he U.S. trucking industry has suffered a dramatic downturn in recent months and financial analysts are worried the bad news is a presage of widespread economic trouble.
What are the details?
According to data compiled by Reuters, the demand for trucking every kind of product from food to furniture has been in a free fall since March. And one segment of the industry that deals with on-demand trucking, known as the “spot market,” has been hit especially hard.
“It basically just dropped off a cliff,” said Craig Fuller, the CEO of transportation data company FreightWaves, in conversation with the news agency.
The demand-sensitive spot market is now in correction territory, Reuters reported. Average first-quarter spot rates, excluding fuel, plummeted 55 cents per mile from $2.78 in mid-January to $2.23 on April 14. A slight downtick is reportedly common for that time of year, but the industry normally only sees a 22 cent per mile decrease.
The rate deterioration took hold when diesel prices nearly doubled amid backlash over Russia’s invasion of Ukraine and has been pummeling trucker wages ever since.
Reuters cited one California-based trucker, 63-year-old Marco Padilla, to demonstrate just how bad things have gotten. Padilla told the outlet he used to spend about 25-30 cents per mile to run his truck. But he’s nowhere near that range anymore.
“For every dollar (of pay), I was pocketing 70 cents,” he said. “Now it costs $1 a mile.”
What does it mean?
Those familiar with the trucking industry know spot market trouble is rarely an isolated incident.
One expert, Joseph Rajkovacz, who serves as director of governmental affairs for the Western States Trucking Association, described it as the “proverbial ‘canary in the mineshaft,'” meaning it is an early indicator of coming danger.
Analysts fear the downward trend could soon “decimate truckers’ ability to dictate prices and push some small trucking firms into bankruptcy,” the outlet stated. But not only that, it could foreshadow a wider rec…