The Economy is in a Slump

by: Pash Brar

If you talk to people in trucking, they will most likely say there is a major recession, yet the news doesn’t announce that.  In trucking there are many indicators the economy is in a downward spiral.  I would often tell people interested in investing in the stock market, to ask people in trucking if they are busy, because that was a great way to plan a timing strategy. When truckers are busy; buy. When truckers are slow; do not buy.  I had told many small businesses in 2022 that we were heading into a major downfall because trucking was slowing down, and here we are.  I have not seen the trucking industry this plagued since 2008-2009 after the stock market crash.

Many truckers tell me they are barely getting any loads.  They can barely make their mortgage payments, let alone their truck and trailer payments. If the economy is doing well, then why are there far fewer loads? When the economy is doing well, trucking companies are bombarded with loads, and drivers are rushed because there is a back log of new loads that need to be delivered.  In a good economy long haul truckers barely see their families in the summer, because they come home and are asked to take a new load immediately.  In a good economy drivers can make well in to six figure incomes and support their families easily.  That is not the case now.

The prices for loads are very low right now.  Rates are so low, that the fuel, insurance, and maintenance of the equipment are barely covered.  It may be a big advantage to businesses needing loads delivered, but it’s at the extreme detriment of the trucker and trucking companies.  Many truckers tell me they are extremely frustrated and feel like they are working very hard for little, to no money.  When the economy is doing well, the load rates are high because there is high demand.  Where there are too many truckers, not enough loads, and the demand is low, then the load rates are also low.

The Vancouver Port recently reported record volumes. can there be record volume when a trucking firm that works primarily doing port loads advised me of an 80% decrease in business?  How can there be record volumes when longshoremen with 20+ years seniority in the union are not getting much work?  Usually after that many years in the union, they have their pick of the hours they want to work, but are now saying there is very little work.  Who is buying these record number of goods when I see people in grocery stores leave half their cart of groceries behind because they can’t afford to pay for the remainder?

I often see articles written about trucker shortages.  We need more truckers they say.  The truckers we have now have no work.  So, adding more truckers now will only aggravate the problem. There is already a surplus of drivers and low rates.  When you add more drivers to create more surplus, the load rates could possibly go even lower.  A new trucker entering the market now will not be prioritized loads, because there are many more drivers that have seniority.  When we come out of this low economy, that will be the time to enter the market.  At that time there will be a demand for truckers and the rates will increase with that demand.  If you want to change careers and enter trucking, then you should train now and be ready to enter the market when the economy does eventually rebound.

Until the economy picks up, trucking will continue to be in turmoil. Prices for equipment are sky high, the demand for loads is low, there are too many truckers, and the rates are low.  The bigger firms plan to acquire struggling businesses and the small ones get absorbed during times like this.  Many are selling equipment and changing industries.  I’m not sure when the economy is going to pick up.  I will be keenly watching the next provincial, federal, and U.S. Presidential elections.  These elections may impact our economy.  But right now, I’m seeing the stock market perform the best it has since 2019, which is why no one is declaring a recession.  The stock market is currently not a reflection of our current economy, making it extremely unpredictable in my opinion. The real estate market is also gaining traction even though prices and interest rates are sky high. I wonder why these other facets of the market are doing well, and not trucking?  I just hope there isn’t a big reason, like the 2008 U.S. housing bubble that led to the collapse of the economy.  Hopefully the real reason will come out soon and we as an industry can get back to normal and make some money again.

Previous articleTips to Prepare Your Truck for Summer
Next articleWhy I Chose Trucking