When judging the likelihood of a recession, it isn’t just data about manufacturing, housing, and consumer good production that goes into most predictions. Data about ancillary industries such as transportation and shipping also help to play a role in determining whether an economic slowdown is about to occur. With so many goods in the United States dependent on trucks to make their way from factory to consumer, the trucking industry provides a useful bellwether on the health of the US economy. And right now, things aren’t looking too hot.
We already know that truck orders are way down this year compared to last year. Part of that is due to a huge amount of orders last year that has resulted in a backlog of trucks waiting to be delivered. But that has also led to a significant amount of overcapacity, with total trucking capacity up 30% year-on-year as of June. That has helped contribute to a plummeting of shipping rates, reduced numbers of contracts, and a collapse of the spot shipping market.
Combine those plummeting rates with higher fuel costs and higher fuel taxes in many large states like Illinois and California and the result is an increasing number of trucking firms that are feeling the squeeze. That has led to a growing number of smaller trucking firms going out of business. And even with the current overcapacity, too many firms going out of business could reduce capacity and make it more difficult for goods to make it to stores.
It’s clear that economic analysts need to keep an eye on the trucking industry in the near future to see whether this is just a shakeout that is eliminating dead wood or if it is indicative of a longer-term trend that could decimate the trucking industry. But for right now, everything appears to show that the trucking industry is the leading edge indicating that the US economy is headed towards recession.