One expert has issued a warning about the precarious state of America's trucking industry, emphasizing its significant impact on the economy as an indicator of consumer sentiment leading into the holiday season.
Following the pandemic, an oversupply of trucks and drivers compared to available freight has led to intensified competition among truckers and trucking companies, creating what has been dubbed the "great trucking recession."
Mike Kucharski, Vice-President and Co-Owner of JKC Trucking, described the industry as being in dark times, highlighting its crucial role as the engine driving the American economy.
Notably, major companies like Yellow Corporation and Convoy Inc. have faced financial troubles, with Yellow Corporation filing for Chapter 11 bankruptcy and Convoy Inc., a once highly valued trucking startup, shutting down.
JKC Trucking Inc., specializing in less-than-truckload carriers (LTL), particularly in climate-controlled and dry freight shipments, faces challenges due to declining freight volumes and rates caused by supply and demand imbalances. Kucharski emphasized the importance of freight volumes as an economic indicator, noting that the current "volume volatility" reflects a downturn in the industry.
Factors contributing to the "great trucking recession" include decreased consumer spending, rising costs of living, and skyrocketing prices of essential commodities.
Kucharski pointed to diesel fuel prices as a major operating cost affecting trucking companies, leading to increased costs for delivering goods and impacting consumers who are already feeling financial strain.
"It costs more to deliver goods and therefore this cost is passed on to the consumer. Consumers are feeling strapped for cash due to the increased costs and interest rates, they are holding back on purchases seeing what's going to happen and now we have our drivers sitting on the sidelines with no work," he said.
"It's a vicious cycle and all the trucking companies are in a dogfight, to get this volume because we went from 100 miles an hour to almost a complete halt," he added. "Until the entire economy corrects itself, we're going to be in the slump, and we're going to continue to see other trucking companies go out of business. Everybody is in bad shape, I don't care if you're Amazon or a one-trucking operation, everybody across the spectrum is affected."
The aftershocks of COVID are evident in Americans' depleted savings and altered spending habits, according to Kucharski.
Despite the holiday season traditionally benefiting the trucking industry, he expressed concerns about reduced spending post-Thanksgiving and fears that the current holiday season could be more challenging than the previous year.
Kucharski stressed that the trucking industry's struggles are interconnected with broader economic challenges, portraying a grim outlook for both consumers and businesses in the face of the ongoing economic pressures.
"The rampant inflation has created financial hardships for Americans across the board," Kucharski said. "People are tightening their belts, you just have to right now, and this holiday season is going to be a major test and economical indicator of how economic pressures are impacting Americans and the trucking industry."
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