- The majority of truckers say they’re less confident about the direction of the US economy today than they were three months ago, according to a Cowen survey.
- Trucking has gone through a rough patch in 2019, as trade tensions and an overcapacity of trucks slams the industry.
- Still, fewer than a third of truckers say they anticipate a recession in the next six months.
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America’s $800 billion trucking industry has been in a recession since the beginning of 2019, according to ACT Research. The culprits: President Donald Trump’s trade war and a glut of trucking capacity.
And while some factors, like the uptick of retail indicators and a surge in truckload volumes, should give trucking companies hope for 2020, Cowen’s third-quarter carrier survey indicates that truckers are getting more and more pessimistic about where the economy is headed.
In the Cowen survey, 62% of carriers said they are not “more confident in the direction of the economy than they were three months ago.” Last quarter, only 48% expressed that pessimism, while 52% said they were confident in the direction of the economy.
Cowen’s team of logistics analysts posited that “continued tariff talk, no trade deal with China yet, and now an increase in tensions in the Middle East over oil” were all dragging down carrier outlooks.
That hasn’t translated to large-scale recession fears among truckers. Under a third of carriers in the survey said they anticipated a macro-recession to slam the American economy in the next six months.
What’s notable about the Cowen survey — compared to previous reports from owner-operators calling 2019 a “bloodbath”— is that this study also includes the viewpoints of larger trucking fleets, some with more than 250 in their fleet.
Larger trucking companies tend to be insulated during times of trucking recessions, but major carriers like J.B. Hunt, Knight-Swift, and Schneider have been hit in 2019, too. One public trucking company even reported its net income tumbled from $2.5 million in Q2 2018 to $1,000 this year.
A leading indicator
When truckers are feeling shaky, it can spook the rest of the economy.
“When manufacturers get scared, they cut production, meaning fewer jobs or even layoffs, as well as fewer truckloads going out the door, reducing the options for trucking companies in assigning their trucks efficiently and profitably,” Jody Sims, a truck driver in Lexington, Kentucky, previously told Business Insider.
Trucking is often looked at as a leading indicator of where the rest of the economy is headed. As 71% of America’s freight is moved on trucks, companies foreseeing a need for fewer trucks is typically an omen of an economic downturn: If manufacturers are producing less and people are buying less, there’s less of a need to move goods.
A trucking recession doesn’t always mean a macro-recession, though. The freight industry goes into recession twice as often as the rest of the economy, according to a study by freight technology company Convoy.