This article was released last night by Zerohedge but was written by Greg Fuller, CEO of FreightWaves:

The Great Freight Recession Has Now Lasted Longer Than The COVID Bull Market

What happened to the trucking industry is pretty simple to understand in hindsight. The trucking market over-expanded dramatically from mid-2020 until mid-2022 due to an artificial surge of demand created by:

1. The limited supply of drivers during and after COVID

2. Most of the US sitting home in lockdowns ordering online instead of shopping in-person

3. A massive surge in discretionary spending from the 'helicopter money' the US govt dropped on the people during lockdowns

So everyone was at home with pockets full of money and nothing to do but order stuff online. Our infrastructure wasn't designed to accommodate that sudden surge, so freight prices skyrocketed. That created a massive expansion of capacity in our industry.

When that artificial demand dried up, so did the freight market. But hopes remained high that the good times would continue, and the memories of how difficult it was to expand their fleets for the surge in demand remained fresh. Not to mention, the govt has lied consistently about the strength of our economy, making it exceedingly difficult to predict future demand.

Companies didn't want to reduce fleet size, so they held on as long as possible. That's why this has been such a long, slow grind for the industry.

Here is more from the article:

During the two years of the freight market’s COVID bull run, fleets built up substantial operating surpluses and were able to build strong balance sheets. This has enabled them to hang on for a long time.

For much of the Great Freight Recession, trucking fleets have been running many of their miles at losses. This has forced them to tap into the financial reserves they built up during the COVID bull run.

The Great Freight Recession has gone on longer than the COVID bull run, meaning that since the first days of the COVID lockdowns, truckers have operated primarily in recessionary territory. For those who remain in the market, their reserves are likely exhausted, as is their stamina.

However, for those who can continue, the tough times may be ending. The data suggests that a recovery in the balance of supply and demand will come as soon as fall 2024, but almost certainly by spring 2025.

Finally, here is a chart showing the number of trucking companies in the US, with green being expansion and red being contraction:

What do you guys think? Is our economy about to take off, or are we about to fall off a cliff?

What that article isn't saying but is present, the state ran media/propaganda are suppressing and I believe is also a very significant contributing factor is that consumers aren't spending. It's one of the primary causes.

Most people feel, and rightfully so that the economy is teetering on the cliff. Food and gas are conveniently left out of the equation for inflation, food is up 26 percent, gas 31 percent. Inflation, adjusted is still double digits. People simply are not able nor willing to buy products outside of bare necessity.

One of the things that cements this concept is packaging. We haul a lot of it. PCA, packaging Corp of America is the largest box supplier in the country, one of our partners. They shuttered one of their plants and 1800 people lost their jobs. First time on record that they lost money. The reason is that people aren't buying products, equalling less boxes used. They specifically stated that as the reason.

I think it's being suppressed, but the driving reason for the continuing trucking great depression is that there's far less consumer deman and confidence. It may have initially started out of several reasons listed in the article, but they aren't the only reasons and it's been prolonged by extreme incompetence or its intentionally planned. People didn't get into positions that they occupy by being grossly incompetent, so it basically leaves one option, planned failure.

Call me crazy, but the WEF, WHO crowd, the biden regime and the like seem very intent on dismantling the existing geopolitical structure and implementing their new world economy, stakeholder capitalism, which is actually just rebadged socialism. In order to install a new economic machine, they must first shut the old one down.

I just don't buy there being a monolithic cause to this, and that being an over abundance of inventory. (Remember that was the first narrative, just too much product from over ordering). Now, the gaslighting continues and its just too much capacity. It's as see through as chairman vegetables blaming inflation on the consumer. Only a government can create inflation.

I mentioned before that I think the shippers are going to try to keep this marketplace like this for as long as possible. In turn the large carriers are going to keep this as long as possible in regards to their drivers. It's counterintuitive but they are benefitting from it as well. It's driving the cost of labor down. If they can keep it down, they will. Overall, I see this current state staying for a long time, it's too profitable for the large corporations to let go of.

The wildcard in this is the threat of civil war regarding the upcoming elections. A recent pole has 45 percent, nearly half the country, strongly feeling that a civil war is eminent within a year. Regardless of anyone's political leaning, the impacts of even wide spread civil conflict in blue islands, let alone all out civil war can not even be calculated, but I think it would dismantle most systems and utterly fragment transportation.

I mentioned before that I think the shippers are going to try to keep this marketplace like this for as long as possible. In turn the large carriers are going to keep this as long as possible in regards to their drivers. It's counterintuitive but they are benefitting from it as well. It's driving the cost of labor down. If they can keep it down, they will. Overall, I see this current state staying for a long time, it's too profitable for the large corporations to let go of.

Interesting that you mention this as I was speaking to management in my building not too long ago about this.

I brought up how FedEx freight's shipments per day dropped from 120k to 90k. He told me he didn't expect it to get back to where it was. He said the focus on customers was qualtity over quantity. They raised shipping prices and were fine letting go of anybody that didn't want to pay the increase.

We saw it with FedEx Express being ok with USPS going to UPS. They're still making a bunch of money, but labor costs have dropped significantly.

During Covid, we saw an increase in employee demand leading to increased wages. It seems like a move to make people desperate and take what they can get leading to wage stagnation.

What that article isn't saying but is present, the state ran media/propaganda are suppressing and I believe is also a very significant contributing factor is that consumers aren't spending. It's one of the primary causes.

Most people feel, and rightfully so that the economy is teetering on the cliff. Food and gas are conveniently left out of the equation for inflation, food is up 26 percent, gas 31 percent. Inflation, adjusted is still double digits. People simply are not able nor willing to buy products outside of bare necessity.

One of the things that cements this concept is packaging. We haul a lot of it. PCA, packaging Corp of America is the largest box supplier in the country, one of our partners. They shuttered one of their plants and 1800 people lost their jobs. First time on record that they lost money. The reason is that people aren't buying products, equalling less boxes used. They specifically stated that as the reason.

I think it's being suppressed, but the driving reason for the continuing trucking great depression is that there's far less consumer deman and confidence. It may have initially started out of several reasons listed in the article, but they aren't the only reasons and it's been prolonged by extreme incompetence or its intentionally planned. People didn't get into positions that they occupy by being grossly incompetent, so it basically leaves one option, planned failure.

Call me crazy, but the WEF, WHO crowd, the biden regime and the like seem very intent on dismantling the existing geopolitical structure and implementing their new world economy, stakeholder capitalism, which is actually just rebadged socialism. In order to install a new economic machine, they must first shut the old one down.

I just don't buy there being a monolithic cause to this, and that being an over abundance of inventory. (Remember that was the first narrative, just too much product from over ordering). Now, the gaslighting continues and its just too much capacity. It's as see through as chairman vegetables blaming inflation on the consumer. Only a government can create inflation.

I mentioned before that I think the shippers are going to try to keep this marketplace like this for as long as possible. In turn the large carriers are going to keep this as long as possible in regards to their drivers. It's counterintuitive but they are benefitting from it as well. It's driving the cost of labor down. If they can keep it down, they will. Overall, I see this current state staying for a long time, it's too profitable for the large corporations to let go of.

The wildcard in this is the threat of civil war regarding the upcoming elections. A recent pole has 45 percent, nearly half the country, strongly feeling that a civil war is eminent within a year. Regardless of anyone's political leaning, the impacts of even wide spread civil conflict in blue islands, let alone all out civil war can not even be calculated, but I think it would dismantle most systems and utterly fragment transportation.

I read somewhere, probably here, that pallet manufacturing is down, due to shippers not needing pallets. And yes, bringing down the economies of the world is by design, so that the WEF and elites can bring about "the great reset."

What used to be called conspiracy theories are now called spoiler alerts

I brought up how FedEx freight's shipments per day dropped from 120k to 90k. He told me he didn't expect it to get back to where it was. He said the focus on customers was qualtity over quantity. They raised shipping prices and were fine letting go of anybody that didn't want to pay the increase.

Every business owner in every industry weighs pricing decisions continually based on demand, profitability, and various other factors.

I've spoken with trucking executives who readily admit they haul freight at a loss sometimes. It can be maintaining fleet size, keeping top drivers rolling, moving drivers out of poor-paying areas into better areas, finding a backhaul for a dedicated account, and other factors.

This must be one of the most difficult times to make business projections there ever was:

1. The government blatantly lies about everything. You can't get any reliable data from them at all.

2. They shut down the planet and then printed trillions of dollars, thus executing the largest wealth transfer to the upper class in human history

3. They drove inflation through the roof, the worst in 50 years

4. The combination of interest rates and inflation made home ownership impossible for most people in the US

5. AI gets released in the middle of all this, creating a massive waves of layoffs throughout many industries, including tech and finance. You'll see millions more people lose their jobs over the next year or two because of AI alone.

6. On top of everything else, it's an election year, which means bad actors will once again bring chaos to our country like in 2020. Back then it was Antifa, now it's Palestine. When it comes time to implement CBDC's to take final control of the population, they'll create yet another "summer on fire" with a new excuse.

It's impossible to know where we're heading at this point.

I've spoken with trucking executives who readily admit they haul freight at a loss sometimes.

It doesn't work that way in LTL because there's no need to "get out of an area". For example a swift drive makes a delivery in Florida, Swift will haul for a loss to get out of Florida because it's better than nothing. In LTL, drivers are domiciled in one location. They're not bouncing around all over the country.

Empty back hauls are common in LTL and it's worked into the price of moving freight. My return trip consists of empty trailers 9/10 times.

If the numbers work, LTL companies will use purchased truck load trailers instead. With the price of PT, they're using it plenty know but that wasn't the case 2 years ago.

Empty back hauls are common in LTL and it's worked into the price of moving freight. My return trip consists of empty trailers 9/10 times.

One thing trucking companies are aware of is the expectation they set when they agree to haul freight at a certain price. If the current breakeven is $2.00/mile and you agree to haul at $1.80, it could become very difficult to raise your prices with that shipper or with others who know you hauled at $1.80.

Sometimes, trucking companies choose to run empty instead of hauling at a loss to avoid feeding into a downward spiral in future rates.

I get that, that's why I used the example of Swift. LTL charges by weight and dimensions, not by the mile. It's an apples to broccoli comparison.